Lovesac Co at Stifel Cross Sector Insight Conference (Virtual) Transcript

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

Question: Lamont Williams - Stifel - Analyst : With that, let's just dive right into it. Shawn, for those that may be less familiar with Lovesac and the story here, could you just give the brief overview of the business, the products you sell and the Designed for Life philosophy?

Question: Lamont Williams - Stifel - Analyst : Yes, you touched on -- and during the pandemic, you learned you could drive your own traffic. You guys also made a number of enhancements to the user experience during the pandemic. You basically got a free look at a number of things that you were able to pivot into very quickly. Could you just talk about some of the enhancements to the consumer experience? You have a new website. You developed a post-purchase specialist role, and then there's the -- the list goes on. Could you just talk about some additions that you've done and how that is enhancing the customer experience?

Question: Lamont Williams - Stifel - Analyst : Right, right. The supply teams backed up has been an important topic in the category recently. And yesterday, you guys spent some time on it on the earnings call. You mentioned that you are in a very good inventory position now. And you have been even going back to the holiday season while many of the other operators in the space have seen long delays and out of stock. Could you just talk about some of the things that you have built into the supply chain to enable you to have this good inventory position now, and then what you expect going forward? You noted yesterday, supply chain is going to be something you have to manage carefully for the rest of the year, and you are starting to see higher freight cost. Could you just delve into those two?

Question: Lamont Williams - Stifel - Analyst : Okay. And just shifting a little bit, you are increasing the level of investment this fiscal year as some of the initiatives were postponed during the pandemic. You mentioned yesterday there was -- that the level of spend was a little bit lower in 1Q than you might have expected going into it. And we should probably see an elevated level of spend for the balance of the 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. JUNE 10, 2021 / 12:40PM, LOVE.OQ - Lovesac Co at Stifel Cross Sector Insight Conference (Virtual) Could you just discuss the various buckets of spend that you were targeting, and how are you thinking about the impact on margins, following the strong margin year that you had last year?

Question: Lamont Williams - Stifel - Analyst : Right. And just a quick follow-up to that, you've mentioned reduced promotions. The promotional landscape has been fairly benign, and part of that could be due to what is going on in the supply chain. Do you think that this -- as we recover and maybe the supply chain starts to see improvements whenever that is, could that promotional landscape intensify back to what we've seen previously? Or how are you thinking about that, the balance this year into next year and as part of the recovery?

Question: Lamont Williams - Stifel - Analyst : Okay, and just a follow-up. You touched on the marketing. You've made some marketing changes to your marketing strategy, and some of that is based on the learnings that you had last year. You are seeing a stronger return on your marketing investment, and you just talked about stronger

Question: Lamont Williams - Stifel - Analyst : Okay. We have a question. I wanted to touch on the store strategy. You saw really strong sales of e-commerce last year, and it often gets asked -- yesterday, you noted 25 new showroom openings this year. In addition, you have the shop-in-shop program with Best Buy. You also touched on yesterday a kiosk test in some markets, where you don't have a physical presence. How should we think about the physical touch -- your physical touch point strategy -- showrooms plus other various typical models, and that interacting with the e-commerce channel, which you saw considerable strength in last year?

Question: Lamont Williams - Stifel - Analyst : Okay. And switching gears a little bit to more of a macro question, the furniture category has been exceptionally strong, given the stay-at-home dynamics and strong levels of housing turnover. Are you seeing any changes at the industry level or in your business as the economy starts to normalize here?

Question: Lamont Williams - Stifel - Analyst : Okay. And then there was just a final question, and you touched on it briefly. Just on -- you are seeing some competitors come out with various versions of modular couches. How do you think about the competitive landscape as you -- yes?

Question: Lamont Williams - Stifel - Analyst : Great. With that, I think we are out of time here. Shawn, thank you very much for your time this morning. This has been great. And as well, thank you to everybody in the audience, and everybody, just have a good day.