Lovesac Reports Slight Increase in Net Sales and Significant Gross Profit Growth in Q2 Fiscal 2026

The Lovesac Company reported a slight increase in net sales for the second quarter of fiscal 2026, reaching $161.2 million, up from $160.5 million in the same period last year. The company achieved a gross profit of $110.3 million, representing a significant increase of 21.7% compared to the prior year, with gross margin improving to 68.4% from 56.4%. This improvement was largely attributed to the recovery of IEEPA tariffs, which contributed 1,240 basis points to gross margin, and a 250 basis point increase in product margin due to price adjustments. However, net income for the quarter was $7.4 million, a turnaround from a loss of $6.7 million in the previous year.

In the first half of fiscal 2026, Lovesac's net sales totaled $299.4 million, a marginal increase from $298.9 million in the same period last year. The company reported a net loss of $3.7 million, significantly improved from a loss of $17.5 million in the prior year. The increase in sales was driven by new showroom openings, although the closure of Best Buy shop-in-shop locations and a decrease in omni-channel comparable sales impacted overall performance. The company operated 284 showrooms as of August 2, 2026, an increase from 270 showrooms a year earlier.

Operationally, Lovesac's showroom sales increased by 4.6% year-over-year, while internet sales decreased by 5.3%. The company also noted a decline in new and repeat customer counts, which fell by 1.9% and 0.5%, respectively. The decrease in customer counts was contrasted with a prior year increase of 8.6% in repeat customers. The company continues to focus on enhancing its omni-channel strategy, which includes a mix of showrooms, e-commerce, and pop-up shops.

Lovesac's strategic initiatives include ongoing investments in product innovation and showroom expansion, with capital expenditures amounting to $12.2 million in the first half of the fiscal year. The company has also implemented a share repurchase program, with approximately $46.9 million remaining available for future purchases. Looking ahead, Lovesac anticipates continued challenges from macroeconomic factors such as inflation and consumer spending patterns, but remains optimistic about its growth trajectory and the potential benefits from its recent tariff refunds and product innovations.