What Happened:
Shares of furniture company Lovesac (NASDAQ:LOVE) jumped 24.1% in the morning session after the company reported second-quarter earnings results. Lovesac beat analysts' EPS expectations, and its revenue narrowly outperformed Wall Street's estimates. Notably, the top line benefited from the net addition of 31 new showrooms, which increased its footprint, partially offset by a decrease of 5.4% in omni-channel comparable net sales.
Amidst a challenging macro backdrop, management highlighted market share gains as the business continued to innovate after launching new products, including the PillowSac Accent Chair and AnyTable.
On the other hand, its earnings forecast for next quarter missed, and its full-year earnings guidance fell short of Wall Street's estimates. Overall, this was a mixed yet decent quarter for the company.
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What is the market telling us:
Lovesac’s shares are very volatile and over the last year have had 37 moves greater than 5%. But moves this big are very rare even for Lovesac and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 5 months ago, when the stock dropped 17.6% on the news that the company reported fourth-quarter results, with revenue and EPS both falling below Wall Street's expectations. Guidance wasn't much better. Next quarter's revenue and EPS guidance, as well as the full year outlook for revenue and EPS, missed expectations. In the release, management mentioned that they were anticipating an "eventual category rebound." Overall, this was a bad quarter for Lovesac.
Lovesac is down 1.8% since the beginning of the year, and at $25.90 per share it is trading 14.1% below its 52-week high of $30.14 from July 2024. Investors who bought $1,000 worth of Lovesac’s shares 5 years ago would now be looking at an investment worth $1,365.
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