Lovesac Co Q2 2026 Earnings Call Transcript

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

Question: Maria Ripps - Canaccord Genuity Corp - Analyst : Good morning and thanks for taking my question. First, so as you undertake your brand evolution sort of refresh, do you anticipate any changes to the customer acquisition approach or maybe marketing effectiveness here in the near term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2025 / 12:30PM, LOVE.OQ - Q2 2026 Lovesac Co Earnings Call

Question: Maria Ripps - Canaccord Genuity Corp - Analyst : Got it. That's very helpful. And then I wanted to ask about Snugg and sort of now that the product is launched in more than 100 showrooms. Can you maybe help us think about sort of the type of partnerships or distribution partnerships that would be sort of most complementary for this platform?

Question: Maria Ripps - Canaccord Genuity Corp - Analyst : Got it. That's very helpful. Thank you, both.

Question: Michael Baker - D.A. Davidson & Co - Analyst : Okay. Thanks. Can you talk about a little bit more detail on what has changed in terms of the EBITDA outlook versus a few months ago? You said tariffs, you said promotional activity, is one of those bigger than the other? And on tariffs, maybe I don't know if you can help us with a little more specificity. I thought sort of tariffs are coming in lower than expected. At one point, we're expecting over 100% in China. So what on the tariffs is worse than expected? And how much of the reduction in guidance is due to the promotional activity?

Question: Michael Baker - D.A. Davidson & Co - Analyst : Okay. Thanks for that color. If I could ask one question of Shawn. Shawn, I think you had said new -- maybe -- I don't know if you specifically call it the new room, but it sounds like a big new launch, new room potentially, you said at least a year away. That sounds like the end of calendar 2026. Is that -- I thought it was going to be sort of earlier in 2026. Maybe I misinterpreted that. But is that new launch, new room that you have teased, is that being pushed out at all?

Question: Michael Baker - D.A. Davidson & Co - Analyst : Got it. Okay. One more, if I could. Any change -- I mean, I presume not because we haven't talked about it, but any change in that sort of long-term outlook that you guys talked about at your Analyst Day, which, again, requires a pretty big ramp in terms of growth beyond 2025, sort of 2025, a little bit of an off year and then growth in calendar 2026 and 2027 and beyond a much, much greater ramp. Is that still the idea?

Question: Michael Baker - D.A. Davidson & Co - Analyst : Great. Thank you for the color.

Question: Matt Koranda - Roth Capital Partners LLC - Analyst : Yes, thanks. Just wanted to touch on the progression of the quarter. You mentioned the category improved, I think, across the quarter and sustained into July and perhaps into August. But did you see a pickup that was kind of commensurate with that in your own comp performance during the

Question: Matt Koranda - Roth Capital Partners LLC - Analyst : Okay. I appreciate that, Mary. And then just curious, the customer response to some of the pricing actions you guys have taken on Sactionals, especially in the last few months, has it changed conversion from the quotation pipeline in any way? Are you seeing sort of responses where folks trade into the, I guess, now Snugg? What's the way to think about sort of the customer response to those pricing actions?

Question: Matt Koranda - Roth Capital Partners LLC - Analyst : Okay. I appreciate that, Mary. And then maybe just for Keith, the gross margin progression, I know it's been covered a little bit, but I just want to make sure I understand it clearly. Third quarter, the headwind is really we're still not lapping the heavier promotions from last year. So we have the heavier promotion putting pressure on product margins and then heavier tariffs pressure as well in the third quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2025 / 12:30PM, LOVE.OQ - Q2 2026 Lovesac Co Earnings Call But then that flip to the positive or, I guess, flattish to positive gross margin that's implied in the guide comes from basically just lapping promos from last year? And maybe just help us -- help me understand that a little bit more.

Question: Andrew Chasanoff, CPA - Oppenheimer & Co Inc - Analyst : Hi, this is Andrew Chasanoff on for Brian. Thanks for taking our questions. Just a few quick ones. In terms of just gross margin, how are you guys thinking about what the unmitigated tariff cost for Love is right now? And does your guidance contemplate any further pricing actions in addition to what you already discussed?

Question: Andrew Chasanoff, CPA - Oppenheimer & Co Inc - Analyst : Awesome. And if I could just follow up quickly on the expense side. I understand that you discussed kind of the marketing in detail, but is there any reason to think that the expense profile of the business is changing as we go into back half '25 and into '26? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 11, 2025 / 12:30PM, LOVE.OQ - Q2 2026 Lovesac Co Earnings Call

Question: Andrew Chasanoff, CPA - Oppenheimer & Co Inc - Analyst : Awesome. Really appreciate it. Thank you.