Lovesac Reports 2.4% Increase in Net Sales to $697.1 Million for Fiscal 2026

The Lovesac Company reported a modest increase in net sales for fiscal 2026, reaching $697.1 million, a 2.4% rise from $680.6 million in the previous fiscal year. This growth was primarily driven by a 9.9% increase in showroom sales, which accounted for 67.1% of total net sales, while internet sales saw a slight decline of 2.0%. The company experienced a notable shift in customer dynamics, with repeat customers increasing by 8.8%, although new customer acquisitions fell by 5.6%. The overall gross profit decreased by 1.2% to $393.2 million, resulting in a gross margin of 56.4%, down from 58.5% in fiscal 2025, largely due to rising transportation and tariff costs.

In terms of operational changes, Lovesac expanded its showroom presence, opening 28 new locations while closing seven, bringing the total to 278 showrooms across 45 states. The company also launched new products, including the AnyTable and the Sactionals Reclining Seat, which are designed to enhance customer experience and product adaptability. However, the company faced challenges with its "Other" sales category, which includes pop-up shops and barter transactions, experiencing a significant decline of 37.1% due to the discontinuation of its partnership with Best Buy and a strategic decision to halt barter transactions.

The company's selling, general, and administrative expenses increased slightly to $284.0 million, primarily driven by higher payroll costs and rent, but as a percentage of net sales, these expenses decreased to 40.7% from 41.4% in the previous year. Advertising and marketing expenses remained stable, accounting for 12.7% of net sales. Despite these increases, the company reported a net income of $4.1 million, a significant decrease from $11.6 million in fiscal 2025, reflecting the impact of rising costs and a competitive retail environment.

Looking ahead, Lovesac aims to continue its growth strategy by enhancing its omni-channel sales approach and expanding its product offerings. The company plans to invest in domestic manufacturing capabilities to mitigate supply chain risks and improve operational efficiency. However, it acknowledges potential challenges from macroeconomic factors, including inflation and consumer spending patterns, which could impact future performance. The company remains focused on leveraging its unique product offerings and customer engagement strategies to drive sales and profitability in the coming fiscal year.