Dive Brief:
- Lovesac on Thursday reported second-quarter net sales increased 45% year over year to $148.5 million while comparable sales grew 31.1%. Showroom net sales, which includes kiosks and mobile concierges, increased 47.7%; internet sales increased 20.5%; and its “other” channel, which includes wholesale partnerships with retailers like Best Buy, increased 98.3%.
- The brand’s marketing and advertising spend increased 46.4% from the same period last year to $19.1 million, according to a company press release. Advertising and marketing represented 12.9% of total net sales compared to 12.7% last year.
- Lovesac’s operating income increased 9.8% to $9.9 million, but its net income decreased 15.7% to $7.1 million.
Dive Insight:
Lovesac’s top and bottom line growth exceeded the company’s expectations and comes at a time when other digitally native companies struggle to turn a profit.
“We delivered these results against an industry backdrop that proved challenging for many, illustrating our market share gains off of a very small base in a large and fragmented total addressable couch + home audio market of $46.2 billion,” CEO Shawn Nelson said in a statement. “These share gains continue to be fueled by the compelling value proposition our Designed for Life platform offers with sustainability core to how we operate, our industry-leading in-stock position, and our brand awareness and customer adoption that are at important inflection points.”
The brand’s performance also comes as demand in the home category continues to slow and consumers begin to pull back on discretionary spending.
Retailers selling home goods saw a boost during the early months of the pandemic as consumers actively sought out goods. But more recently, some home goods retailers have seen sales decline as consumers shift spending to other areas.
The furniture company has expanded its offering beyond its sectional couches, launching its StealthTech sound and charging systems designed to be integrated into the company’s sofas. Lovesac earlier this year partnered with Disney+ to further promote its StealthTech products.
“While we expect the dynamic operating environment to persist through the rest of this year, our growth strategies are designed to fortify our position and build on our market share gains,” Nelson said, pointing to product innovation efforts like StealthTech, marketing and merchandising strategies and digital channel growth.
“The significant runway we have with our strategic initiatives combined with our focus on disciplined execution gives me confidence in our ability to drive our share gains in any type of macro environment while also accelerating our growth investments as we continue to scale the business,” Nelson added.
