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LOVE's Shares Rise on Narrower-Than-Expected Loss in Q2
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The Lovesac Company (LOVE - Free Report) reported better-than-expected results in second-quarter fiscal 2025 (ended Aug. 4, 2024), with earnings and net sales beating the Zacks Consensus Estimate. On a year-over-year basis, net sales increased and the adjusted loss widened.
The company's quarterly results benefited from the net addition of 31 new showrooms and a 7% increase in internet sales. This was partially offset by a 5.4% decline in omnichannel comparable net sales. During the quarter, the company opened 10 new showrooms and closed two.
An increase in outbound transportation and warehousing costs accompanied by a rise in overhead expenses, payroll, rent and selling-related expenses marred the bottom line.
The company saw a strong reception to recent product innovations, including the PillowSac Accent Chair and the newly-launched AnyTable. LOVE plans to build on this momentum by expanding its offerings. While it is cautiously planning for the second half of the year due to industry challenges, Lovesac believes it is well-positioned to meet short- and long-term goals.
Following the earnings release, Lovesac’s shares appreciated 21.3% during trading hours on Sept. 12, 2024.
Inside the Numbers
In the fiscal second quarter, the company reported an adjusted loss of 38 cents per share, narrower than the Zacks Consensus Estimate of loss of 46 cents. Lovesac reported an adjusted loss per share of 4 cents in the prior-year quarter.
The Lovesac Company Price, Consensus and EPS Surprise
Net sales of $156.6 million topped the consensus estimate of $154 million by 1.7%. The metric increased 1.3% from the year-ago quarter’s figure.
Operating Highlights of LOVE
The gross margin contracted 80 basis points (bps) year over year to 59%, mainly due to a 110 bps decline in product margin from higher promotional discounting. This was partly offset by an 80-bps decline in inbound transportation costs, while outbound transportation and warehousing costs expanded by 50 bps.
Selling, general and administrative expenses, as a percentage of net sales, increased 570 bps to 47% year over year. Advertising & marketing expenses, as a percentage of net sales, depreciated by 230 bps year over year to 14.9%.
Adjusted EBITDA was $1.5 million, down from $5.3 million reported a year ago.
Lovesac’s Financial Highlights
As of Aug. 4, 2024, Lovesac had cash and cash equivalents of $72.1 million compared with $87 million at the end of fiscal 2024.
Net cash used in operating activities totaled $0.8 million as of second-quarter fiscal 2025 end against net cash provided of $27.3 million reported in the year-ago comparable period.
LOVE’s Q3 Guidance
For third-quarter fiscal 2025, LOVE expects net sales to be in the range of $152-$160 million and adjusted EBITDA loss in the range of $3 to income of $1 million. In third-quarter fiscal 2024, it reported net sales of $154 million and an adjusted EBITDA of $2.5 million.
The company expects net loss to be in the range of $4-$8 million. In the year-ago period, it reported a net loss of $2.3 million.
LOVE’s Fiscal 2025 Guidance Updated
For the fiscal 2025, the company now expects net sales to be in the range of $700-$735 million compared with $700-$770 million expected earlier.
Adjusted EBITDA is now expected to be in the range of $52-$59 million compared with the prior projection of $46-$60 million. Net income is expected to be in the band of $17-$21 million, down from $18-$27 million expected earlier.
Diluted income per common share is expected to be in the band of $1.01- $1.26, down from $1.06-$1.59 expected earlier, on approximately 16.9 million estimated diluted weighted average shares outstanding.
Zacks Rank & Key Picks
Lovesac currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
The company has a trailing four-quarter earnings surprise of 28%, on average. Shares of ANF have surged 168.3% in the past year.
The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and earnings per share (EPS) indicates an increase of 12.6% and 61%, respectively, from the year-ago period’s levels.
Texas Roadhouse, Inc. (TXRH - Free Report) currently carries a Zacks Rank #2 (Buy). TXRH has a trailing four-quarter earnings surprise of 0.4%, on average. Shares of TXRH have surged 58.7% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS indicates a rise of 15.6% and 39.2%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 at present. The company has a trailing four-quarter earnings surprise of 21.6%, on average. Shares of LOCO have increased 44.3% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 2% and 12.7% growth, respectively, from the year-ago period’s levels.
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LOVE's Shares Rise on Narrower-Than-Expected Loss in Q2
The Lovesac Company (LOVE - Free Report) reported better-than-expected results in second-quarter fiscal 2025 (ended Aug. 4, 2024), with earnings and net sales beating the Zacks Consensus Estimate. On a year-over-year basis, net sales increased and the adjusted loss widened.
The company's quarterly results benefited from the net addition of 31 new showrooms and a 7% increase in internet sales. This was partially offset by a 5.4% decline in omnichannel comparable net sales. During the quarter, the company opened 10 new showrooms and closed two.
An increase in outbound transportation and warehousing costs accompanied by a rise in overhead expenses, payroll, rent and selling-related expenses marred the bottom line.
The company saw a strong reception to recent product innovations, including the PillowSac Accent Chair and the newly-launched AnyTable. LOVE plans to build on this momentum by expanding its offerings. While it is cautiously planning for the second half of the year due to industry challenges, Lovesac believes it is well-positioned to meet short- and long-term goals.
Following the earnings release, Lovesac’s shares appreciated 21.3% during trading hours on Sept. 12, 2024.
Inside the Numbers
In the fiscal second quarter, the company reported an adjusted loss of 38 cents per share, narrower than the Zacks Consensus Estimate of loss of 46 cents. Lovesac reported an adjusted loss per share of 4 cents in the prior-year quarter.
The Lovesac Company Price, Consensus and EPS Surprise
The Lovesac Company price-consensus-eps-surprise-chart | The Lovesac Company Quote
Net sales of $156.6 million topped the consensus estimate of $154 million by 1.7%. The metric increased 1.3% from the year-ago quarter’s figure.
Operating Highlights of LOVE
The gross margin contracted 80 basis points (bps) year over year to 59%, mainly due to a 110 bps decline in product margin from higher promotional discounting. This was partly offset by an 80-bps decline in inbound transportation costs, while outbound transportation and warehousing costs expanded by 50 bps.
Selling, general and administrative expenses, as a percentage of net sales, increased 570 bps to 47% year over year. Advertising & marketing expenses, as a percentage of net sales, depreciated by 230 bps year over year to 14.9%.
Adjusted EBITDA was $1.5 million, down from $5.3 million reported a year ago.
Lovesac’s Financial Highlights
As of Aug. 4, 2024, Lovesac had cash and cash equivalents of $72.1 million compared with $87 million at the end of fiscal 2024.
Net cash used in operating activities totaled $0.8 million as of second-quarter fiscal 2025 end against net cash provided of $27.3 million reported in the year-ago comparable period.
LOVE’s Q3 Guidance
For third-quarter fiscal 2025, LOVE expects net sales to be in the range of $152-$160 million and adjusted EBITDA loss in the range of $3 to income of $1 million. In third-quarter fiscal 2024, it reported net sales of $154 million and an adjusted EBITDA of $2.5 million.
The company expects net loss to be in the range of $4-$8 million. In the year-ago period, it reported a net loss of $2.3 million.
LOVE’s Fiscal 2025 Guidance Updated
For the fiscal 2025, the company now expects net sales to be in the range of $700-$735 million compared with $700-$770 million expected earlier.
Adjusted EBITDA is now expected to be in the range of $52-$59 million compared with the prior projection of $46-$60 million. Net income is expected to be in the band of $17-$21 million, down from $18-$27 million expected earlier.
Diluted income per common share is expected to be in the band of $1.01- $1.26, down from $1.06-$1.59 expected earlier, on approximately 16.9 million estimated diluted weighted average shares outstanding.
Zacks Rank & Key Picks
Lovesac currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector.
Abercrombie & Fitch Co. (ANF - Free Report) flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 28%, on average. Shares of ANF have surged 168.3% in the past year.
The Zacks Consensus Estimate for ANF’s fiscal 2024 sales and earnings per share (EPS) indicates an increase of 12.6% and 61%, respectively, from the year-ago period’s levels.
Texas Roadhouse, Inc. (TXRH - Free Report) currently carries a Zacks Rank #2 (Buy). TXRH has a trailing four-quarter earnings surprise of 0.4%, on average. Shares of TXRH have surged 58.7% in the past year.
The Zacks Consensus Estimate for TXRH’s 2024 sales and EPS indicates a rise of 15.6% and 39.2%, respectively, from the year-ago period’s levels.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 at present. The company has a trailing four-quarter earnings surprise of 21.6%, on average. Shares of LOCO have increased 44.3% in the past year.
The Zacks Consensus Estimate for LOCO’s 2024 sales and EPS indicates 2% and 12.7% growth, respectively, from the year-ago period’s levels.