Furniture company Lovesac (NASDAQ: LOVE) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 2.5% year on year to $160.5 million. The company expects next quarter’s revenue to be around $156 million, close to analysts’ estimates. Its GAAP loss of $0.45 per share was 36.2% above analysts’ consensus estimates.
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Lovesac (LOVE) Q2 CY2025 Highlights:
- Revenue: $160.5 million vs analyst estimates of $160.3 million (2.5% year-on-year growth, in line)
- EPS (GAAP): -$0.45 vs analyst estimates of -$0.71 (36.2% beat)
- Adjusted EBITDA: $837,000 vs analyst estimates of -$5.43 million (0.5% margin, significant beat)
- The company reconfirmed its revenue guidance for the full year of $725 million at the midpoint
- EPS (GAAP) guidance for the full year is $0.79 at the midpoint, missing analyst estimates by 21.6%
- EBITDA guidance for the full year is $48.5 million at the midpoint, below analyst estimates of $50.18 million
- Operating Margin: -5.5%, in line with the same quarter last year
- Free Cash Flow Margin: 4.9%, up from 0.1% in the same quarter last year
- Market Capitalization: $301.9 million
Shawn Nelson, Chief Executive Officer, stated, “We're pleased to have delivered another quarter of market share gains underpinned by our secular growth initiatives across Designed for Life product platforms and efficient customer acquisition engines. Our operational discipline continues to drive operating expense leverage even as we maintain an investment stance for innovation and long-term growth. Our financial and operational performance, despite ongoing category headwinds, further bolsters our confidence as we move forward and transition from a product-focused company to a true brand. With this as our focus, we have refined our strategic roadmap and are evolving our brand positioning to support our growth into a multi-faceted home brand with an organized and prioritized product hierarchy and merchandising strategy. Looking ahead, while we balance near-term industry dynamics amidst the evolving tariff landscape with our ongoing secular tailwinds, we remain confident in our objective to deliver meaningful long-term value as we aim to build the most loved home brand in America.”
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 performance is an indicator of 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 an impressive 21.5% compounded annual growth rate. Its growth beat the average consumer discretionary company and shows its offerings resonate with customers.
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 significantly as its annualized revenue growth of 1.6% over the last two years was well below its five-year trend. 
This quarter, Lovesac grew its revenue by 2.5% year on year, and its $160.5 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 4.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months. Although this projection suggests its newer products and services will fuel better top-line performance, it is still below average for the sector.
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Operating Margin
Lovesac’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 1.9% over the last two years. This profitability was inadequate for a consumer discretionary business and caused by its suboptimal cost structure.
In Q2, Lovesac generated an operating margin profit margin of negative 5.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
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 Q2, Lovesac reported EPS of negative $0.45, down from negative $0.38 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Lovesac’s full-year EPS of $0.63 to grow 23.4%.
Key Takeaways from Lovesac’s Q2 Results
It was good to see Lovesac beat analysts’ EBITDA expectations this quarter on in-line revenue. On the other hand, its EBITDA guidance for next quarter missed and its full-year EBITDA guidance also fell short of Wall Street’s estimates. The outlook is weighing on shares, and the stock traded down 9.5% to $18.80 immediately following the results.
Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
