Dive Brief:
- After more than six years at the company, furniture brand Lovesac announced its Chief Financial Officer and Executive Vice President Donna Dellomo is retiring to become a senior strategic advisor, according to a Wednesday press release. Keith Siegner will take over the EVP and CFO positions effective June 30. Meanwhile, Jack Krause is retiring from the chief strategy officer role effective June 30, with CEO Shawn Nelson and COO Mary Fox taking over the responsibilities.
- The direct-to-consumer brand also reported its first quarter saw net sales increase 9.1% year over year to $141.2 million. Gross margin decreased slightly from 51.1% to 50.1% while the company swung from a net income of $1.9 million last year to a loss of $4.2 million.
- Lovesac reported an operating loss of $5.9 million compared to an income of $2.6 million last year. Meanwhile, total comparable sales were up 15.1%. The furniture brand expects a net income between $30.0 million to $36.0 million for the full fiscal year.
Dive Insight:
Despite headwinds across the home sector, Lovesac started its new fiscal year on a positive note.
“We are very pleased with our first quarter performance, highlights of which included 9% and 15% increases in total sales and comparable sales, respectively, despite dampened consumer spending and higher interest rates,” Nelson said in a statement. “While we expect unfavorable macro-economic conditions to continue in the coming quarters, Lovesac continues to operate from a position of strength with a debt free balance sheet and a proven track record of cost discipline and rigor.”
Internet net sales increased 28.7% during the quarter while showroom net sales jumped by 2.9%. The increase in showroom sales was partially related to a higher point of sale transactions with lower promotional discounting. Lovesac has 50 additional showrooms compared to the previous year, marking a total of 211 locations.
On a call with analysts Wednesday, Lovesac’s chief executive said that one key reason the brand’s demand remains strong versus competitors is that it sells a value product.
“This is widely misinterpreted because of our product's high sticker price,” Nelson said. “But this customer is a value customer. They are choosing to spend quite a bit of money with us because of all the value we design into the product and platform.”
To continue promoting growth for the company, Nelson added that Lovesac has a pipeline of new products it hopes will disrupt a “myriad of home-plus-tech categories” that it hasn’t entered yet. The company currently sells speaker technology, called StealthTech, for some of its sofas.
Lovesac is focused on investing in technology and research and development this year, according to Fox. The furniture brand is specifically looking to invest further in artificial intelligence and recently conducted a pilot of generative AI-guided experiences for customer-facing service associates. Fox noted that early results showed “great promise” from the pilot.
