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Lovesac Earnings: What to Watch on Wednesday

Lovesac (NASDAQ: LOVE) is slated to report its results for the fourth quarter and full year of fiscal 2021 before the market open on Wednesday, April 14. A conference call is scheduled for that day at 8:30 a.m. EDT.

Many investors are probably feeling optimistic about the premium beanbag and modular furniture retailer's upcoming report. In the first three quarters of the fiscal year, its revenue and earnings have beat Wall Street's consensus estimates.

Shares have raced out of the gate in 2021, as they're up about 66% through April 9. The S&P 500 has returned 10.5% over this period. Over the last year, shares of Lovesac (which held its initial public offering in June 2018) are up a whopping 1,150%, compared with the broader market's 50.5% return.

Here's what to watch in the company's upcoming report.

Image source: The Lovesac Company.

Key quarterly numbers

Metric Fiscal Q4 2020 Result Wall Street's Fiscal Q4 2021 Consensus Estimate Wall Street's Projected Change YOY

Revenue

$92.2 million

$116.1 million

26%

Adjusted earnings per share (EPS)

$0.37

$0.58 57%

Data sources: Lovesac and Yahoo! Finance. YOY = year over year.

Lovesac didn't provide formal guidance for the fiscal fourth quarter, citing continued uncertainty surrounding the COVID-19 pandemic.

That said, on last quarter's earnings call, CFO Donna Dellomo provided a broad outlook for the fourth quarter: "While we currently feel confident in our ability to generate healthy year-over-year net sales growth, we do not expect it to be at the level we reported in Q3. [...] From a profitability perspective ... we expect a strong 50% to 60% year-over-year increase in adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization]."

For context, last quarter, Lovesac's sales surged 44% year over year to $74.7 million, exceeding the approximately $66 million Wall Street had expected. Growth was driven by a 125% jump in online sales, though comparable showroom sales also did fairly well given the pandemic, as they rose 26% year over year. "Other" sales (which includes shop-in-shops and pop-up shops) declined 9% year over year.

Last quarter, net income was $2.5 million, or $0.16 per share, compared with a net loss of $6.7 million, or $0.46 per share, in the year-ago period. That result sped by the analyst consensus estimate of a loss per share of $0.88.

Best Buy online partnership

On the earnings call, investors can probably expect an update on Lovesac's new partnership with global retailer Best Buy (NYSE: BBY). In mid-November 2020 (or early in the fiscal fourth quarter, which began on Nov. 2), Lovesac began selling some of its products on BestBuy.com. Top management has expressed high hopes for this new sales channel.

Guidance for fiscal Q1 2022

Management's outlook will be especially important since the market looks ahead. Even if Lovesac doesn't issue formal guidance for fiscal first quarter 2022, investors can likely count on management to provide a general outlook on the earnings call.

For fiscal first quarter, Wall Street is modeling for revenue to jump 27% year over year to $69.1 million, and loss per share to narrow slightly to $0.57 from $0.58 in the year-ago period.

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