The Lovesac Company (NASDAQ:LOVE) reported first-quarter fiscal 2027 results that topped analyst expectations, but stock fell after the furniture retailer narrowed its full-year sales and earnings outlook amid ongoing pressure on lower-priced purchases.

First-Quarter Results

The furniture retailer posted a GAAP net loss of $11.1 million, or 76 cents per share, compared with a loss of $10.8 million, or 73 cents per share, in the year-ago period. The result was better than analysts’ estimate for a loss of $1.00 per share.

Net sales slipped 0.1% year over year to $138.2 million, ahead of the consensus estimate of $137.4 million.

Showroom sales increased 0.6% to $97.1 million, while internet sales rose 7.1% to $35.7 million. Other sales fell 36.3% to $5.5 million, largely due to the closure of Best Buy shop-in-shop locations. Omni-channel comparable net sales declined 1.0%.

Gross margin contracted 160 basis points to 52.1%, reflecting higher inbound transportation, tariff, outbound transportation and warehousing costs. Price increases and cost-reduction initiatives partially offset those headwinds.

Demand Trends And Financial Position

Management said transactions above $6,000 increased at a mid-double-digit rate during the quarter, with even stronger growth for purchases exceeding $8,000 and $10,000.

The company said it is working to improve affordability at entry-level price points, including promotional efforts tied to its Rain Chenille fabric offering.

Lovesac ended the quarter with $57.0 million in cash and no outstanding borrowings under its credit facility. During the period, the company repurchased $2.4 million of common stock and had approximately $51.7 million remaining under its share repurchase authorization.

Guidance Update And Tariff Recovery

Lovesac narrowed its fiscal 2027 guidance, reducing its earnings and sales outlook while maintaining the lower end of both ranges.

The company now expects fiscal 2027 GAAP EPS of 34 cents to 81 cents, down from its prior forecast of 34 cents to 95 cents, compared with analyst estimates of 71 cents.

Lovesac also trimmed its fiscal 2027 sales outlook to $700 million-$740 million from $700 million-$750 million. The updated range brackets Wall Street’s estimate of $723.1 million.

For the second quarter, Lovesac expects a GAAP loss of 48 cents to 20 cents per share, compared with analysts’ forecast for a 31-cent loss per share.

The company projects second-quarter sales of $157 million-$166 million, compared with the consensus estimate of $165.8 million.

The outlook includes $3.6 million in tariff refunds already received. Management said total accepted refund applications now stand at $20.8 million, although the timing of additional recoveries remains uncertain.

Management Commentary On Consumer Spending

CEO Shawn David Nelson said, “Lovesac’s solid first quarter performance reflects disciplined execution, including modest market share gains, as we navigate continued industry headwinds while simultaneously preparing the business for our most prolific year of new product introductions in Lovesac’s history.”

Lovesac also pointed to growing pressure among more budget-conscious consumers. Management said that, given record-low consumer sentiment, the company continues to see softness in transactions below $6,000 as shoppers delay discretionary purchases.

President Mary Fox said demand remains strongest at the higher end of the market, with premium offerings such as reclining seats, storage options and larger configurations helping drive growth, while lower-priced purchases have been slower to convert.

LOVE Price Action: Lovesac shares were down 12.08% at $14.49 at the time of publication on Thursday, according to Benzinga Pro data.

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