The Lovesac Company (NASDAQ:LOVE) shares rose in Thursday’s premarket session after the company reported fourth-quarter fiscal 2026 results that beat analyst expectations on both revenue and earnings.
Lovesac Beats Q4 Estimates on Revenue and EPS
The company posted EPS of $2.19, topping the $2.01 estimate, and revenue of $248.046 million, above the $242.775 million estimate.
Net sales increased 2.7% year over year to $248.0 million. Net income declined to $32.1 million from $35.3 million, while adjusted EBITDA fell 7.8% to $49.6 million.
Margins Pressure Results Despite Sales Growth
Gross margin contracted 230 basis points to 58.1%, driven by higher inbound transportation and tariff costs, along with increased outbound transportation and warehousing expenses.
Operating income declined to $44.9 million from $47.6 million. Showroom revenue rose 3.5% to $159.8 million, internet sales increased 12.3% to $79.2 million and omni-channel comparable sales grew 0.6%.
The company ended the quarter with 278 showrooms.
Full-Year Declines and Strong Cash Position
For fiscal 2026, net sales increased 2.4% to $697.1 million, while diluted GAAP EPS fell to 28 cents from 69 cents, and net income declined to $4.1 million from $11.6 million. Adjusted EBITDA decreased to $36.1 million from $47.8 million.
Operating cash flow rose to $49.3 million, and cash and cash equivalents increased to $101.9 million, with no outstanding debt.
Outlook, Buybacks and CEO Commentary
The company authorized an additional $40 million share repurchase program, bringing total remaining capacity to about $54.1 million.
For fiscal 2027, Lovesac expects GAAP EPS of 34 cents to 95 cents versus a 78-cent estimate and revenue of $700.0 million to $750.0 million versus a $735.743 million estimate.
For the first quarter, it expects a GAAP loss per share of 95 cents to $1.22, versus a loss estimate of 81 cents, and revenue of $133.0 million to $139.0 million, versus a $144.447 million estimate.
CEO Shawn Nelson said, “Despite a challenging macro environment in fiscal 2026 marked by tariff pressures, economic uncertainty, and intense promotional activity across our category, we adapted effectively and drove meaningful progress on our strategic goals.”
Technical Analysis
Shares have decreased by 39.88% over the past 12 months and are closer to their 52-week lows than their highs, reflecting ongoing market challenges. The current 52-week range for the stock is between $10.33 and $21.90.
The RSI is at 41.79, which is considered neutral territory, indicating that the stock is neither overbought nor oversold. Meanwhile, the MACD shows a value of -0.5618, with the signal line at -0.6485, suggesting a bullish momentum as the MACD is above the signal line.
The combination of neutral RSI and bullish MACD suggests mixed momentum for the stock, indicating potential for upward movement if market conditions improve.
Benzinga Edge Rankings
Below is the Benzinga Edge scorecard for The Lovesac, highlighting its strengths and weaknesses compared to the broader market:
- Value Rank: 77.87 — The stock is considered to have a strong value proposition.
- Growth Rank: 81.32 — Indicates solid growth potential.
- Quality Rank: 13.97 — Suggests concerns about the company’s overall quality metrics.
- Momentum Rank: 5.37 — Indicates weak momentum in the current market environment.
The Verdict: The Lovesac’s Benzinga Edge signal reveals a mixed profile, with strong growth and value rankings but weak momentum and quality scores. This suggests that while the company has growth potential, it may face challenges maintaining its current momentum.
LOVE Stock Price Activity: Lovesac shares were up 12.50% at $12.70 during premarket trading on Thursday, according to Benzinga Pro data.
Ritu Manoj Jethani from Shutterstock
Recent Comments