The Lovesac Company

Greetings. Welcome to Lovesac's third quarter fiscal 2024 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to Elizabeth Schneir. Ms. Schneir, you may now begin.

Thank you. Good morning, everyone. With me on the call is Shawn Nelson, Chief Executive Officer, Mary Fox, President and Chief Operating Officer, and Keith Signer, Chief Financial Officer. Before we get started, I would like to remind you that some of the information discussed will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections, and our plans and prospects. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's filings to the SEC, which includes today's press release. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by applicable law. Our discussion today will include non-GAAP financial measures, including EBITDA and adjusted EBITDA. These non-GAAP financial measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of the most directly comparable GAAP financial measure to such non-GAAP financial measure has been provided as supplemental financial information in our post-release. Now I would like to turn the call over to Sean Nelson, Chief Executive Officer of the Love Stack Company.

Thank you, Liz. Good morning, everyone, and thank you for joining us today. I'll start this call off by reviewing the highlights of our third quarter fiscal 2024 briefly providing an update on our operational accomplishments and finishing up with our outlook. Then Mary Fox our president and COO will update you on the progress we made against our strategic initiatives. And finally Keith Signer our CFO will review our financial results and a few other items related to our outlook in more detail. Turning to the highlights of our results. Not a lot has changed since we spoke with you four weeks ago. Lovesac continues to deliver strong financial results and category outperformance, backed by a very strong balance sheet. For third quarter, we're pleased to confirm top and bottom line results that were in line with the outlook provided on our second quarter call on November 3rd. The headline is that third quarter net sales grew double digits in a double digit negative category. To be clear, the macro backdrop largely remains the same as last month. Lingering macro uncertainty leads to consumer caution and pressure on the furniture category, which we estimate was down mid to high teens in the third quarter. However, our playbook also remains largely unchanged and continues to deliver. Our disruptive design for life platforms, impactful product innovation, compelling marketing, and highly productive omnichannel footprint continue to distinguish our unique brand and engender customer love and loyalty. More specifically, for the third quarter, total net sales were 154 million, up 14.3% versus the prior year period and 32% on a two-year basis. Omnichannel comparable net sales growth was 2% for the quarter, a key metric for how we evaluate and manage our unique omnichannel business. We delivered gross margin expansion and substantial abatement in SG&A deleverage as expected, which led to materially improved profitability compared to the third quarter of fiscal 2023. Adjusted EBITDA reached a positive 2.5 million compared to a negative 6.9 million in the prior year period. Net losses also improved to 2 million compared to a net loss of 7 million in Q3 last year. And that's despite non-recurring expenses related to the restatement that are called out in our press release. The Lovesac team continues to execute across all our priorities, including our innovation agenda, physical footprint expansion, omni-channel experience from order to delivery, and marketing efficiencies. Mary will discuss in more detail the progress of these growth strategies in a moment. As we look to the final quarter of the year, which includes the all-important holiday selling weeks, I'd like to note the following. The macro environment and in turn the discretionary home category has remained challenging. As we said on our last call, we are not planning for any meaningful recovery and category growth in the near term. And yes, as expected, the promotional environment was more competitive over the Black Friday and Cyber Monday periods than last year. But as we discussed with you last month, we adapted our plans, increasing the discount slightly and delivering relevant and distinctive marketing with strong gross margins to boot. Taking all that into account and with the Black Friday and Cyber Week events behind us, I'm happy to say that Love Sack has continued to grow and outperform the category. As a result, we are further tightening our full-year net sales guidance range, now $710 million to $720 million. which represents high single to nearly double digit growth, even excluding the impact of the 53rd week this year, a truly standout performance. We are not ready to provide guidance for fiscal 2025 today. However, we will prudently control expenses and with a focus on efficiency, balanced against proactive investments in new products to drive profitable growth. In summary, We are pleased to deliver third quarter results that were in line with our expectations and which, once again, are ahead of the competition. The operational progress we are making against our growth strategies, along with disciplined investments in key foundational areas like technology, new product innovation, and insights, continue to fortify our flywheel, thereby driving consumer demand and expanding our market leadership, which we believe can last well into the future. Finally, I want to thank the entire Lovesac team for their tireless execution of our strategies and delivery of our goals, especially during this critical time of year. Our disruptive model enables us to continue to grow, thrive, innovate, and invest in this business. But it is our people who ensure an outstanding customer experience and are the reason that our Lovesac family is growing so steadily as we enjoy a great holiday season together. With that, I will hand it over to Mary to cover our strategic priorities and progress in more detail. Mary?