STAMFORD, Conn. – Lovesac, the furniture company best known for its Sactional adaptable sofas, posted a third-quarter net sales increase of 43.5%, driven in large part, by an increase in Internet sales of 125.2%.
The company also posted its first third-quarter net profit of $2.5 million compared with a net loss of $6.7 million in the prior-year period, which resulted in a net gain per share of 17 cents compared with a net loss per share of 46 cents in the third quarter of 2020.
Gross profit dollars increased by 57.3% to $41.3 million for the third quarter of fiscal 2021, which ended on Nov. 1, compared with $26.3 million for the third quarter of last year. The company said the gross profit increase was primarily due to the increase in net sales, higher average retail price due to less promotional discounts and favorable mix impact, partially offset by the impact of tariffs.
“Lovesac’s third-quarter results exceeded our expectations on the top and bottom line, a strong affirmation that we continue to successfully navigate marketplace challenges,” said Shawn Nelson, Lovesac CEO. “These results speak to the resiliency of our business model and the exceptional job our team has done to meet customer demand in a challenging and rapidly evolving environment.”
Nelson added that the company’s recently expanded partnership with Best Buy will broaden its audience in an efficient manner. “As such, we expect a strong year-over-year increase of 50% to 60% in adjusted EBITDA for the fourth quarter. We look forward to building on our progress and success as we close out the fiscal year.”
The company opened a record 10 new showrooms in nine markets, including its newest location in Hoboken, N.J., during the third quarter, and now has a total of 107 showroom locations.
“Our topline growth is a testament to our agility, and our Q3 new customer metrics reflect this success,” said Jack Krause, Lovesac COO on the quarterly earnings call. “Our total customer count is up 34% vs. Q3 of last year.”
Although Lovesac didn’t hold any physical pop-up shops with Costco during the third quarter, the company did two temporary online pop-ups with Costco that generated $7.7 million in total volume.
Lovesac launched a new e-commerce platform in August, which led to increased conversion for mobile and desktop, Krause said on the call. “We are continuing to improve the site with faster load times, a new configurator and the ease of scheduling in-person showroom appointments.”