Lovesac (LOVE) Fiscal Q2 2027 Earnings Call: Tariff Benefit and Product Outlook
Source Tradingkey
Key takeaways
- Fiscal Q2 2027 net sales increased 0.4% to $161.2 million, the company’s highest second-quarter revenue on record, while omnichannel comparable sales declined 1.9%.
- Gross margin rose 1,200 basis points to 68.4%, primarily due to $20 million of IEPA tariff refunds recognized in cost of merchandise sold. Excluding tariff recoveries, gross margin was approximately 56%, down 40 basis points.
- Net income reached $7.4 million, or $0.51 per diluted share, versus a $6.7 million loss, or $0.45 per share, a year earlier. The tariff refunds contributed a net benefit of $0.86 per diluted share.
- Demand remained stronger for configurations above $6,000, including larger Sactionals setups, premium fabrics and new features. The below-$6,000 segment improved but did not return to growth.
- Management expects several product launches to have limited impact in late Q3 and a more meaningful contribution in Q4. This timing shift, along with ongoing pricing tests, informed a more conservative outlook.
- Lovesac guided to fiscal 2027 net sales of $690 million to $710 million and Adjusted EBITDA of $31.5 million to $35.5 million.
Core financial data
| Metric | Fiscal Q2 2027 | Year-over-year change / context |
|---|---|---|
| Net sales | $161.2 million | Up 0.4% |
| Omnichannel comparable sales | — | Down 1.9% |
| Showroom net sales | $114.1 million | Up 4.6% |
| Internet net sales | $40.2 million | Down 5.3% |
| Gross margin | 68.4% | Up 1,200 bps, primarily due to tariff refunds |
| Gross margin excluding tariff recoveries | Approximately 56% | Down 40 bps |
| SG&A expense | $72.3 million | Up 0.3%; 44.8% of sales |
| Advertising and marketing expense | $22.8 million | Down $0.7 million; ratio improved 50 bps |
| Operating income | $10.9 million | Versus an $8.8 million operating loss |
| Net income | $7.4 million | Versus a $6.7 million net loss |
| Diluted EPS | $0.51 | Versus a loss of $0.45; included a $0.86 tariff-refund benefit |
| Adjusted EBITDA | Loss of $1.3 million | Excludes the $20 million tariff-refund benefit |
| Cash and cash equivalents | $68.8 million | No outstanding debt |
| Inventory | $130.2 million | Versus $124.0 million a year earlier |
| Operating cash flow | Use of $11.4 million | Improved from a use of $29.2 million |
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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