The Lovesac Company (LOVE) Financial Report Summaries

Risks

• If we fail to manage our growth effectively, our business, financial condition and operating results could be harmed.
• Our business, results of operations and financial condition may be adversely affected by global economic conditions and the effect of economic pressures and other business factors on discretionary consumer spending and consumer preferences.
• Our inability to maintain our brand image, engage new and existing customers and gain market share could have a material adverse effect on our growth strategy and our business, financial condition, operating results and prospects.
• If we fail to acquire new customers, or fail to do so in a cost-effective manner, we may not be able to achieve revenue growth or profitability.
• Our business is highly competitive. Competition presents an ongoing threat to the success of our business.
• We rely on the performance of members of management and highly skilled personnel. If we are unable to attract, develop, motivate and retain well-qualified associates, our business could be harmed.
• System interruptions that impair customer access to our sites or other performance failures in our technology infrastructure could damage our business, reputation and brand, and substantially harm our business and results of operations.
• Unauthorized disclosure of sensitive or confidential information, whether through a breach of our computer system or otherwise, could severely hurt our business.
• A substantial portion of our business is dependent on a small number of suppliers. In some instances, our suppliers are the only source of supply, or one of a limited number of suppliers, used by the Company for materials, components or services. A material disruption or labor shortage at any of our suppliers could impede our ability to meet customer demand, manufacture or deliver our products, and reduce our sales, and/or negatively affect our financial results.
• We are subject to risks associated with our dependence on foreign manufacturing, suppliers and imports for our products.
• Our reliance on suppliers in developing countries increases our risk with respect to available manufacturing infrastructure, labor and employee relations, political and economic stability, corruption, and regulatory, environmental, health and safety compliance.
• Increases in the demand for, or the price of, raw materials used to manufacture our products or other fluctuations in sourcing or distribution costs could increase our costs and negatively impact our gross margin.
• Our lease obligations are substantial and expose us to increased risks.
• We are required to make substantial lease payments under our leases, and any failure to make these lease payments when due would likely harm our business. In addition, many of our leases contain relocation clauses that allow the landlord to move the location of our showrooms. As our leases expire, we may be unable to negotiate acceptable renewals.
• Our business depends on effective marketing and increased customer traffic, and the failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our e-commerce and our omnichannel approach for shopping.
• Our increased use of social media poses reputational risks.
• Our efforts to launch new products may not be successful.
• We may be unable to successfully open and operate new showrooms, which could have a material adverse effect on our business, financial condition, operating results and prospects.
• Our inability to successfully optimize our omni-channel operations and maintain a relevant and reliable omni-channel experience for our customers could have a material adverse effect on our growth strategy and our business, financial condition, operating results and prospects.
• Purchasers of furniture may choose not to shop online, which could affect the growth of our business.
• We depend on our ecommerce business and failure to successfully manage this business and deliver a seamless omni-channel shopping experience to our customers could have an adverse effect on our growth strategy, business, financial condition, operating results and prospects.
• Seasonal trends in our business create variability in our financial and operating results and place increased strain on our operations.
• Significant merchandise returns could harm our business.
• We are subject to risks related to online payment methods.
• We may be unable to accurately forecast our operating results and growth rate, which may adversely affect our reported results and stock price.
• Failure to comply with personal data protection and privacy laws, and other laws and regulations applicable to our business, can adversely affect our business.
• We may be unable to protect our trademarks or brand image, which could harm our business.
• We may not be able to adequately protect our intellectual property rights.
• We may be subject to product liability claims if people or property are harmed by the products we sell.
• Product warranty claims could have a material adverse effect on our business.
• Government regulation of the Internet and ecommerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations.
• Our products or marketing activities may be found to infringe or violate the intellectual property rights of others.
• The trading price of the shares of our common stock has been and is likely to continue to be highly volatile.
• We are and may in the future be subject to securities litigation, which is expensive and could divert management attention.
• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
• Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our Company more difficult, and limit attempts by our stockholders to replace or remove our current management.
• We do not expect to declare any dividends in the foreseeable future.