Lovesac Co at Oppenheimer Consumer Growth and E-Commerce Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Nagel - Oppenheimer & Co. - Analyst : That's great. So I've got one -- there's a couple of big buckets I want to discuss. First and foremost, just the internal operations of Lovesac, the opportunities you see, but then again you talked about some of the macro disruptions. And you just alluded to this a bit too, just to the extent to which Lovesac has really capitalized on these to become even a better company. But as far as internally, you mentioned your two products, the Sac and the Sactional. So we've talked a lot about those products, so maybe just elaborate a little bit further on the ongoing development of those products, particularly the Sactional, but then also what we should expect potentially for new product introductions from your Company.

Question: Brian Nagel - Oppenheimer & Co. - Analyst : Is there any more comments on just the timing of new products?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : That's great. We are eagerly awaiting that introduction. So let's talk about the distribution model. You have a multipronged -- I call it multipronged distribution. At your opening, you talked about the showrooms, that you have the e-commerce site which works very closely with the showrooms. And you have these relationships with other established retailers. They're not wholesale; they're more partnerships so to say. But could you just maybe just frame for us how this all works together in your consumer connections?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : Got it. So, Shawn, you and your team -- there's been some pretty significant enhancement, so to say, to your distribution -- your distribution fulfillment network. I think that's allowing you to operate better and then probably positioning the Company better for growth going forward. Do you want to discuss that in like what's happening and what we should expect going forward from that standpoint?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : Just on China because I know we've talked about this a lot, but I think it's worth reemphasizing. What portion of your COGS now is sourced from China? Where was that? And are you now at an optimal level?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : Let's shift a bit to marketing. So you and other companies have talked about this as well, but it seems as though the efficiency of Lovesac marketing has improved significantly. Where are you marketing now? How is your kind of go-to-market strategy with marketing shifting here?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : So I just want to hit on this a little bit more. So what I'm hearing you say is the marketing- - you've been growing very, very well with relatively limited marketing spend. And look, it would make sense, as you grow a bit more here, you can get that better word-of-mouth. So is there any talk amongst you and your team to step up -- with the product so good right now and still unique out there, is there any talk to step on the market a bit more?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : That's a perfect segue to my next question, just to explain further these investments. So, look, in the beginning of the crisis, I think you are very smart to hunker down as other companies did as well, just not knowing what lied ahead. But like you said in your most recent conference call, you and your team have discussed this reinvestment. As we look ahead -- what more specifically are these areas of reinvestment, particularly as we go through the balance of the current fiscal year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Brian Nagel - Oppenheimer & Co. - Analyst : So last, I want to shift over to the macro beat and how Lovesac has performed through this environment. So I think anyone that studied the consumer environment would probably agree that the last several quarters have been unprecedented with respect to the fluidity, if you will, of the consumer backdrop. Lovesac performed extraordinarily well through this. So I guess a couple of questions, Shawn. One is what were your key learnings about your business model through the COVID crisis? And then thankfully, COVID headwinds here in the United States have started to abate rather significantly. What do you see as any type of transition for your consumer as the consumer maybe gets back to more pre-pandemic levels -- I'm sorry, pre-pandemic activities?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : That's great. I'll throw it back to you. Is there anything that we didn't discuss here that you want to make sure we highlight? Or the other way I'd ask the question is what aspects of the Lovesac story are investors or Wall Street missing the most in your eyes?

Question: Brian Nagel - Oppenheimer & Co. - Analyst : That's great. Well, congratulations. It's always a pleasure to connect with you and hear more about the Lovesac story. You had a phenomenal run, and I know you'll continue to do extraordinary things here. So thank you.

Question: Brian Nagel - Oppenheimer & Co. - Analyst : Of course. See you.