The Lovesac Company (LOVE) 11 Apr 242024 Q4 Earnings call transcript

Greetings, and welcome to the Lovesac Fourth Quarter Fiscal 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the call over to your host, Caitlin Churchill, Investor Relations for Lovesac. Thank you.

You may begin.

you. Thank everyone. morning, Good the President Shawn and and Officer. Chief on Officer; Keith Chief Mary Financial Fox, Chief call me Nelson, is Executive Siegner, With Operating Officer;

those that I forward-looking projections include regarding and forth expectations, prospects. include future set future and to Before statements discussed our statements would Actual and our differ performance. get the information plans statements. started, remind we materially such results financial you financial some events about of will future from like in may These our

For a should press with which discussion of and uncertainties, today's these the review you risks release. includes filings the company's SEC,

You should required and by of update today, that statements statements we as predictions not make no them, and on except we beliefs of as undertake are forward-looking obligation assumptions as future this to applicable events. on forward-looking on rely All call law. our based

Our in the as such as discussion information EBITDA. from measure non-GAAP comparable measures in adjusted financial include in of or results. non-GAAP should our financial our measure measures, GAAP release. provided press to directly non-GAAP and has EBITDA isolation GAAP addition supplemental A financial including today been substitute for will reconciliation be most financial and considered These to a not

like Officer turn Shawn of Now to I'd Executive to the the Chief Nelson, over call Lovesac Company.

profitably year and come. us business Good the Thank strategic XXth for thank to Infinity scale in reinforced to a Design business What today. joining across make product it our Lovesac Life everyone, platform Omnichannel strengthen a year meaningful you, been. we necessary and fashion, years for strides number morning, our and for our brand in Caitlin. as you we true has Flywheel, In and areas made of years investments our

the was just year fiscal is for that the single-digit a against $XXX margins over the of the category for profit and now revenues XXs. years. Despite and product reflecting growth. essential more X for to high crossed profitable we million This in material up in sustained down years support growth X into the ago. the headwinds, delivered revenue the gross industry year gross year, mid-teens tripled high investments We covered capabilities approximately and past flat with expansion dollar than That

versus net reported on income expenses While growth was discussed nonrecurring we restatement year are excluding to year. the net for pleased that deliver a down the to last previously, basis, related the we've income

ended performance a cash growth balance a We credit year net in borrowings quarter facility, gross and healthy the on profits we solid in very fourth delivered which include income. and million results These with our revenues, year-over-year $XX zero sheet. in

large to over Infinity the diluted other. a mid-quarter which addressable and fell we of years have a low all compared meant income over omnichannel with net costs margin, unique our sales, and market adjusted we're in our industry advantaged gross later. The customer, and Keith guidance by model Flywheel EBITDA, we business shy our the our net is compete within We focus billion. just review delivered will the the underpinned an $XX any on While unlike managed for ranges we for products of of past in detail well EPS, outperformance X

barely We year, scratched share to yet this category. fragmented every and huge continue market we surface take and the of

how love a relationships other. evolve. are a been This with and unmatched customers for us. delivers that which business things This any we philosophy. when drive We is doing we we services the paired in should unique our and designed TAM product everything Life this do to continue what to longevity, last very with sustainability intend brand launch who build approach to unlike long-term in lens, approach Designed rooted to through a We has always built lifetime make

Side health brand home gaining to that products. as new stronger our in seen is of Angled landscape is StealthTech response ever, the our with against changing category than and the innovation Our

We incredible Xx have most sales productivity We second periods best-in-class touchpoint X our economics. with payback of and estimate foot and the year about per of square Apple they compared only are to to competitors. Tiffany's

compromising Our supply orders supply late, driven a our experience. we've to customers or backed fiscal by days, inventory advantaged in enabling delivery delivers year-end efficiencies with at investments made, reduce And to customer we've XX% of to matter evergreen inventory. almost us chain further of the without times chain

showroom focused chain In and innovation addition capabilities, end-to-end building distribution supply the is years expanding experience engine technology our our footprint, capabilities, to strengthening elevating our cranking. over on been and our customer few have investments past ensuring

are enter phase we and fiscal the key investments growth. next driving on now foundational of our 'XX, As we've of focused many made

We it The which when are the to our to returns products total in the disproportionately category market to new taking new actively we as growth, well. actions category developing will. meaningfully seating categories us addressable today will comfort position capitalize many and expand are

We're continually deepen to tactics draw fold, overall the fold enhance customers relationship in into and brand strategies our lifetime refining marketing new brand the of value our once and the customers.

outlook For prudent with It's a fiscal macro conservative thing backdrop. to do. the XXXX, begins our

We business this category modestly a plan decline that up us the half appreciate first. giving model without upside. to back are unique way It's enables estimating our to of year year a approximately of better declines, XX%, important including full another than with

over-participate the we the that demand expect foundation, to gains. term, With to our reinvest flat If we Please continue while approximately is with we future our and a business does flow existing macro in a We've is our net have. truly as primed have on spans continued category market massive net us. real Lovesac category of through curve in sales rebound cash cash grow expanding that drivers. Lovesac to even outlier. of beating long gains can deliver competitors further. in We're EBITDA very truly an into growth that time, than exciting development compound of profitable, SG&A and Then, share faster even we'll categories. opportunity expect years. sales for strength rates to product over a few sales ahead We're up products. continued XX%, brand that we that to capability representing an better, active share a the of achieved growth near pipeline by and position ride high-growth positive, and market note products

one powerful huge innovation As happen. would and our our pipeline we amazing to platforms, nothing each product shout magic #LovesacFamily, people, marketing our as you without prowess are, make every and the core a be of out

our detail. to key Operating upcoming areas Speaking of guidance go our amazing over of people, XXXX Fox, I President Mary Officer, and highlights Keith priority financial the Chief hand after the which fiscal call in discuss over the year, for and will and more operational now will results to

and morning, Thank good you, everyone. Shawn,

As model. X.X% omnichannel Shawn fiscal growth results our XXXX, driven of with sales business for reflected industry-leading discussed, our unique by growth

a believe Omnichannel We financial category, underpinned other pre-pandemic sales margin XXX% adjusted at consistent of from this up our unique the points. period, product-centric outperformance customer compared over on and Flywheel. flat any on year ahead basis, the has our were is to by our Importantly, brand focus levels and category Infinity basis XXX increased our EBITDA full same time in our

an strong built category, economics opportunity in a else significant, growing, advantaged have in addressable and resulting supply market total a a that and unlike the is best-in-class business brand We platform touchpoint model chain. is that anyone and health

our as Infinity strongest a the other Shawn scratched remaining don't but flywheels $XX market of customers shop we of is We're earlier. this surface potential of large our with #X our massive share Word the highlights market customers A proponents. X/X few billion. of America, selling that believe mouth and brands. addressable We couch #X our driver fragmented have over we over awareness shared compete of We in category. our even huge have in confident and that they cross are report because barely

innovation with brand marketing and our and Angle stronger lifetime health launches enables drive value, unsurpassed have cost gains, is acquisition reinvestment. the of is strength ratio StealthTech Side Our that ROI customer continued fueling these in than healthy the helped customer ever

incredible foot and Tiffany payback year of based of we to on sales competitors. only best-in-class have productivity estimate second is touchpoint and economics period to the We that cash per Xx our Apple up X

an loyalty times in over satisfaction days evergreen supply measured increasing just resulting customer inventory, And with and of further delivery advantaged customer Lovesac the differentiating our finally, chain XX%, enables in crowd. coupled from

our continue profitably market strategic and that plans initiatives Shawn growth positioned to our our even share further disciplined through expand key that provide of take markets. I to of expect We platforms market capabilities are our investments go-forward current highlights to will with initiatives. addressable our that, strategic top of we core on discussed. uniquely dynamics the On now in each from our benefit

highlight higher a than Side, continues Firstly, Sactional size we largest which representing within it share, for Notably, to of summer AUV Angled without be gain continues launched the and business to us. last driving Side. a Angled mix product our Sactionals innovation.

commitment Additionally, having customers. With also who generated technology StealthTech value. enriches Side comfort X select 'XX, the standard to higher our excited in customers satisfaction average Sactional Angled Side with minor this continue on about and year. platform. that launch will an of invisible our launch next product StealthTech This our the to sold StealthTech with even our that an experience order in Sactionals that nearly than were expected second is our bringing their report fiscal times We're half elegant customers

disruptive and this across StealthTech In our we platform launches Side Sactional several exciting both other year. addition expansion, and to have

aperture to closer of couch with we we share Stay love are fiscal accelerate gains. expect look us planning to we We forward and market to to where these material expect broaden innovation launch you 'XX, the think and product that sharing drive tuned compete the details platforms. to more to open them. In our a our enable early since significantly to launch. We in category, AOV you'll we appeal

next life years. scenes, already categories to product and in the launches product behind new innovations many design over platform the for Lastly, we're several disruptive existing developing

retailer Secondly, our physical have platform. omnichannel become combination touchpoints we our experience, a true and digital through and omnichannel a of

our cost shift omnichannel, locations seen our covered improved to real of health, and into and strong [indiscernible] structures. brand a of aspect higher percentage reductions we occupancy as we've when strategy discussed physical the For lean economics I and showroom estate I year-over-year deal

continue In exploring our from fleet years, than and our to our to to to productive services roughly bring opportunities customers. X continue terms our our current next we'll the showroom opportunity we products double over locations to XXX and of XXX see more showrooms,

and new as we we to and our XX For fiscal open expect paybacks. model to showrooms tool fleet site industry-leading approximately leverage selection predictive 'XX, net with our analytics consistently optimize continue our

customer with e-commerce of when X quarter the we strong improving year over points growth of by Turning omnichannel. of satisfaction category we're sales to and the grow only beat aspect XX% X,XXX had trends basis in e-commerce to and with the We year-over-year. one a brands e-commerce

which other our allow additional at products, Shop-in-Shops Shop-in-Shops, which is showrooms opportunity Best Looking stand-alone Buy our as to experience double that shoppers most year our effective and discrete that StealthTech, attachment ended are at our platform. in when Buy showrooms are our the especially StealthTech locations, very XXX rates XX for Xx are Best which they online person. channels, experienced of our roughly end, from powerful tech-focused To

growth For XX% physical versus 'XX, continue assortments nearly and by additional Costco, we fiscal fiscal 'XX for shows for to relevancy backed with increased customers. road planned partnership bundle strengthen our in

for our Costco, show in runway proud Side The Angled at results We're is assortment of thus first in road see expansion. introduction QX. expanding continued step far our started significant and of future which the

our consumers with scores service customer improving levels evidenced satisfaction technology in resonating our strategic highest particular and improved resources scores. are investments efforts by driven by Our digital to supply These in capabilities, our recorded year-over-year in as and experience. customer chain our

and Hub will further fiscal specific to project to videos content as experience that focus customer [ do ideas. satisfaction, multiphase create customer one-of-a-kind My have from set calling optimize integrate subsequent everything other launched in check year phases on the 'XX we the This experience their experience online, a brand earlier with X omnichannel we're post-purchase purchase a their account up of way Looking status project whereby part and of a customer on our a receive and begun personalized to a visit can the will based their Phase and is way doing. order no all the this ].

design products, is philosophy, circular goal our value developed a investments ecosystem, for and for circular customers ecosystem long-term Thirdly, have and we for operations product and customers have life our relationship. our a in platform. their our driving optimal our for The

and various the nonlinear coupled brand TV social with During we including to product digital year, in continue media, established traditional some advertising using our TV advertising. and and leveraging market and strategies, media formats, national influence

to experience heavily This a with meeting Lovesac omnichannel targeted to reinforces Our driving our in focused interact customers digital into choose truly and shoppers our touchpoint marketing commitment they where efforts on products localized to model, person. tactics business a us.

quarter new messaging promotional existing In tested successfully X, and for targeting customers. we

As and throughout website a to plan experience our performing and focus reach. drive special with high to to a base, we ROIs the expand driver highly key on prime that we marketing. long-term demo, tactics ROI a we our digital is as plan TV on linear year-over-year differently 'XX. Media we and in out traffic grow also our believe local leverage to new very building year marketing segment touchpoints drove value this hyper buys drive and and this customer touchpoints to improved loyalty qualified fiscal of speaking to plan in traffic success We rolling to to also

are here margin fiscal to customers, data 'XX, over gained new 'XX. purchase points we of fiscal from up our mid-single and a illustrate year XXX,XXX couple In And first digits progress. was

full customer acquisition pressure. relatively with lifetime Our CAC promotional headwinds customer pricing the increasing year-over-year year inflation cost some in same media spite first amount remained in of LTV and year-over-year value, ratio and flat

than As their do at for first upgrading Life a we breakeven the adding or know decades. customers our Sacs to for we or Sactionals and purchase, more reminder, Designed that repeat,

business Life XX% opportunity fiscal from repeat transactions at Our to 'XX, demonstrating increased around Design of our with build relationships for customers overall the long-term XX% of our platform. end to the

through as beginning and sales. with this item With open an right expanded the leverage begin foundation creating are side flywheel we lifetime box associates enable and trade-in just the program, value we'll we resales. test and to services, for our we internal of activate that notably Lastly, customer

And despite business long business we and to demonstrated fiscal achieved this costs, profitable finally, Since and the the consistently driving for operating inflationary to making Over XXXX, Lovesac the investing in growing our and continue headwinds has very efficiencies. IPO growth this disciplined approach way. disciplined infrastructure and will term. period, a we time investments manage category

metrics and an the time total fiscal year-end, In efficiency as in in margin reductions leveraging satisfaction, material through of freight inventory order system improved opportunities as customer a reduction management for 'XX, expectations capabilities cost improvement planning capital. we operational at remain. new well further and and line cost We reductions simplicity. inbound enables delivered XX% gross new more launched warehousing by increased but should delivery enhance that around and working This

logistics see of transformative be investment partnerships. We 'XX, other also which earlier. incremental savings on and inbound continue new our and areas through come, growth will flywheel to some deliver and development innovations fuel primarily the to freight In technology and the I research for our in shared fiscal of to

to the growth with strategic pleased continue on our foundational are ahead. important we well summary, in make we the lies So the investments successfully priorities to expand progress as substantial support that drive and business as as

XXXX ESG outlined briefly to road wanted I Keith, in our to published Life we Sustainability mention starts waste our Design zero emissions believe report, to by over and our from approach December of was 'XX diverted thousands goals. Sactionals reach and turn where word I with has at the which sustained, and zero Before map couches to admirable landfills. third we annual for

more fabric, upholstery stream in and use XXX date. the waste amount than 'XX plastic repurpose removed of fiscal bottles to more we in for Additionally, million XX of very from large million than and

In now sustainable Keith. makes the I over pass products that short, Lovesac from materials. call sustain to will

margin for XX%. exceeded million. exceeded Net representing fiscal nonrecurring 'XX several just Fiscal profits Gross and been a income delivered It restatement, $XXX million down $XXX anniversary, as XXth have million, the 'XX, for Lovesac. over was our net a was resolved achievements. milestone year Thanks, marks $XX.X but Mary. related successfully gross from Revenues we over $X adjusting million reported, the in up. of expenses would to income momentous

on $XX in the Inventories million year declined with the we XX%, cash sheet. balance ended and

long is All profitable category innovation expenses set investments operating people, in term. from systems us despite product for pressure sustained and up the of on that growth and for headwinds to

quarter, of our right driven Then late $XXX.X a X% increase jump fiscal bounce the sales our was or discuss I'll fiscal before into a a quick year-over-year XXrd fiscal expectations week, XXth representing included increased January. in as to 'XX. Net in by for year. let's provided outlook million fourth mid-quarter million a quarter reminder, from the 'XX, which, and of the with low web. Now to in December, a review the This $XX fourth early our below showrooms slightly owing back week

fourth fourth as $XXX.X sales $XX.X year year shop-in-shops the quarter million The or transactions in to to due to as Showroom the decrease addition net the million were X.X% new increase in sales the fourth the $XXX.X XX.X% transactions quarter. to quarter million prior compared $XX.X which by million period. period. pop-up-shops, million The of prior net was $X.X showrooms was sales lower million the showroom quarter a of in a increased net or open-box million fourth the compared in inventory which net only XX $XX.X compared offset million million million sales. Internet decrease net in Other open-box $XX.X to of to include 'XX. in period, XX.X% in $X.X fiscal partially inventory omnichannel decreased $X compared $X.X by driven the to sales, comparable and in principally year to prior X.X% increased or

open-box may our warehouses reminder, as possible. forward, operating are inventory going we ensure limited efficiently to as a engage in ICON As transactions with

our of of program the this for believe year. impact to are return a beneficial level, rate later and resale run which launch of success targeted and is the trade-in, given more recent baseline reflective we this However, potential stock

in fourth Sacs XX%, By to X%. to net increased sales product pillows, net XXX sales, other primarily costs, net compared increased in or warehousing quarter, points higher higher of of and in related sales increased expense quarter partially XX points discounted. SG&A includes transportation as blankets percent net a by offset promotional less the outbound the fourth Sactional our due the versus and basis seen net XX.X% decreased deleverage in inbound and sales the prior XX.X% points tied decrease XXX and the basis the the support growth, costs, which year. basis basis selling-related was fourth accessories half points quarter. employment expenses year X% investments margin to XXX transportation fees, to category our to current continued Gross driven future XXX deleverage decreased quarter, quarter primarily sales in the in points prior in by within decorative than deleverage by to third card. The basis Lovesac and professional costs credit and

of million, of a million with million equity-based miscellaneous of infrastructure $X.X restatement in and period fourth million consisting million million, $X.X mainly prior increase costs driven net $X.X a expenses in increase increased employment by fiscal decrease of fees, million, nonrecurring dollars, $X.X million, $X.X In by $X.X principally offset estimate approximately was to increases expenses $X.X associated $X.X expenses investments financials fees increased in card incremental an by decrease and the the the quarter. compensation. 'XX. sales in in Rent overhead offset increased of rates. fees to due card related new We credit items in in hires primarily professional in in by Selling-related in other increase credit an

marketing the prior quarter sales increased or Advertising in 'XX the net the million in of $XX.X period. Operating compared the by expenses XX.X% fourth and year million million as marketing was million and compared to million last XX.X% quarter to fiscal $XX.X net $XX.X expenses we $X.X in of Advertising income in period. were fourth sales for the just $XX.X compared year the quarter fourth quarter factors of driven prior the XX.X% discussed. year, to of for to

metrics adjusted the earnings reconciliation this early and net GAAP please measurements per net Before morning. adjusted directly terminology refer EBITDA, to most and issued attention to share comparable our we release of and turn in between our diluted income our each their income,

million expenses, mentioned income and the $X.XX or $X per Net share diluted compared share diluted of nonrecurring included $XX.X to or million million quarter as for earlier. $XX per the was period, just $X.XX prior in under

$XX.X recorded to fourth quarter year and quarter period. $XX.X of in the of million During $XX.X the was EBITDA fiscal 'XX, tax income 'XX for prior million. compared an the we million Adjusted provision as

our Turning sheet. balance to

merchandise about our down year's industry-leading Our further are in-stock successes. and ability delivery times. of with projections, quality We of ongoing levels total optimize our both line the end inventory to positions XX% discussed the 'XX. quantity and our maintain initiatives Mary of fiscal inventory good in and this versus top exceptionally to on feel

$XX million with as with cash on line ended on financial as in our a credit Please balance inclusive borrowings. We million to availability for of fourth details quarter equivalents and very no earnings sheet, of the healthy in other refer quarter press our $XX revolving cash release performance. well fourth our

So outlook. now our

Shawn We has in in unpredictable remained in improvement After month. February difficult As March. January, particularly was decline. a the substantial trends finish a experienced and category then mentioned, to strong

want Given first off our versus we with modest category better full that to transparent category we're outlook year in basing expect this, or to Should better, specifically perform a perform of half. another half improvement decline the prudently the the versa. year would second vice declines, we XX% be

$XXX full $XXX fiscal sales 'XX, million. the million of we net year to For estimate

as estimated expect million net EBITDA estimate estimate of $X.XX weighted a $XX million to We a $X.XX outstanding. be as between approximately shares million. common income of We and per million. and XX% XX income This diluted of share the and of approximately marketing XX% includes percent in sales. to advertising diluted average range $XX SG&A approximately net of XX% gross $XX We and between and net adjusted million margins XX%, $XX sales to percent of

fiscal contain fourth 'XX fiscal week the contained in will reminder, additional which an XXrd XX a 'XX, versus weeks quarter. As

$XXX [indiscernible] to $XXX For estimate difficult the fiscal first year, most to quarter, of million. of we our quarter million net the sales which is

includes $XX approximately million net This between percent and to percent margins XX% XX% a as as of sales XX% XX% of and a of $XX Advertising sales. loss marketing EBITDA XX%. adjusted SG&A to million. and net gross of expect We of

to $XX estimate category and growth million to be to $XX $X.XX an loss common and return per between timing million are category ahead outstanding. In if at summary, We average between estimate be is the shares of net loss and stabilization with eventual million. basic XX unclear the moment. We share of even that us, $X.XX weighted

While it's the opportunity our in this value balancing expenses category essential all efficiency that on are tremendous long-term stakeholders. we and belief prudent stay creation [indiscernible], focused to and with for That's the Lovesac's big massive picture. for

investing Lovesac innovation product We function building the and that are new brand new and in spans style, categories.

we track more rebound the irrespective of of in category time our term, than soon it the gains. share primed and Plus, peers. no capitalize the as category in Make our on aim we're real continuing market near as mistake, to to record happens grow

turn As back the should line operator this the top I'll Q&A occurs, to the of drive growth additional to now bottom call growth. start session. to revenues line flow-through expanding our

from line comes question Nagel Brian & first Our Instructions] the of Company. [Operator with Oppenheimer

But sales kind So really regard question, it parts. make maybe just like few with my question a with to X trajectory. of I'll the

and Keith, it, So too. Shawn think I mentioned

in that I then March, heard talked restrengthening about, February, or -- heard if correctly, again, correctly. was you January, weakness in if it strength You I in weakness in

new sales this well. that, anything as have I noticed driven would I is is volatility? Then quarter? kind are is tracking there the there while. driven the a But have second if question into So anything mentioned late fiscal of that guidance the sales talked the a recognizing sort about look where gave now, first you I of difficult mean, that there category reflective pretty that of sales we've anything -- -- question Others the have, say we're you that's gave, growth you for you that for is, guidance QX, at

product Is more you the discuss you're you more the to the to the that in just year? current over anything about is there, or particular some that kind overall just talked restrengthening related dynamics? third of then industry there timing pointing And of question, balance or launches fiscal of sales

I'll part and Difficulty]. probably Yes. [Technical Thank you, first Brian. the take then

for category about, are to that I with we've the take to obviously remain strong year, shared tough. as So continue think the very even still guidance with our we very key And will, assuming talked we guidance market the share. obviously

Keith lull was we strong us. pull for down had a more little Friday to in typical that about same very in did again is a the as we've we dial a bit promotions. talked December. December of And We of as January tried bit the as We dynamic because in what saw seen, up Specifically, promotions Black February.

February to up were clearance. competitors key very even had XX% So deals, during off and aggressive in

feel baked So for and XX% us, is a March big, we our value very to And of done And into guidance factor. a all that and point. it's has really strong, February. good step from into up was to we moved we've then where we as pivoted have that category we promotions. big March, the in first because your back cost that, clear that were Difficulty] in need very [Technical to deep we been

a we happened disruption. bit February, have moved We of second is which the piece, what media did little to bit a little was new think a I in of agency.

media back timing and a bit planning This So there some on was little targeting. is around track. all

So year again, of strengthening hence, the giving us this for the the the and confidence of sale. rest

are well. reflective March has stronger your seeing is the for that early as as yes, And of April, and in also QX, had much, we much about that Keith baked guidance the been shared, start in. question So talks as

I think Keith...

that. on add to just Yes,

the down that So time-ish look credit still it's benchmarks Bank look which we from at is primary, at XX% right? for months the of if call our for we around together, February. March, when when market performance Mary share X it would it, planned card we America, and that impacted the have is for data not real one let's gains, still for reasons performance, So both showing category discussed where of you just the February even put

right now. XXrd happened that the would our highlight because PX, really PX because in X weeks week of and we're of entering I that the just

the basically it's through this from the of May part So X. of which end week the is quarter, early

still all we most in incorporated But guidance. March. we all to go, have PX and again, in we to of So the encouraged our our saw as of rebound were that's basically into trends

about, we we things. shakes market of for more where about try to we of coming out. underpinning When And outlook. drivers we Obviously, around the talked year our the product that's same and to a context the take our think lot year. about launches you number this baseline ability the when of Mary give it's share, have category that think a

have also marketing. the to us expansion, continue optimize progress We're through as We and on looked we a enhancements what have touchpoint our promotions. to basis to especially going year. compares, have like We do to We right? easier X-year tweak our

put continue still all levers to that will stuff we are of pull market control have that and another support our think we year going that to secular So within together, share gains. refine we

of next Ripps Our with Canaccord the comes line question Maria from Genuity.

wide So declining the category. a the able couple all And a you growth in has you declines? look for and of reasons category the to of I just guidance. we for that in anything were now revenue outperform looks appreciate by as with of of vertical, changed delivered but color outperform broadly, QX, some your sort the margin like QX But it maybe your ability to is sort there years especially softer highlighted a around expected towards its

around. Yes, sorry, we're just switching

for thank question. the So you

that in have year is we we've still our you growth factors been company successful years, all think category we terms in and a has where so on a incredibly years. last if the think that the in no we feel is X And growth rates just else that confident last X about XXX% delivered why the one So compete flat, around I against. the of delivered

see I grow line around continues that brand about a be and that So and the awareness, strength still very lot improve. to we of able And our marketing is We customers the aided to then for very unaided pull talk how strong low, word indicator #X we awareness around and around brand path through the funnel purchase innovation just awareness our but is continues we're our our on. a talk And the mouth. continued performance a the stickiness about very, to strong. touched for lot

on the still Keith gaining significant guidance we share. will we with even good very feel that So that. be And shared,

year. The fleet benefits see outperforming continuing for that we're second, think we new their And charges. touchpoint I manage we're our our economic about performance around talked pro The a and as we very occupancy is showrooms formas. as openings on clear of this our Keith the getting some bit

tough double-digit continue. thing And is think the this one of every team through we've the we've And planned conservatively. And X I very even we then of will forecast we team I always I'm outperformed. move, this think and as proud, decline. talked Keith very very adjust time [indiscernible] everything We the in test, we some one February, And consistently third gone out that years this pivots fast. has about in laid

that show financial feel continues performance for So terms good I this that for about lot think the we year beyond. everything of to a there's and And in us. very

is et question. for that digital is that is aspect Yes. And And overlooked intensely the the Lovesac very at because this Shawn. particularly Maria, particularly I'm I to obviously our growth created This invested is landscape speaking on. for tough the appreciate a this that I'll tag the we've for last building times in we've fervor of like there just category decade, we've the the couches, modular in in is garnered and obviously, probably what competition, realm. and to fastidiously The cetera, lot brand. couches, of

and kick et effort that's a demand. lot butt when lot that's shining. acceptance, and cetera, with through through making a between engine internal activations, is own -- strength some Sun events, But as And the competitors for is And strength competitors, to realm based studies big digital, a most and TV brand our on of the really not digital taken is realm, a a of in in of love -- a the of built well brand, brand. of of competitors traditional this advertising, the relentless the marketing and our of that's a this The build. traditional decade advertising, Lovesac the hay as all lot the through difference it's real just awareness combined lot that those to and obviously of

well products this perform so continue And launch highly and as We'll is well Lovesac to perform we versus category. underneath we brand to more sought-after continue just to a product. flag, the them expect

And time carries -- others cetera us really stores, who are and many traffic cetera. means digital focused a through et brand so showrooms, in versus that strength really this on like through just converting on or et relying foot

appreciated real think this don't way, it's or and a outlier fully and So in okay. that's valued Lovesac I is

where continue want category, horizon perform to all it'll -- as the to and this to And near products we'll category new build brand on taken and long focused point, another meantime, gain view rebound. medium do term things it. some of And our exciting at the will with share and take in decade the market it take in we take point We're to the it's to this shut to that's management. and the even emerge necessary against really on dive the this

bit of helpful. consumers? secondly, the little on What give needed you be very us of will and investments this of and connecting are be And some you maybe logistics of buying you a And just are initiative? to sort then initiative? enable sort inventory? resale That's this that selling taking Or your more will ownership color can trading

that establish amazing [indiscernible] around with we've important. Maria. products, and Yes. we've convert an you, the we about is flywheel, active for brand awareness, around the able amazing touchpoints so ability This [indiscernible] driving be we Designed an initiative very the that services think Great. about for passionate incredible life that very been on is touched and I platform as to Life we're Thank talk because Infinity to the side,

last the [indiscernible] work starting ability year we build the So to we're the that for resale. started trade foundations operations, just and in around do to

we of also overall just to terms helping happen. team in just be open I we're And to And just foundational technology have in building with item and processes do fact just our launching S&OP bit sales even an for touched us this internal the able that that that. around also to members that, the the box have little own build a is an external working test on partner that

in, those come for later our into investments year. And of the All we're back progress and and terms baked you we'll with then is of in making business year, for that resale in share that this the trade in.

will today. a And so the our product high Difficulty] demand secondary will that see we out, loop and be as through, on we there yes, build we be for and very market inventory, then [Technical managing that

So happening today. it is

us intact. and an It's experience really for harder to it's other resell keep brand ability can no hard do. the and the and have amazing to and else brands, product in. trade much logistically expensive one that do something very complicated So do Because them to super for

So customers product their able as to ability get we for and XX years to be in and trade new come bought innovations ago, talk the to up value. lifetime then about covers, our build a able that covers

We visibility. excited about are very

news So we look critical you obviously, initiative. very this, forward the to sharing progress for more and of

ROTH comes question next with from MKM. Our the of Matt Koranda line

shared. a relative March the And bit quarter-to-date way spin know back is trends you March? just them? basis. there saw any that little quantify to and you you to Maybe I mentioned getting on better to than wanted a What them February Just in or February unpack --

actually just badly than maybe bit down March little or was just Just more there. basis less February, a a up on year-over-year

of more the And to just about broader previous then wanted I in one responses. off frequent faring mentioned and in the we're how that just, you little know Mary, if you you relative it I touched and hear the could talk speak the more tactics. to a you promotions of industry? promotions sort promotional of But running those bit the XX% are your of on about promotions some kind

over about then promotional tactics. Mary the to it and talk to pass off start I'll more

at terms relation to down category both same this in at what in according to specifics, to February February the the look not specifics kind and point, boiled a was and March. given the March, exact what going it card of we're the of Mary into February, give but of data that to in credit the for about get and Just details lot

on tried the was this specific, of factors, back for said, to dial company we've promotions. the Some as right, Mary

dialing the up on were However, promotions the at that competitors time.

As to happened relative first the really So which change well the it we in entirety year, fiscal corrected the the as for of day but program right? of impacted PX, our that. agency, dislocations marketing in on

which dramatic holistically as into into promotions think February We for guidance. trends. March we April, We've within all back. adjusted and a and in for we that's compartmentalized is massive that. taken account headed a as we We our tweaked was shift about bounce March the our saw and PX, It plans both

and an refine and this things. learn, and refine, is Obviously, ongoing to tweak tweak and all types constant those effort of test

when more the things this think is tactics. right, And Mary promotional that to So placement seeing at we start talked think stuff in. this representation convert expansion don't if before. we kind our see touchpoint earlier, I the year the know that we're point, the can then really marketing we the to as all for our want little That's see really and launches, this all in we best when our of about kicking and talk crystallize highlighted that's interest to a when I finance promotions, that's into customers. get we really quarter. later And from the offers, sharper of we get you even the with Mary, about

actually Thank Then at we you, to that's you normally had of year, we still category, And No. we I out Friday, couple and substantially see down the typically, everyone even off. strongest stock a deals. lower. the promotions little seeing just else step Yes. taking we as that aggressively. strong actually the what is compared bundled get know, ways, Matt, holding were of think, do We promotions aggressive more a would out area in XX% I Black Keith. And shared, off it and core rest more bit, clearance promoting Black many and coming in performance. of But very We as up products to obviously, XX% came the of and saw Friday. the a -- using actually it's

And back tail velocity to just just as -- had a bit then have was a always compelling back we So strong, quote Keith we really have because little bit we little said, conversion when know the value. we just growth was saw people slower. dial a down,

Keith great we March. it said, test off, growth saw we the as XX% So back as in into

in So to parts learn. really is consumer I of behavior week a one to think of anything, a a see our a X point like test about of weeks. high we're customers business to And we quote from of the percentage interesting close going continue very and view,

and and allowing campaigns then us, when for really able we're Difficulty] they're drive promo [Technical conversion. to to to be adjusting them in, our see tactics So coming just we

all as margin [Technical about again, advantage all across So that have performance. we gross in, earlier we just And for of manage baked performance. Difficulty] channels. has industry-leading Keith growth talked our of that us In the year-over-year and big we

So we're and margin the threading flows just gross growth growth, top always through. how line between needle that

So feel settled but through in we'll terms where the we are adjust programming. good year, now in of our

like gross there's margin the expansion it for guide the first Okay. Got it. then looks there. And on quarter, some

seeing if from terms the just freight. of maybe, that lower unlock sort sort of Maybe you on touch versus continued on of some factored touch wondered inbound could Just Keith, what's in, in headwind that. promotional of we're

of the couldn't And on this what investments I can't maybe sort we're guidance, more that bit not little we're see if still some or why -- at then a just SG&A, coming planned full year, wondered on are look we on could see and why there seeing touch year? we you the deleverage guess, or line for the if leverage maybe

margin. Sure gross thing. I'll with the start

year-over-year inbound us the comfortable capitalized by So year's little first We Last I freight We quarter quarter. a got think year. still margins with said kind about months with bit off in burdened full really XXs the as the story what that's last of the we've for high hadn't level. been first was a X that and first burned consistent talking and a this bit range. little is to quarter this is gross helping of

talking freight a We expansion range that the for about do saw side us. logistics within the but line top that gross this you for guidance that Obviously, provided, we Mary benefit impact and to was there's both potential and have will total expect that few inbound things of margin our outbound year. the

quarter, first some were relation we it's whether Baltimore, it's stuff. that to had getting we Red Sea, in whether questions been of Even in kind -- all

this and of of beneficial into impacting PX, we relationships some PXX some moved definitely model. we've put a into container moved we carrier context, providers to owner stuff things for us. the to using ocean-freight changed for as drayage have. That's We service Just and really direct cargo direct

benefit evaluating has into some side outbound margin gross alternative an stuff test, on all moving for potential we the think also and side to We're things. options carrier the last-mile projects of

magnitude margins, we definitely for just the for look, up. the see of gross potential expansion upon the category depending that So year, the where upon again top ends really largely line which is dependent

near because is drivers. what we be things, efficient, We need year. take that's don't price, On of to right? want this we lot the invest against balance do our value to really in know these trying the off a is And the we want also creation right, SG&A side tricky, eyes you're Please to to is term of appreciate here. long this the to here what this term we're look, seeing long-term but

which We're now infrastructure-driven growth. model, was pressure about it's more and of year's last off largely on those,

that coming innovation 'XX keep Mary So and talks in details that. of we when a potentially beyond going opens is pace earlier, AOV year is hope product about we fiscal this benefits category. a gave core innovation where those for innovation of to the exciting going, product busy and but This some for our and aperture that really early

think, select during that's those we're medium of stand again, a to benefit term. who we And make over the period we and uncertainty can long macro because -- the doing what investments can. most That's

if opportunity, does, cash that in investments and it the innovation. position if for And exploit prudent particularly does in profitable, want back, in are we're a position, We're to we all are that ready good the on everybody ready bounce and do to, these the product And We you to better to as so macro capitalize to, it like a it we're hope we to. we go. of because we're we making, can. have look, wants be we and being wanted will, wise, we'll being

Okay. I Very more helpful, Keith. sneak If one could in.

you more just can profitability. year. we to quarter -- it be for least just the by terms but for versus be on on or year? maybe cadence expect everybody little on XQ set cadence I trough provided of bit profitability guidance, rest of the anything little and asking the the for -- we would would sort specific rest in positive not XH, just breakeven for I'm the level a Just profitability Obviously, should I of the expect know Maybe we at cadence. XH of this Should but a of year? imagine

and line that I front. out. guidance, to the that also I boils historically where just on gave be picture our most top we Yes. obviously, mean, we line backdrop what changes difficult this upon And is is of really mean to the year in full down difficult based category terms the QX. quarter. year shakes of expect most it top Nothing

likely back for your for QX fall to it's but the out, selling It's will the the us, a a the half still first quarter in around can better a the versus was year have slightly -- quarter planned. a seasonal remains half trends in quarter the that, big similar sorry. look with what little for profits. backdrop such -- selling wiggle us just There's at bulk model we macro year historically, you coupled the -- of and very

should that nothing of that X affecting outside be those cadence. unusual dynamics So

line Davidson. Our D.A. with of next Baker question comes from Mike the

you for which helping and I of change for the something XX% than XX% for the the of full for the year. to different a think Okay. growth it right? first on following were driver sales has big implies to as in up be massive guidance Yet a percent goes a ramp rest asking Maybe year, the some your sales in then quarter. seems the and advertising questions. the that growth the rest quarter sales profitability down first year, But The after of previous and way. lower

guess color year when XX% sales. to XX% for again could percent the much with that's And of the of if Why you the XX% calendar rest little XXXX the why as you're help I better. So it us sales, gets term, then more more, beyond or not a short a like so that, advertising -- for driving XXXX? go above advertising seems in

thing. Sure

QX. of spend we what the this So to QX given obviously, the it's and That's lowest Matt's that discussed look, the and location drove most the that just inefficiency seasonality dynamic. with Look, related we in is just that question, starting transition. given to kind is this spend had

bigger efficiency dollars and anticipate the of later seasons. -- we we as anticipate have and We get effectiveness more into the dollars

with That be bringing. that couples product with the couples the innovation also also promotions, that we'll

together. things of All kind these work of

those but things combined lower through more we've of We drive your range So with it. you effectiveness and dollars all what very dynamic see of point been to this fair. question totally that and is impact that at guidance. But comfortable all get are within that of and of percentages, would higher

And we never it's just and quarter think, add, there's growth. short-term I that's a to and what our drives [Technical see, I mean, beyond marketing working Mike, think, spend, I Keith, also Difficulty] that within the because time. in always media advertising

second the come. think our and around spend research the innovations I piece work development to the in all is

building. as So equity well that brand also built in as

that the things time and always we continue about marketing. is we've to test around the talked and of learn One all advertising

right in moments we would and opportunities the running at of funnel. team to now, of convert test the really So typically a promotional that for a that see you temple looking example, drive through can outside terms are the -- windows, see then traffic

that, feel of we in we one well great for is very the the Keith year we of a that the testing, think as we've I because that is the debates us success and the lots reasons the of many good had is around of the years. will continue outlook points very as obviously, for So And rest as team key been are energized and that about formula agility. have growth so for in terms of of and that and runway touch shared, lever successful think terms

housekeeping. One quick, just Okay. Fair enough.

to As analysis, how but part of back is share? that you're and my we willing the of terms I the the the in extra half, helped estimates, need have are showing EBITDA. week sales much something variables

it there that for make Yes, us. about unusual week would nothing a was nonstandard it

QX of front. So a the unusual it's pretty most consistent metrics across with really on that typical week, nothing

Both or in profitability of and terms sales dollars? EBITDA

relatively moving a Yes. thing, across Yes, there's QX a of but representative the number it's week. pieces

question next with Forte comes Group. Maxim the Our Thomas of from line

Great.

X for sake So X on more the The the about inventory talking and Or the permanent you're then think I quick change? And was are management, acceptable. one-off? questions was profitability. services we time, more like that of about it, than that that but answers should quick a how relative a revenue,

be a high? soft your greater do then rate landing. there a on lastly, year you about there's like may notion Your margin And your of about gross is goods it quite seems cuts, the think outlook, thinking full that fewer how likelihood when but

but your seems greater and sensitive love a be news it high-level rates, know category I'd a to could of there's thoughts on home that soft like I highly interest landing, the chance that? a So good is

the it inventory so for a can a chain. we've of result made Keith, of in past in supply was us, I Yes. the Tom, take the management investments lot one.

just DC. goods speed and as of we kind So us, inventory efficiencies drive even we the for to continue move factory from in to to our market will our through

have see So the job. you'll an and honestly done continuing some benefits expect amazing team to

So we're very grateful. just

inventory. the And some ability does to momentum. to demand as very touched before, drive where back on I us build back into the and to for also able point to be agile the We're back be the up move the category really able think will swing up Keith at point

good that one. feel we on So

out I think terms more still we It's those we service days early to of share we'll as very capabilities. the year revenues, think the model. start as through in build

color give Keith, want some year. go And the think, you in more the to we'll later So that I outlook? you to to maybe

thing. Sure

there's housing get soft a could not desire -- macro complicated these furnishings. the do -- What we in with it's really But which the What greater the happens look, So elections? results discussion get of for we get the really turnover, landing? pieces. which moving cuts, result typically also have a more quickly. rate Do lot in

manage position the are setting that's curve that, think not for approach going conservative take get was really elections And expenses turnover, position to a is a of and having that time up come, out, should in more to whatever. rates to should should plan. what not against demand real ride make we deal, can bounce work we're us that exactly we where trying enviable the participate because housing lower, I get in big is we we furnishing when our more going were call this say to home a on We and and go demands, that

plan And we really benchmark to dominate guidance. lot transparent a more plays a that's So so you're underneath transparency rest. that's that. hope the about, macro of not why outcomes behind the positive requires Yes, the we're providing that talking out any why are that way more it the we of our but building we're with

concludes Ladies floor the Nelson any session. and comments. that I'll gentlemen, question-and-answer Mr. turn final for back our to

want just all thank this We as that fiscal as an of company Lovesacers forward amazing out the investors well our We there year. to keep Yes. Thank thinking. look you. to all

call. conference today's concludes This

may participation. this you lines at your disconnect Thank You time. for your