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. Inc. - Analyst : No. That's perfect, Shawn. So let's just talk. Let's dive into the topline trend. So if you look at the last couple of quarters, I think you and I have talked about this a lot, the trend has been -- Lovesac is growing at a rate that's still a nice rate, but still something less than Lovesac would normally be growing at. But probably, most importantly is your brand, your company continues to grow at a pace that's significantly outpacing others in the space. So from that, I'll ask a couple of questions. One, how do you view the market share opportunity? Why is Lovesac growing at a pace so much faster than others? And then secondarily, just to touch on the macro environment, your consumer, there's clearly pressures out there from a spending perspective. What do you see from your vantage point? To what extent are macro pressures weighing upon the demand dynamics of your core consumers?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : So where are you taking market share as a disruptor within the seating category? Where do you view yourself as really taking market share?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Yeah. And then you mentioned in one of your responses that we're looking -- this year, we're modeling for guidance for roughly 9% top-line growth. Through the pandemic, we saw growth north of 50%. As you step back and think about the model you're building, the product, the demographic, what's a normalized? And I know that's a funny word in today's world. But what's a normalized growth rate, a top-line type growth rate for Lovesac?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : That's great. No, and look, and you and your company know your customers extraordinarily well. I mean, this is obviously a very fluid backdrop for the consumer. But what's the unlock? As you think about the consumer and the consumer's decision to buy a Lovesac product, a Sactional, to basically take that sales growth from the guided 9% back up to that normalized 30s we were discussing, what has to happen here?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Got it. So let's talk about product interactions. So a couple of weeks ago, I had the pleasure of attending your -- the launch event for the angled side in New York. It's kind of fun. So thank you. I think it was last year, I visited with you when you launched StealthTech, which you've mentioned here a couple of times. So maybe talk about just the power of these introductions. As you continue to enhance that Sactional platform, what does that do for the company from a financial standpoint? How does that further endear you to your core customers?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : That's great. And so as far as product introductions from here, so on the heels of StealthTech and your angled side, again, for those of us watching the company, what should we expect? Will it be more enhancements to the Sactional? Or are you going to also, at some point, launch that, what I'm calling a third product, the Sac Sactional, and then the next thing?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : That's great. Now, I know our time is starting to wind down. I do want to jump a little bit into the financials. But so I want to, in my mind, one of the bigger opportunities nearer term, Lovesac's done a great job of kind of reconfiguring, if you will, of your supply chain over this, like what just happened over the last few years. Is we're now beginning to cycle past. I'm talking about this with all of my companies, but cycle past these really high, historically elevated shipping costs. There's going to be a benefit now. So I know this, and so I want you to talk about, from a Lovesac perspective, is you're starting to see these lower overseas shipping costs. How as investors should we think about the benefits your company can have?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Got it. And you mentioned the continued build out of your showrooms, going over time to 400. Are there any other investments that need to be made, say, to the operational model [of Lovesac] to continue to support the growth? 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. Inc. - Analyst : And look, the final question for me, I mean, very much related to the top group's discussion, but it's what the capital needs of the business. How do you think about your cash position now, and what capital, from a capital standpoint, you need to grow?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Anything else you want to -- I didn't ask you when I get out there?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Great. Well, thank you for joining us today, Shawn. Congratulations on the recent success. And very eagerly waiting to watch Lovesac continue to grow from here. 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. Inc. - Analyst : Thanks. DISCLAIMER Refinitiv reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes. In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES REFINITIV OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.