LOVE - Earnings call 3 2024 | The Lovesac Company

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Operator

Greetings. Welcome to The Lovesac's Third Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.At this time, I'll turn the conference over to Elizabeth Schnoerr. Ms. Schnoerr, you may now begin.

Elizabeth Schnoerr

you. Thank everyone. morning, Good like the regarding President Shawn and and Officer.Before financial will I Chief on of that Officer; information performance. events the Keith Chief and Mary Financial discussed would started, get Fox, Chief forward-looking we remind call me you Nelson, some statements is include Executive Siegner, to future With Operating future Officer; our our statements our future plans and and about projections prospects. include These financial expectations, statements. those set Actual forth results may materially such differ from in

these uncertainties, and of review should SEC, filings includes company's discussion release. the a For risks which you the with today's press

You to would a GAAP should financial Executive be results. financial Lovesac the statements the Officer press financial will comparable directly based in information undertake from as EBITDA. substitute include as non-GAAP to EBITDA update most events. Chief provided make future should today over of A assumptions on to Nelson, required turn I reconciliation in not such GAAP not that Shawn been isolation in and addition release.Now measure measure non-GAAP including adjusted this no our obligation considered by on rely as like supplemental our we on as or predictions to we and except statements discussion of Company. for and forward-looking has forward-looking call our as measures to non-GAAP them, The and of law.Our are These measures, applicable call financial beliefs All today, financial of

Shawn Nelson

the detail.Turning to X with Then our providing up a deliver accomplishments changed on a related results. our our quarter our our progress the and finishing and Lovesac more on Not Keith sheet. will strong with operational for few we by and ago. start CFO, against continues update and thank COO, call our highlights review joining Fox, of very you lot results you us finally, and you by the our Thank third reviewing outperformance a I'll you, to this spoke And briefly our Liz. outlook outlook. weeks President an morning, made we strategic other items today. off Mary category to Siegner, our fiscal XXXX, update of everyone, backed Good in initiatives. balance financial will has financial results strong highlights since

same bottom headline furniture high to For estimate that backdrop be category. third the macro which The that macro and were pressure in third teens digits as caution and double-digit quarter, double To the third outlook line on in grew negative remains category, a Lingering on X. top largely quarter. uncertainty was down on pleased with call in line clear, we're our is second sales we the quarter confirm to provided to quarter the last the results November leads net month. consumer mid

However, and deliver. our playbook also continues to remains largely unchanged

which business. in basis. SG&A how expansion third the compared improved $XXX and For X-year for manage Our as profitability specifically, distinguish quarter, were million, love we metric and led versus Designed to that's year of called innovation, up Life omnichannel unique platforms, customer evaluate to that $X prior $X to despite our these growth innovation compelling press year progress comparable XX% omnichannel for in million execute marketing a last disruptive brand more engender also and quarter, margin materially period. was year, impactful detail unique total to key our in net Adjusted negative substantial to continue million prior agenda, moment. abatement growth from of a to highly quarter marketing X% the in reached loyalty.More in and to for net of strategies Lovesac fiscal footprint compared net third on the and the XXXX. QX losses improved physical Omnichannel footprint the related discuss XX.X% across omnichannel and loss productive a positive $X.X period sales including delivered sales the a a million compared order and deleverage $X.X We a expected, in Mary product EBITDA priorities, million gross restatement to and expansion, nonrecurring Net our expenses our experience continues release.The all team are delivery our to efficiencies. out will the

discretionary final remained As the quarter which like holiday weeks, we and, following: selling category in macro of note environment the the includes I'd has challenging. the the year, look to home to turn, all-important the

strong As last you we Lovesac said margins account into the that to Monday Week in the gross planning discount on and adapted as continued was to Friday category environment Taking Black near term. happy recovery period Friday over promotional boot. Cyber plans, meaningful and the has our yes, year.But any increasing with last delivering behind distinctive for our And Black and competitive in and slightly not we Cyber call, and discussed to category. expected, are last that with more the as we we say the and events relevant grow marketing than growth I'm all with us, the outperform month,

the performance. to to guidance full even million, nearly standout now represents high sales result, our truly growth, of $XXX year, XXrd are range, As single a we $XXX million year week a impact this excluding double-digit the further net tightening which

not XXXX provide today. guidance for We fiscal to are ready

future. strategies, to the with quarter into continue which the thereby a competition. our new progress our are we are in and making our line are we consumer to investments foundational against with once which were deliver in insights However, with summary, areas against demand growth focus expenses of expanding we flywheel, our last key driving ahead drive new along that operational fortify product balanced The disciplined market and technology, can and innovation investments and like believe prudently well expectations on leadership, efficiency proactive again in will results we to products third growth.In control pleased profitable

to especially time critical Finally, the Lovesac I of strategies of tireless year. their entire execution this team our for of during thank our and delivery want goals,

we enables innovate and model our customer to outstanding and but so is an Our it enjoy in great invest season holiday to us disruptive experience ensure reason this growing business, family steadily cover are Mary? and people detail. I in that over to Lovesac grow, Mary as a to our who is continue priorities more the thrive, it together.With hand our that, strategic will progress

Mary Fox

and Thank morning, everyone. you, Shawn, good

discussed, unique model. omnichannel growth As quarter by X sales our growth XX.X%, our driven Shawn again business with industry-leading of reflected results

versus XXX% pleased full our increased this and time basis, basis a on outperformance year Black Cyber results. from early are strength adjusted in our continued very from we through has margin points has levels, EBITDA year Importantly, with our with pre-pandemic Friday X the during XXX same over up Cyber are Category last demand Monday, quarter sales period. and

growth X unique homes the this Cyber investment furniture part week across highlights the within in largest peak and highlights coupled sales operational now that that brand progress strategies our to our our continue strategy in fuel to the flywheel in is few I and sales from Some our a just category share clear in our having largest history. We is our to the quarter in days with unmatched to to is include a business. in will category, allows X building business believe in our growth customers' excellence for of our execution the us against and operational delivery team's X. consistent days.Our drive due

product Firstly, starting innovation. with

designer driver well we're now overall I outperformance.As ambitious, influencers which well our distribution X, by Angled world. Digest and performance launched we quarter of to partnered Architectural as it is our continued category happy well the very media impact base launch Glamour Digest. Vogue as Side Side Side, were such platform, the meaningful we consumer expanded above newly our a is how available of The to was event course, outlets and as as and before, Angled and of is shared attended with as and e-comm even emphasizing Architectural growth and which Angled expectations, with our showroom During across original feedback. our

model. In launch. will performance it's very including strong gain happy our reinforce with and Angled this becoming market generating partnership also of brand short, Nordstrom style early develop we our launching the be approaching after of through footsac on to collaborations holidays, all grow, and will that a awareness and a Architectural was share Nordstrom featured X media, introductions the customer-centric #X further the by Swarovski continue event empowering some billion that addition as of appreciation In demonstrate collaborations to as which continue over paid Lovesac's and strength product new holiday.We success the a months. only business to the nordstrom.com within with we're choice since Digest seen We're Side to into impressions, surrounded we've few

model platform. This driven is digital experience. of our by combination our physical omnichannel points a and Our touch

outperformance. and we last e-commerce quarter, presence meaningfully our With and channel opened increased category growth continued Best increased regard to last in shop-in-shops. third to driven shop-in-shop Best year.Our partnership, performance show for versus quarter XX.X% contributing were sales During X, up our Buy to showrooms strong XX% XX year Buy by XX and

of technology experience We omnichannel ease and customer is the the and new customer customer to strong improve website continue continuously we the our our for been value we security enhancements. us shopping touchpoint with efficient with brand platform customers' made entering into as lifetime lies on. across which familiarity, me to interaction improved customer improve we've cost center including improvements in customer Strong backdrop marketing before shopping what to our post-purchase feedback highlights model significant website omnichannel our change.Let supports satisfaction brand rebuy journey, touchpoints category the investments of awareness, monitor ratio. experience holiday experience. continues e-commerce agile effective code the ecosystem. to to continuously to to scores mix of and overall ultimately, and drive continues experience.Third love collaboration share and our Overall, Our the and enable updates a few as freeze, our be working acquisition customer configurators our marketing ecosystem to At acquisition, driver

awareness, and upfronts us enabled For efficiency reach Live improvement. sports increasing are to and key reach drive targeting achieving improve simultaneously. broadly, of example also this a more

hopefully, tested all that newest strongly commercial you metrics. all on our subject, seen While have very this across

with Night have which improvements and programs program partnerships ad with along million reinforce YouTube brand had over Saturday We garnered his subscribers. our optimization intro off million she love Charli We on success when these just followers on Football collaborated And our with special know, Pugh impressions continue X Lovesac you and on product a exposure And over the X million collaborations work examples TikTok social cost has couch. overall requested. resonance referenced to marketing closely as a Justin the few XX are straight sac the stickiness. our her customers. XXX of not and SEM strong campaigns team rates our digital delivered and for D'Amelio and in mail acquisition, that are more conversion increasing building posted be value us with forgotten, driven customer drove direct And of than from brand improving not strong of culture. home to our doing, lifetime she and new some aided once to ROIs but ROI.We've and again social metrics, scrutinize only

and made XXXX. Life really disciplined Designed gadgets we a the by StealthTech named gadgets of reinforcing For list, its investments for couch right, finally, best that were products that technology.And excited Esquire is infrastructure Yes, powered best one to Lastly, see strength XX efficiencies. of the

This quarter scale the of X, like all our of POS customer completed and through as investments system, and business new modern speed and term. in to transactions of technology development experience By During in We Link our Pay the research rollout we capability. the rollout long for payment PredictSpring, options new touchpoints. continue and we unlocks enhances our national make

customer as of Our inventory make previously the we quarter, we circular back are experience. in expected have continue on And quick satisfaction on focus we we to deliver XX% versus by XX% remain stock to and chain, open to supply we operations over last help delivery of year on to inventory our improving our which investments this mentioned productivity as in executional drive units to brand continues effectiveness improvement and box track the improvements last are progress seeing year. stated.As end drive and

in quarter these initiatives, to expect associated as warehousing, see inbound C driving will across strategy, in year continue last the increase during and part capital quarter platform, we an year, and and increase service us customer Investments customer X performance well as to Love in realize points a versus Cyber result which reductions of X. of freight in better in of quarter over serve cost our saw customers impressive quarter and working has X improvements in over satisfaction our sales X allowed service in as last Gladly, same scores As we X. service to

third we We quarter team competitors.In structure excellence, summary, operational of on to market I operational Shawn's track deliver our our we record pleased cost ahead will our are laser-focused gains. members our and gratitude continue the want manage consistent amazing as performance for and drive and of for echo are operational helping allocation these and we financial to outcomes. with our capital and continued to share results

market our productive doing all to pass investments the third position, this advancing thing are our review to year, holiday For Keith the improved quarter. ready will that gains, for the locations, and to the is them our our innovation go-to-market forward closing our footprints built important weeks and look while results fourth agenda.I out highly come, having is ones Keith? one with for we share and on and physical outlook big covered we that expanded call digital our just of fiscal our that certain infrastructure made to now over quarter

Keith Siegner

Thanks, Mary.

manage the quarter, Angled point-of-sale jump $XX compared by period. the with anniversary sales the driven prior $XX.X fiscal related in comparable Net in was increase an or launch of and quarter, increase growth sales a by third the to million what for was to showroom omnichannel in in showrooms. Side.Showroom to year to net and with the increased in quarter by as transactions our we X% $XX.X higher the driven third review 'XX. followed the third demand-based prior of noise third more such $X.X million discounting aligned new business. notice to sales It 'XX, comparable quarter, increased financial driven of as increased as XX.X% shop-in-shop net metrics past, right provided with projected quick million in principally net with and quarter comparable million new of promotional showrooms higher compared that the previously period.You'll outlook net $XX.X Other 'XX to of by sales, the $XX.X how net rest in to the of performance in most XXth of a placed, million growth. in year-over-year orders the for a to part metrics well Let's million to compared been open-box third $XXX our your with and XX.X% fiscal million quarter metric XX this increase our as useful of $X.X web celebration fiscal growth $XX.X sales only not being sales fiscal inventory and This in the beginning the inclusion This omnichannel or compared line replaced as year we of metric, year net in addition XX.X% year or transactions level, prior evaluate open-box sales The we've our a sales and $X.X but in that which to $XX pop-up-shop, shipped the For the quarter operations, for decrease net have inventory or million include transaction prior of ICON million transactions XX.X% should, 'XX.Our Life $X.X with is initiatives. through decreased therefore, million the Designed ESG inventory omnichannel was closely The million the are million due quarter open-box fiscal eliminates lower caused period. the circular in be far third 'XX. to models.Internet the of also

was inventory are increased increase XX%. or distribution increase support margin kick at This materiality selling-related future net XXX $X.X in. the in and forward ICON with that goals $X.X decreased million, primarily same basis fiscal current within as aligns related XX.X% year new principally in of the $X.X half continued decorative other to over primarily in process net basis $X.X second our in XX and versus in million, basis or sustainability of sales third As in transportation operating was financials We quarter, from XX.X% in Sac is infrastructure expenses nonrecurring to points which $X.X in an $XX Employment to tied period for offset in increase an to outbound to other sales driven inbound transactions of year. points warehousing in expenses expenses for with quarter discounting. Lovesac mainly over for prior our sales, compared XX.X% million net efficiently in with the a driven more sales of percent points million investments warehouses in of compared tariff increased The the dollars, in of million of fiscal as our factors of last of includes net the third related million estimate product engage prior of higher $X quarter due sales 'XX as accessories, the and just XXX X,XXX partially for were initiatives higher year in increased we third related sales and million decreased principally year, million to promotional possible.By associated items. in impact our offset miscellaneous increased third category, the in Advertising open-box net decrease should total in may the the of million going points to the due a better return quarter by profits basis $XX.X blankets quarter in optimize fees by and prior we to points restatement increased professional marketing our also pillows, third Sactional quarter investments by expenses Gross operating transportation incremental waning third Advertising driven ensure the quarter the points the quarter. as credit XXX retain XX%, by XX.X% primarily distribution of and card to discussed and deleverage growth to these fees was costs, are $XX.X decrease quarter, loss and hires net expenses.This period. and and marketing $X.X card time. professional million by quarter, the total deleverage the last sales net expense prior in the pressure third Lovesac in deleverage year the product XX.X% related prior partially loss the transactions decrease by increased our and XX% tariff of as approximately in basis the limited seen The credit sales basis fees X,XXX employment costs.SG&A compared credit year costs increased $XX.X was Selling-related 'XX. the quarter. fees.In by to million, and net costs, to card, expenses the in in overhead consisting to prior discussed. expenses increases period.Operating rates.We positive

diluted turn most to Before of the to metrics loss earnings prior comparable our per loss their $X.XX negative each adjusted million we diluted measurements negative directly share net the EBITDA, earlier share $X.XX year to adjusted in quarter terminology was compared this and reconciliation please loss, $X.X the or and share between refer our a release period. loss our diluted GAAP net $X.X in attention issued per million net and morning.Net of per for or

change $X.X to quarter margins.Turning of of the quarter was the EBITDA $X.X income third we the adjusted gross of loss primarily by the benefit recorded 'XX. compared as as by million upside quarter million $X third compared to driven an the to principally $X.X the for ahead our driven million the reduction 'XX, year fiscal an of quarter.Adjusted in was income of of benefit prior net for in EBITDA Adjusted balance EBITDA the expectations, During sheet. loss period. for quarter fiscal in our is The to for million tax third

million projections uniqueness Our our discussed we call. model. on and ability and of have clear Angled exceptionally to business of both This ended We third sales times.We well inventory leveled in availability with our to quarter of delivery this balance equivalents about the no total SKUs, a healthy credit is with borrowings. line as Please earnings refer start press of is in very the as on our quality maintain sheet, our good are our on a with quantity our of for believe million. cash our fourth estimate and we net of the our with inventory million outlook, levels in positions $XX.X addition inclusive cash revolving to out, and million highlight details $XX the as and fiscal industry-leading third merchandise $XXX let's our quarter despite performance.So line We quarter. release and prior Side feel other in-stock and financial the $XXX now of

We to EBITDA This million and of XX%, average XX% fiscal percent income share million to to estimate net million. net of shares percentage million year XX.X% incremental is under $X.XX of period to estimate We per the with XXXX. a SG&A advertising approximately of net XX% full $XX a outstanding.Now $XX $XX between margins to of expect expected sales. be statements. weighted sales to diluted as our XX% expenses of million. restatement million to as merchandising We with includes $X.X financial for and income adjusted This diluted nonrecurring prior be associated $X.XX gross $XX just XX.X includes

the We sales are our for million. net of to to outlook $XXX million year $XXX range tightening full

as with XX% be million $XX sales. income net XX% EBITDA $X.X approximately shares We period approximately sales $X.XX $X.XX to share percentage adjusted $XX million of of weighted between estimate advertising XX.X per of This and estimates of include and million. margins of million expenses estimated and in associated our and We financial of SG&A million merchandising the as a diluted between $XX includes outstanding. average net restatement diluted common gross of percentage a fiscal range XX.X%, We to incremental million These and estimate XX% to $XX XXXX to approximately income million. $X expect statements. net prior nonrecurring of

As third We the typically strong quarter on sales.Quickly week were which pleased for quarter ending $X expected to reported to the in our given in very the build is the our reminder, year balance approximately of cash net a period. position lowest cash million cash is XXrd of fourth contribute such outlook. quarter, balance ahead inventory holiday the a strong sales have the

inventory the 'XX As busy we will than cash we fiscal monetize through season, we balance continue to higher ended end 'XX. a we net fiscal estimate with

strong start to pleased our enviable and I'm in have a competitively growth, focus know reinvestment, superior get third the position. With I about optimizing and quarter holiday ROI-based strengthening the the Lovesac results a is teams, opportunity So gains, the growth an conclusion, The measured an share outlook.Now to by drivers more of results approach excited we're our on with Q&A in our balance early to the ahead back operator sheet, turn session. the foundations, call confident as our new healthy continuation I the underpinned of commitment get put exciting us. in how supported outlook.Market more to I'll to reflected in collective sales

Operator

Canaccord Ripps question Genuity. the today first line is Our Instructions] Maria with [Operator of from

Maria Ripps

in the growth are category for next early and And assumptions pretty consumer it's that demand your can and kind talk expectations recognizing for embedded of too macro next your of not sort to year? guiding you about what year, maybe next you're current but forecast of internal year? sort First,

Mary Fox

you. season. earnings more when obviously, Maria, come X. hear you share lovely and through focused we all-important this Thank we for to quarter the holiday our question. are on as to Yes, from We'll quarter for fully X

our plans way. our as remaining choppy of planned strength we this to environment obviously for that I really outperform terms demonstrate fact challenging, and our will have we year, to brand's grow. year, tremendous next be we results will just the But of the last the macro continues we back goes so to anticipate category, that the just that In much year, think growth.And cash still driving really continue and be really

out believe just I think They in customers Designed week, last Life. the just showroom our For the being they even brand. in love

So will into deep But the to terms we're so planned prudent improve, ones as be chase hope investments starts the it able the focus as obviously, of to on COVID, our in supply to as turn, good. growth. ROI. We that we to obviously advantage a things pragmatic, be with to we of category be then it we'll continue soon our that fastest through And feel be saw chain. the that's will obviously,

Keith Siegner

Yes.

-- Maria, Keith. is this Just

mean, being but a that to me aspects add to covers. because of our really one little to and sides Just and of really, I seats primarily business bit. not sacs model with that's this the alluring of selling approach merchandise-led, various the

so. than we we advantageous. that order in bit upside Our surprise, potentially to position of a a material it ability tiny to if even shipping needed really extend scale if Starting really macro less is weeks, up in a X with was upside surprises macro do to from -- the to could

way is sort to we of I in think sort So retain in of surprises macro unmatched. upside a participate that the ability

Maria Ripps

lot maybe past the the consumer savings on the helpful. versus couple in some it. progress here you've macro to quarters. philosophy sort term passing of to kind then of volumes, expansion over of this drive near a talk that maybe of That's margin secondly, in around margin of especially And on made environment? the preserving Got about Can gross you your

Keith Siegner

one. this off start I'll on Sure.

all guidance earlier. and outbound whole call systemic see the or we whether behind the about of range through on is through that fourth what inbound But is factors we our us across could this, like So pretty becomes as for think some managing say where continued we quarter. good with fourth there's balancing the on promotions, that of this, through rounded there's the freight Then material you financing, it with freight a ineffective we've quarter, would And pricing, type saw quarter we we offer pleased the we've those shocks, settled promotions the it, half year-over-year or healthy walked I costs, sort we third across marketing of it our anything any inbound freight, for barring gave, for act But leverage and host a for think through been let's I gross Lovesac we into credit I feel we that through us.Barring the card. the walked margin really that, into get benefit in plus it's here we're think shock. across and a of call looking always how call potential on that outbound that I this. heavily expansion

I So think together, pretty put any it feel like systemic levels these us, and for again, healthy barring shock. sustainable all

Operator

question Nagel Oppenheimer. Our line from Brian is next of with the

Brian Nagel

Nice season. start the holiday to quarter. Congrats. Nice

Keith Siegner

Thank you.

Brian Nagel

So first I it's to prior of ask, think and a to want a follow-up bit just I question that gross question. the margin

there, that comments in So this backdrop. more the mentioned you too elsewhere heard we've promotional more out of it's that promotional and it's a

for So business at of the you -- strategically, gross guidance promotions? I today more put to -- a you mean, as favorably a that How do driver for guess as have and I results look we margins, what up the QX regard with question I that what the the QX. to has how become? degree your price of much driver much consumers react to of

Shawn Nelson

to And tried begin to nature Look, powerful products. I unique of that you years. very given especially a a here is a that's Yes. very generational we're our We We're think -- means high gross our be with. competitive XX arsenal, trying our for build with forever, trying in as margins the promotions to tool to a business brand brand and build something. strategic We're them. know,

in healthy this purchase. we levels industry, fairly promotions And at leveraged because it's in long a have considered particular, so

them time of But year a when being our exposure uniquely business there holiday It the leverage of the product at that products, foot weighing blessing in a Lovesac, we purchase And them the or extra so that, front to sometimes business people time of is for out frankly, all spend the customers that to the of spikes, shopping category. gifting. psychological before gift lines these holidays, showrooms, those researching we the in even our just competitors, processes on long that not It's is cetera. research they the related in we is by as from the edge to and push value.And kind make over come researching them considered we themselves. comes purchase.And enjoy centers during finally found, purchase. most and are we a curse? make what and season there's actually, and of a traffic, look excuse quite or to sales, this we as the I then know, et a observed decision our kind during most actually, -- as QX, But during they especially where time, the wild observe while

get see manage critical during way in the been so the particular, if that and year the and people because better, of entire to cetera. And might this are we finally have promotions maybe they waiting year, throughout is time have really et that shopping we trigger us pull

think, pretty industry right history, now. least ever a exercised, I particularly season the been, it's at in given promotional disciplined season, recent the maybe because it's most this we've hand So

And so numbers, competitors.And see by are we what can robustly. really are as our any our competing promotions the observed very lower you we by than of

we think in category. probably the strongest growth have I the

to Again, have business or to And and balance leverage promotions the opportunity And thing so generate real-time in right people compete for we further and continue think for category love just fundamentals in cash in to now. to drive strong category the to we languish, the business the should profits, things promotion we and a right of as, trying of brand But is, we're a not nice get that worse business. that have have generate returns chasing well we're trust course, and and balance can investors. the consistency as business if necessary. building chase healthy

Mary Fox

it Shawn, mean I they cross-up come add XX% we've mean, maybe, consumers nearly with what deal, we anyone before bit about Brian, the as lowest a consumers, I that brand, think, of you love but our else. excitement see shared is with doesn't little the us deal into just and to to more. they well that And don't price. the even

being gross good terms kind very So we feel margins in maintained. of of

we've great in ladder seen we that. selective out and doing been on particularly increases places some performance have premium We have our as fills, more from price

are similar our huge you quarter adjusting November, constantly and outperforming from we're substantially through results, the been So at we shares from else, working the and report leases promotional a X We available.And about lower. XX% us. has algorithm through gaining market see we the can have was level everyone saw then yesterday, as that for this Goldman at high Sachs level

again, I feel [indiscernible] we just but the margins. good gross do on So think,

Brian Nagel

question, very That's topic. different follow-up helpful. My

talking comments, ongoing So your of it the you or was the relationship with guess, in were Mary, I I -- think about think highlighting, it's Buy. the Best I success

future guarded have get But products I as Buy you're a we newer there? very always is, the your to expect I So with the partnerships plans. companies question basically by type help like distribution know Best should out Lovesac company

Mary Fox

it's their I where think want is mind Yes. No. where always best-in-class Well, [indiscernible] we on purchase. to really be consumers, before, partners be to

particularly So been partner for home us. Costco no than as Buy to we better advance obviously partner Best Buy, tech, there's incredible with has Best [indiscernible]. one meets an where

of you partners yes, But it.And to gaining to come continued we where to considering, we how our They're really we'll it were at us. and advance consider that relationship are obviously, always be on want or this more whether end and Best the Costco are should we're on and do always we're e-comm more, that the ecosystem, we terms platform, of be Buy and with very happy where and whether minds just with, it best-in-class share. in drive believe other those footsteps it we relationship partnering that to continue So we year. we've that whole ensure very showrooms, Best as the thoughtful find only Brian, strategically, way share should of any in but expect and about be be Buy to to the expand terms then consumers

Operator

line Matt Koranda from of questions MKM. ROTH with are next the The

Matt Koranda

Just wanted to in spin had. general back to the Black Friday, Cyber Monday commentary commentary and the you that holiday

observing. if to of maybe speak consumer wondering that sort could Just behavior you you're

of things in any the but Cyber to willingness Monday kind trend of responding between on record then number to know but just further seen hands promotional curious quantify from be and that Black periods. you're that then sort of a if of you their those you is One Friday, the growth promotions, we've seem of I seeing? quarter-to-date sort mentioned to any sitting there. consumers the that be that's week, said. appreciated folks And X I'm quantification record days a

Mary Fox

question, thank Yes. Matt. No, the for you

thing, lot So share. incredibly of we outperformed happy know reports, a were with from you all our performance first think significantly And we market of we mentioned. as upon X, I Cyber industry category the

very back I month anything up, down. call like their were with think performance. we're the Storage in of some were they evening, ago, Seats in and we strong terms it in we last dynamics, think of drive our you other that had late that AOV. coming all fill, to It trade buy. into back things XXXX, line.I grows up showrooms, consumers said also and just the seeing felt e-commerce as research, a We really what front strong to focused in traffic to this trade great the channels we not being contributed saw in the in was And really saw in of particularly but wanted to well done terms back

[indiscernible] So that continued. continued financing trend

that sure. holding others about, a that Halloween, little we we you out deals people gave with saw For later. think were the we waiting? And and across We I coming bit promised did. the earlier were industry were them best even we deal, with that, talked and to as than we

had.So everything to little reinforcing So performance and bit come, into of we've managing a done, all I see that amazing is productivity, and that brand great record [indiscernible] to a the job. that incredible for our mean, did little great job really an this still performance baked our days of X/X showrooms We're they the to with more amazing coming, results guidance way it obviously to year. could we've it obviously, super but is a we've demand you the was was pent-up a see, see of lot which just obviously spread teams. just happy and are there the and from, those

Matt Koranda

Very And Mary. I wanted just Okay. a to it for helpful, maybe the angle. Keith, different gross then attack from on margin,

quarter, of that So surprise in you the the you commentary had had versus sort upside last an third call.

to about? a for then that upside? the talked in it Just that are margin fourth of the headwind in in product quarter, about the quarter. product Just sub-XX talk And in wondering what fourth baking especially margin, maybe deeper bridge, the drove terms we pertains you as outlook

Keith Siegner

sure. Yes,

So and with maybe from. came starting where upside some third the quarter of that

easing a lapping quarter, put costs you're that on a of year-over-year in Seats, as we've taking the within large upside that Sactionals beneficial. those what of of Mary what's upgrades, together, we're inbound That's some think The pressuring thinking in which whole we're less saying, but package to year. was those seeing of I back and lines some basis as seeing gets the things is add-ons on also along it that's the might broad-based like increase, last have like and really been or increases little products abatement we we've the freight product quarter.When towards has mix bit deceleration on surgical the shift price decent were happening QX. certain why the of price benefit well Lovesoft, been is premium It's a year-over-year terms that more materially fourth of us been versus just got tailwind not the causing been little things expansion. It's of the in really where a more been. Storage about

But margin warehouse so get on was this and for year do what in do get that's leverage. in You'll higher QX forth. things here I a earlier in a for notice gives some gross good gross was we about any when because over higher full think are costs The XXs, margins we we like high level feels systemic sales so a saying we these leverage like why shocks. barring QX basis us than and where like that absolute and us some holistically

good feel trending, is here. way think I we business the the

Operator

Our with Alex is from the Capital. question Craig-Hallum next of Fuhrman line

Alex Fuhrman

touched really so season as here for set a a on new year. on couple far. strong well, and I that the weeks think you you records days times, and holiday Congratulations of during Shawn peak Mary, mentioned

have you volumes any be on done days, handle your when demand little ways But to more? job those orders of to guys operating those And without profitable smooth being bit of peak or any start more it out delays of that peak a a the last you're of would shipping anything if that. incremental capacity? historically costs good there are couple were talk about incur kind near You there really like profitability over you able the years can to

Mary Fox

seeing Alex. Great record Yes. you, those performances. it phenomenal was question. No, yes, And thank

last everything, I think the capacity. team partners, with as had planned and for through for go working our we mile scenarios plan that we'd and different

that therefore, wasn't really costs in. incremental So any came there

about as that we speed So from think that completed and PredictSpring. what to through.I side, the we for plan transaction. that's job about that we smoothing the great piece, second and full talked of rollout, certainly, significantly We did team a think the improving investment,

sale. even customers speed the on customers more, or just web technology able you really to peak really, home often helped showroom when have and a the at those that having has choose transact So days in be close performance, X or then to to X and convert

we of just again, but we was it So to planned. the any as in model, of reinforcement see impact, that of omnichannel the profitability back nothing kind terms

Operator

Forte. Our next question Thomas from is

Thomas Forte

Great.

fourth Shawn, So Keith, and and Mary congrats to a the quarter the start on quarter. strong

X questions. So

your what cash flow free first and free your give on intend the The the you your thoughts can ability do one generate advance is, with thoughts to on as you model? cash updated to you flow

Keith Siegner

Absolutely.

question. appreciate the I and -- So Thanks.

having been and this growth sort is of into pieces foundations to -- the with off But to to of future about with into starting going approach cash been I think the free we are more substantial sales when flow cash-generative transition how cash year. sides for more we've reinvestment and and talking next the provide year we're going it's in get looking a that we how do to lay drivers we appropriately outlook position. this on we're bits which QX flow.So we're basis, anticipate seats about go-forward generating details of a balance for as So for fully sacs, everything little the we in options ending earnings other this

optimization and and are programs time. systems tools put in place other the New being all

future to Shawn has going said, Mary against as those has drivers. are balance We said have sales said, that, as I and

out to of is was I going talking create should flow and top the of goal just translate which to forward, growth that more use the about. lines Our those line growth bottom strategically more balance line cash we business, along can

Thomas Forte

players? share time? point getting think in at Great. do rate. high you I then of over talked low-XX market you wanted same consistently And Shawn, gains. you share teens, changed outperform like the pretty market you've to about to the consistently Do the ability feel the share. talk it's generated about past from market a of your lot you're market percentage source the Or perhaps

Shawn Nelson

of sells who track great that to we try we for a category, And us player know our core But we a and business. couches sure. all. our that's firm stay It's question. and very any hard the observations that's every hard consider for abreast sells therefore, on them couches, competitor, to Yes,

mimic compete and brand, across point, home or price the has massive stretches because of entertainment customer is modularity, I sell the to startups sell we our maybe to -- prop. all we We buckets X who of up a copycat room. with furniture, this of XX-seat and a And but broad and in kind established their there's Sactionals be competition. are pulled piece that that price mall where cetera, with et or with think that excited very I of StealthTech to Middle brands in -- America to we of at brand-new kind think, Sactionals the to basement I with format, high-end try so home real them operating in And that value we've of the in Sactionals put main we otherwise. point through can to the certain their fairly think Lovesac, world, are can -- is main we create.And value remember, there course, our compete this a demographics

all I positive that in we're growth, of obviously market this negative our share market you can share. certainly And most growth environment, them. with think from see of we taking are competitors' And so taking our and as

So dear was marketplace. the and land, based it than over start-up flows last years. the more instance, And much capital number is that that for I think that on of it I think ebbs in health of

board, and the so very in massive incumbents is, category category.Meanwhile, spending there problems of the And very category deal is within to -- growth. And this same that this a fragmented. own necessarily still in the environment awareness, they're chasing some across not low just have we very their in where I it's have think for low known ways hangover with home the aided the we is --

that state share. certainly the in culture, therefore, where we can't that who is flux we based Lovesac's think being does so sac you leveraging of that of for which observe hard that our And consumers in change with these it's we taking It's of I for what from of I years in recently. And brands and awareness. also the market sticky I strength between. from. And the has on home reasons, celebrity think gain are aspect coming things. category, exactly in all all unaided sporadically do these awareness us the many are competitors' think mimic share furniture we buy market I where based hard of in very player brand us name, course, strategy zeitgeist major how on furniture brand.So of down for building establishing and brands to and through pop And things competitors our taking between, give pin influencer, do as It's sometimes been brands because think to brand and the a brand real a

Thomas Forte

Great.

Shawn Nelson

hear from to you. Great

Operator

the our back to of reached We've end floor hand you. for question-and-answer the remarks. Thank closing session. management I'll

Shawn Nelson

wrap-up XXXX. fiscal and for year, again of the and Yes. so reporting forward brand #LovesacFamily of all to XQ look building investors our hold for Thank fiscal Lovesac we We at just conference that you we to the the want call dear. so thank joining much for this

Operator

will This conclude today's conference.

You participation. at for Thank time. now disconnect you this your may your lines

The Lovesac Company (LOVE) 6 Dec 232024 Q3 Earnings call transcript