New Haven Register (New Haven, CT)
Furniture-maker Lovesac sees ‘huge gains’ in 2021
STAMFORD — Nearly a year and a half ago, furniture maker Lovesac temporarily closed its showrooms in response to the first wave of the COVID-19 pandemic.
Today, all of its stores have reopened, and they are driving double-digit revenue growth for the Stamford-based company.
Highlighting that rebound, Lovesac reported Thursday sales of about $102 million for the quarter ending Aug. 1, up 65 percent year over year. Boosted by that growth, the company recorded a profit of $8.4 million, compared with a loss of $1.1 million in the same quarter last year.
Following the release of the quarterly results, Lovesac shares closed Thursday at about $63, a 24 percent jump from Wednesday. In comparison, its shares hit a 52week high of about $96 and a 52-week low of around $23.
“We are very pleased with our second-quarter results, as the momentum from Q1 continued into Q2, and we achieved our highest quarterly growth rate ever recorded as a public company,” Shawn Nelson, Lovesac’s founder and CEO, said in an earnings call with investment analysts. “Bottom line, we believe our continued success stems from the huge gains we are making as a brand in terms of awareness and conversion while actively managing the tight supply-chain environment.”
Showroom sales rocketed 387 percent year over year, reflecting the full openings of all stores in the past quarter compared with their limited operations a year ago because of the impact of COVID-19.
Lovesac opened seven showrooms in the past quarter and plans to make 28 openings this year. It has a total of 123 locations, compared with 97 a year ago. In Connecticut, it has showrooms in downtown Greenwich, downtown Westport, downtown West Hartford and at Danbury Fair mall.
Also in the past quarter, the company saw a 36 percent decrease in internet sales. The decline was “reflective of channel shift back to showrooms that are now fully open,” Nelson said. Digital platforms remain, however, a major source of income — with the company’s initiatives including a temporary ‘pop-up shop’ on costco.com.
The rebound of Lovesac underscores the furniture industry’s growth during the pandemic, as the sector has benefited from the spike in demand generated by the residential real estate market boom in much of the country and the significantly greater amounts of time that millions of Americans have spent at home in the past year and a half.
But the pandemic has also disrupted supply chains. Lovesac officials said their firm has made a number of adjustments to mitigate rising freight costs that have resulted from factors including container shortages.
“We have deliberately and strategically built a geographically diverse supply chain with manufacturing in Malaysia, Vietnam, along with China and Indonesia, as well as the U.S., to create redundancies that we view as critical to ensure short lead times and strong in-stock” positions, Nelson said.
Most of Lovesac’s sales come from its signature line of couches, which are known as Sactionals. The seating arrangements can be reconfigured, the covers are washable and the covers and seat filling are changeable.
Another major seller are Sacs, which are beanbag seats filled with Durafoam and the source of the company’s name.
The company held its initial public offering in 2018, 20 years after its founding by Nelson.
“We’re attracting a lot of new customers across the board, but that core young parent ‘want-itall’ is critical to our business,” President and Chief Operating Officer Jack Krause said on the call. “We’re doing very well with that group. Our awareness is growing dramatically. The young parent want-it-alls are part of the older Millennials who are engaging in either looking to buy a home or expanding their family.”
Executives said they have seen robust demand in the current quarter.
“We had a very strong Labor Day weekend — actually stronger than what we had projected internally to happen,” Executive Vice President and Chief Financial Officer Donna Dellomo said on the call. “We had a strong promotion that we ran, I think, for four days over Labor Day weekend. It was very well received, and that could be because we’ve pulled back on discounting over the last handful of months.”