Lovesac posts record results
STAMFORD — A year ago, furniture maker Lovesac had temporarily closed its showrooms and announced it would cut most of its workforce in response to the onset of the coronavirus pandemic.
Since then, its prospects have improved dramatically as it has benefited from a boom in furniture sales driven by the increased time millions of Americans are spending at home during the pandemic. The Stamford-based company has re-opened its stores and filled many of the positions affected by the downsizing, as it has markedly grown its customer base.
Highlighting its comeback, Lovesac reported Wednesday company-record financial results for its past quarter and fiscal year. Reflecting a surge during the past holiday season, it recorded sales of about $130 million for the quarter ending Jan. 31, up 41 percent year over year. For its fiscal year ending Jan. 31, its sales reached nearly $321 million.
“Despite the challenging backdrop, fiscal 2021 was a landmark year for Lovesac,” Shawn Nelson, Lovesac founder and CEO, said in an earnings call with investment analysts. “We could not have achieved this without the grit and determination of our team. The COVID pandemic illustrated even more clearly the strength of our people, brand, business model and operating platform.”
For its past fiscal year, it recorded a profit of nearly $15 million, compared with a loss of about $15 million in its previous fiscal year.
The company was “perhaps more profitable than we would have intended in our long-term plans,” Nelson said. “We intend to continue to growth the business profitably. However, many investments in infrastructure and headcount were put off and will be made in fiscal year 2022 to support our outlook for long-term growth.”
Driving the growth, Lovesac’s quarterly internet sales jumped 86
percent year over year.
“Most of our sales are effectively internet sales — just consummated at retail locations,” Nelson said in a recent interview. “Customers have done their research online and understand generally what they’re looking for.”
At the same time, inperson sales remain crucial. Today, all of the company’s stores have re-opened for walk-in business. “Comparable showroom sales” in the past quarter rose 23 percent year over year.
Within Connecticut, Lovesac has showrooms in downtown Greenwich, downtown Westport, at Danbury Fair mall and in Blue Back Square in West Hartford.
The company operates 108 showrooms in total, compared with 91 a year ago.
In the current fiscal year, the company plans to open more than 20 showrooms, with four having debuted in February.
“Our showrooms serve as great amplifiers for our brand,” Jack Krause, Lovesac’s president and chief operating officer, said on the earnings call.
A signature line of couches — which are known as Sactionals — account for about 85 percent of sales, the company estimates. The seating arrangements can be reconfigured, the covers are washable, and the covers and seat filling are changeable.
Another mainstay are Sacs, which are beanbag seats filled with Durafoam and the source of the company’s name.
Investment analysts on Wednesday’s call praised Lovesac’s results, although the overall market response was less enthusiastic. Lovesac shares were trading early Wednesday afternoon at about $62, down 5 percent from Tuesday. In comparison, its shares hit a 52-week high of about $72 and a 52-week low of around $6.
Widespread growth
Lovesac’s momentum aligns with industry-wide growth in recent months.
Furniture retailers saw their sales for Nov. 27 to Nov. 30, 2020 — from Black Friday to Cyber Monday — increase an average of 30 percent year over year, according to a survey conducted by the Home Furnishings Association and investment bank and institutional-securities firm Piper Sandler.
Danbury-headquartered Ethan Allen is another furniture retailer charting major growth. The company has opened six design centers in the past year, including one last month in Portland, Ore.
“I am confident that our focus on providing relevant product offerings, maintaining and expanding manufacturing in North America and continually evolving our design center concept will continue to help us provide excellent service and will propel us to further success in 2021 and beyond,” Farooq Kathwari, Ethan Allen’s CEO and chairman said in a March 31 statement.
Other firms are also expanding. Safavieh, which bought Stamford Town Center last October, opened a showroom in the mall a few weeks after the acquisition. Eight miles east in Norwalk, SoNo Collection mall last year welcomed furniture sellers Arhaus and EQ3, while Lillian August is also planning to open a store there.
Lovesac officials believe, however, that there is enough room in the market for multiple retailers.
“Even with our significant growth, we estimate we still have only captured approximately 2 percent of the couch market,” Nelson said on the earnings call.