Furniture company Lovesac (NASDAQ: LOVE) fell short of the markets revenue expectations in Q3 CY2025, with sales flat year on year at $150.2 million. Next quarter’s revenue guidance of $246 million underwhelmed, coming in 5.7% below analysts’ estimates. Its GAAP loss of $0.72 per share was 4.6% below analysts’ consensus estimates.
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Lovesac (LOVE) Q3 CY2025 Highlights:
- Revenue: $150.2 million vs analyst estimates of $154 million (flat year on year, 2.5% miss)
- EPS (GAAP): -$0.72 vs analyst expectations of -$0.69 (4.6% miss)
- Adjusted EBITDA: -$5.97 million (-4% margin, 323% year-on-year decline)
- Revenue Guidance for Q4 CY2025 is $246 million at the midpoint, below analyst estimates of $260.9 million
- EPS (GAAP) guidance for the full year is $0.32 at the midpoint, missing analyst estimates by 52.9%
- EBITDA guidance for the full year is $40 million at the midpoint, below analyst estimates of $44.6 million
- Operating Margin: -10.5%, down from -5.2% in the same quarter last year
- Free Cash Flow was -$10.18 million compared to -$6.59 million in the same quarter last year
- Market Capitalization: $200.7 million
Shawn Nelson, Chief Executive Officer, stated, “Our focus on secular growth initiatives such as new products and the beginnings of a major evolution in our marketing, enabled slight year-over-year growth in net sales in the third quarter, reflecting market share gains as compared to our category. As we transitioned into our fiscal fourth quarter, we adjusted our marketing strategies and have seen solid growth quarter-to-date, inclusive of the Black Friday and Cyber Monday holiday events. Lovesac is inventing and investing steadily, even through these tough times for our category, while balancing cash flow generation and profitability. Our tall ambitions begin with reaching our goal of three million Lovesac households by 2030: Households that will have ever-more Designed For Life products across ever-more rooms of the house. We are totally focused and committed to this goal that we believe can produce meaningful growth over the next few years—regardless of what happens in the macro environment.”
Company Overview
Known for its oversized, premium beanbags, Lovesac (NASDAQ: LOVE) is a specialty furniture brand selling modular furniture.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Lovesac grew its sales at a 19.5% annual rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Lovesac’s recent performance shows its demand has slowed as its revenue was flat over the last two years. 
This quarter, Lovesac’s $150.2 million of revenue was flat year on year, falling short of Wall Street’s estimates. Company management is currently guiding for a 1.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 7.7% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Lovesac’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 1% over the last two years. This profitability was inadequate for a consumer discretionary business and caused by its suboptimal cost structure.
In Q3, Lovesac generated an operating margin profit margin of negative 10.5%, down 5.4 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Lovesac’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q3, Lovesac reported EPS of negative $0.72, down from negative $0.32 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Lovesac’s full-year EPS of $0.22 to grow 6.2%.
Key Takeaways from Lovesac’s Q3 Results
We struggled to find many positives in these results. Its full-year EBITDA guidance missed and its full-year revenue guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 6.4% to $12.86 immediately following the results.
Lovesac didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
