Lovesac Co Q1 2025 Earnings Call Transcript

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

Question: Maria Ripps - Canaccord Genuity LLC - Analyst : Good morning and thanks for taking my questions. First, could you maybe share a little bit more color on your marketing efforts and how the partnership with the new media agency has been progressing so far? And then maybe more broadly, what are some examples of things that you can do differently or maybe more effectively now that you're working with a larger agency?

Question: Maria Ripps - Canaccord Genuity LLC - Analyst : That's very helpful. And Mary, you talked about sort of moving to direct carrier relationships. Can you maybe give us a little bit more color on that? Is that something that you've already launched? Is it sort of -- is there anything you can share around sort of maybe the timeline of the launch? And how should investors think about incremental benefits to gross margins as a result?

Question: Maria Ripps - Canaccord Genuity LLC - Analyst : Got it. That's very helpful. Thank you so much for the color.

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Good morning. First off and again congrats on managing well a very difficult environment. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2024 / 12:30PM, LOVE.OQ - Q1 2025 Lovesac Co Earnings Call

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : So the first question I have and I think it's a bit of a follow-up to that prior question. But you talked about this inflection in your business that March and April being much better than February. So you shifted -- you discussed, you've shifted (technical difficulty) advertising partners, but can you talk more specifically about the steps you took that helped to fuel that inflection stronger in your business beginning March?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : It's very, very, very helpful, Mary. Second question I have, just from a backdrop perspective, and I know you all continue to highlight is that the success that Lovesac is lagging in taking share in a difficult backdrop -- but I just wanted to check in on the backdrop. Do you think it's getting worse? We were hearing more data points out there to suggest that particularly the lower income, maybe middle-income consumers actually pulling back further. Are you seeing actually a difficult backdrop emerge here?

Question: Brian Nagel - Oppenheimer & Co. Inc. - Analyst : Thanks, Shawn. Appreciate the color.

Question: Thomas Forte - Maxim Group LLC - Analyst : Great. Thanks, Shawn, Mary, and Keith, congrats on the quarter. I have one question and one follow-up question. (inaudible) the first question, can you talk about the frequency of product innovation for sacs? I can't remember the last time you had something of this nature. And then can you talk about how consumers respond in the past when you had product innovation for sacs?

Question: Thomas Forte - Maxim Group LLC - Analyst : Great. Thanks for that Shawn. Right. So you touched on this in your prepared remarks, but I was hoping you can give some additional comments on your in-house e-commerce efforts and your long-term vision for less Sac e-commerce strategy?

Question: Thomas Forte - Maxim Group LLC - Analyst : Great, thank you Mary, look forward to that.

Question: Matt Koranda - ROTH Capital Partners, LLC - Analyst : Hey guys, good morning. Thanks for taking the questions. Just wanted to touch on the sales outlook for the full year and sort of what the back half implied numbers would suggest, I guess, to get back to the midpoint of the full year sales guide we would require, I guess, a return to kind of mid-single-digit growth in the back half of the year. Can you just talk about what the omnichannel comps would look like in that scenario? Do they get back to breakeven or even positive? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2024 / 12:30PM, LOVE.OQ - Q1 2025 Lovesac Co Earnings Call

Question: Matt Koranda - ROTH Capital Partners, LLC - Analyst : Helpful. And then maybe just dovetailing off what you just mentioned, the touch points for the year, maybe it sounds like it's probably front-half loaded, just given that we opened a bunch toward the end of the first quarter, but maybe if you could talk about the progression of showroom openings for the year and have we changed any plans on that front in terms of total amount to be opened?

Question: Matt Koranda - ROTH Capital Partners, LLC - Analyst : Okay, helpful. And then maybe if I could sneak one more in just a follow-up on the gross margin question that was asked earlier. I guess it sounds like to get to the high 50s, we're getting a little bit less benefit from inbound freight, but then outbound becomes a positive driver as we move into the second quarter and beyond. I guess the plug for me is what pressure are we factoring in on product margins for the rest of the year? Maybe if you could just touch on that, and any change to sort of planned promotional activities. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 13, 2024 / 12:30PM, LOVE.OQ - Q1 2025 Lovesac Co Earnings Call

Question: Matt Koranda - ROTH Capital Partners, LLC - Analyst : Okay. Very helpful, jump back in queue. Thanks guys.

Question: Keegan Cox - D. A. Davidson & Co. - Analyst : Hi guys. I just wanted to ask about the promotional environment. How do you guys feel you stack up against the competition? Your promotions were a little bit more in this quarter than 4Q '23. So just wondering how that is going to trend throughout the year?

Question: Keegan Cox - D. A. Davidson & Co. - Analyst : Awesome, thank you. And then a follow-up is just we saw yields came down a little bit yesterday and your stock reacted positively to it. So how sensitive do you guys think you are to interest rates?