Lovesac: Demand Is Getting Crushed, And Margins Are Waning
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Gary Alexander32.8K FollowersFollow5ShareSavePlay(10min)CommentsSummaryThe Lovesac Company faces persistent demand weakness, repeated guidance cuts, and a 50% YTD share price decline, reinforcing my sell rating.LOVE's margins are eroding amid flat sales, heavy promotional activity, tariff pressures, and rising SG&A from showroom expansion.Despite trading at ~4x FY25 adjusted EBITDA, LOVE is a value trap due to unreliable growth, negative YTD EBITDA, and thin cash reserves.LOVE's Q3 results showed flat revenue, declining comps, -17% internet sales, and -$6M adjusted EBITDA loss, with little evidence of near-term recovery. Melpomenem/iStock via Getty Images Over the past several years, many newer consumer brands have prided themselves on chasing affluent, upmarket customers in the upper middle-class income brackets. The theory was that these customers would be willing to pay a premium for elevated, uniqueThis article was written byGary Alexander32.8K FollowersFollowWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You