The Lovesac Company

Greetings. Welcome to Lovesac's first quarter fiscal 2026 earnings conference call. At this time, all participants will be in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll turn the conference over to Caitlin Churchill, Investor Relations for Lovesac. Caitlin, you may begin.

Thank you. Good morning, everyone. With me on the call is Shawn Nelson, Chief Executive Officer, Mary Fox, President, 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 with 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 measures should be considered in addition to and not 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 press release. Now I'd like to turn the call over to Sean Nelson, Chief Executive Officer of the Lovesac Company. Sean?

Good morning, everyone, and thank you for joining us. I'll start by sharing a high-level overview of our first quarter results, provide an update on our Design for Life product platforms, and touch on our views for the remainder of the year before passing the discussion over to Mary Fox, our president. Mary will discuss our tailored customer acquisition engines and key growth enablers. Finally, Keith Signer, our CFO, will review our financial results and provide more detail on our Q2 and FY26 outlook. Turning to our first quarter. Overall, we're pleased to have delivered results in line with our expectations and consistent with our plan to capitalize on secular initiatives and return to growth. For the first quarter, total net sales were 138.4 million, reflecting a year-over-year increase of 4.3%. These results reflect market share gains, despite the ongoing headwinds facing this category, which we estimate declined 5% for the comparable period. total omnichannel comparable net sales increased 2.8% for the quarter with additional growth coming from new and non-comp touchpoint contributions. Notably, our results reflect not only top line growth, but also SG&A leverage as we've begun to reap the benefits of previous investments aimed to bolster core capabilities and accelerate our pace of product innovation. As a result, adjusted EBITDA, net loss, and net loss per common share all improved by double digit percentages year over year. Our balance sheet also remains very healthy with inventory levels and net cash providing substantial flexibility to weather tariff distractions, accelerate growth, and enhance returns on capital. Now for the exciting part, innovation on our Design for Life product platforms. First, with a full quarter of our reclining seat in market, we can say that it has been a huge success. Back by the launch of the Recline of Civilization marketing campaign mid-quarter, we've seen increases in new customer attachment coupled with healthy units per transaction, all while maintaining the strong repeat customer purchases we spoke of last quarter. Our customers love the Recliner and see it as a tremendous value compared to competitor offerings, giving us optimism for continued meaningful contributions for many years to come. Second, the EverCouch, our first new product platform in over a decade. This elegant and sophisticated entry into the armchair, loveseat, and sofa category effectively doubles Lovesac's total addressable market. EverCouch is a true design-for-life product platform constructed to the highest standards out of the best materials. We believe that it is the best couch on the market, period. Evercouch provides a solution for customers whose needs differ from those of a sectional customer, deemphasizing modularity, but with more of a focus on style, comfort, maintainability, and ease of use. It has a lower price point as a result of this engineering. Evercouch is beautiful with washable covers, exchangeable arm styles, rapid shipping capabilities, and easy assembly with no tools, of course. Even better is that it leverages Lovesac's established brand equity in couches and comfort seating. Well, after a six-week test and learn campaign in suburban Boston, we officially launched EverCouch on Lovesac.com and in 27 showrooms on May 7th. Initial feedback has been very positive, and our showroom team members are excited. We have not yet turned on the marketing engine since we are refining the sales training based on our learnings. as well as building inventories to support a broader sales push. But it is selling, and we are proud of this new invention from Lovesac. Marketing, expansion into additional showrooms, and potentially select use of partner channels are all in the works to bolster awareness and appreciation for this exciting new platform from Lovesac. While we tend to focus on the larger product launches, rest assured we expect to have incremental enhancements to existing products on an ongoing basis as well. For example, as we reached the anniversary of the launch of our wildly successful pillow sack chair in May, we added new wood frame colors, including a darker brown and a gorgeous black. These additions came out of consumer insights and data collected from our current and potential customers. It's a perfect example of how we let research and data inform our innovation to increase our hit rate for success. There is plenty more to come along these lines this year and ongoing. Last but not least, we're making excellent progress on our additional product platforms planned for launch over the coming years, including new rooms of the house beginning in fiscal 2027, which is calendar 2026, by the way. Expansion of our addressable markets and expansion of our brand. This should deepen the relationship that we have with our customers and drive expansion of our business and value creation. We're not quite ready to share all the details yet. Stay tuned. Trust me, we are working on some really exciting stuff. We get a lot of questions about the consumer, including monthly or even weekly trends to try to glean some insight into a fundamental change in trend. It's only been two months since our last earnings call. And honestly, it's too early to make a clear call on any trend change from the data that we're seeing today. The category got a little better in March, weakened a little in April, and the quarter ended right up in line with the average trend since the fall, which is down mid-single digits. That remains our baseline planning for now, but we'll update you when things become more clear. What I can say is that we remain focused on what we can control. Just like I said earlier, we aim to leverage our secular growth initiatives to drive growth here at Love's Act. We grew in the fiscal first quarter, and as Keith will detail later, we forecast growth for the fiscal second quarter and for the full year, even without the category supporting us. As for tariffs, we are actively working to mitigate the potential impact, and we believe we can leverage all of the available tools at our disposal to manage that impact. Mary will provide more details momentarily, but given our unique model with high product margins, geographic redundancy, and strong vendor relationships, we believe we can cover the impact within our existing full-year guidance, barring any new wildcard scenarios, of course. In summary, we are committed to delivering on our objectives, leveraging Lovesac's innovative product offerings, strong customer relationships, and operational excellence to grow irrespective of the category in the near term, while maintaining clarity around long-term thinking and value creation. But let me be clear. We believe that when the replacement cycle for comfort seating ramps up and housing turnover re-accelerates, we will be ready to capitalize on it immediately. We are thrilled to have our new Chief Marketing Officer, Heidi Cooley, now on board. Heidi is already working closely with our teams, developing plans to support our ambition to be the most loved home brand in America by 2030, while driving profitable sales growth simultaneously. We look forward to sharing more in the future. Finally, I must thank our entire Lovesac family for their adaptability, their creativity, and commitment to this mission. Launching new product platforms requires extra effort from every single team member, from our touchpoints to HQ, and that's in addition to navigating tariff uncertainty and a challenging category, to say the least. Every one of you is essential you're reshaping the home category with products that are designed for life and thereby creating long-term value for all stakeholders. With that, I'll hand it over to Mary to cover our strategic priorities and progress in more detail. Mary?