The Lovesac Company (NASDAQ: LOVE) stock dropped 25% after the home furnishing brand announced its first quarter financial results for 2023. Net sales in the first-quarter increased by 56% while Comparable Sales grew by 42.2%. However, year-over-year net income decreased from $2.1 million to $1.9 million.
The $6.4 million Adjusted EBITDA the company reported this fiscal year was an increase from $5.3 million.
How does top management feel?
The company’s Chief Executive Officer, Shawn Nelson, sate:
These first quarter results build on our track record of consistent strong performance, marking our 16th consecutive quarter of at least 25% net sales growth, and establishing a nearly 50% net sales CAGR since our IPO four years ago. Key competitive advantages underpin this outperformance: a unique product that drives intense loyalty and word-of-mouth transmission.
Mr. Nelson claimed that the company’s strong performance in Q1 of the 2023 fiscal year surpassed financial expectations both at the bottom and top lines and went against the macro headwinds that negatively impacted the broader economy as well as the consumer.
The CEO continued:
Lovesac’s totally direct, omni-channel model will allow us to continue to gain share within the highly fragmented $46 billion couch and home audio markets where even with our sustained high-growth we have only garnered a 1-2% market share thus far.
As Lovesac’s financial results show, the company was rapidly growing and innovating before the Coronavirus pandemic, during the ordeal and continues growing to date. The CEO claims that the company’s robust momentum was never just driven by a category tailwind.
Financial highlights
As mentioned earlier, net sales in the first quarter rose 56% and was driven by rapid growth across all sectors. Showroom net sales, including mobile concierges and kiosks, increased by about 65.9%. There was a 24.1% increase in internet net sales.
Lovesac recorded a $20 million increase in gross profit to $66.1 million, representing a 43.5% increase in this quarter compared to the same quarter of the previous fiscal year.
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