The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Michael Baker - DA Davidson & Co - Analyst
: Thanks. And I think Tom didn't get to ask as a follow-up. But anyway, I will -- let me ask. I know you're not giving guidance for next year, but
a lot of changes for fiscal 2027 versus what we were previously thinking. You're pushing out the line to the new room, you're cutting back
on showrooms, but you're launching a new sofa. It sounds like you could be a little bit more promotional.
Can you just help us with some of the P&L impacts we should expect next year in terms of how that all impacts sales, costs, margins, et
cetera, more domestic manufacturing? Again, a lot of changes for next year. Give us some help, please.
Question: Michael Baker - DA Davidson & Co - Analyst
: Fair enough. If I could ask a follow-up. I understand the desire to be prudent for the fourth quarter outlook. But the industry seems like it's
better than it was. You're seeing a lot of momentum, strong Black Friday, et cetera.
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DECEMBER 11, 2025 / 1:30PM, LOVE.OQ - Q3 2026 Lovesac Co Earnings Call
I get that there's more difficult comparisons but you knew that. So why the lower fourth quarter outlook today than what was implied in your
guidance that you gave three months ago, again, if the industry seems to be getting better and you have some momentum? Is it that the
industry improvement isn't as -- it's better but not quite what you thought it would be? Just trying to square that circle.
Question: Michael Baker - DA Davidson & Co - Analyst
: Fair enough. Thank you.
Question: Matt Koranda - Roth Capital Partners LLC - Analyst
: Hey, guys. Good morning. I just wanted to make sure I understood the cadence of demand during the quarter and then into the fourth
quarter here. So maybe just at what point in the third quarter did demand get worse? It sounded like the middle point of the quarter. Are
there any regions where you saw a concentrated weakness? And then the drivers of improvement into the fourth quarter, it sounds like
promotions and sharper on marketing.
But maybe just correct me if I'm wrong there. And then are comps actually positive quarter-to-date? I Just want to make sure that -- I mean,
giving the sense that, I guess, Black Friday and Cyber Monday were strong. But is the full quarter-to-date comp positive quarter-to-date
here?
Question: Matt Koranda - Roth Capital Partners LLC - Analyst
: Okay. Very clear. Thanks, Mary. And then on the gross margin outlook, I guess what's driving the softer outlook in the fourth quarter that's
implied here? Is that incremental pressure from the promotions that you need to run to induce conversion? What's the tariff pressure also
that's factored into the end of the year here?
Question: Matt Koranda - Roth Capital Partners LLC - Analyst
: Yes. I'll leave it there, guys.
Question: Brian Nagel - Oppenheimer & Co Inc - Analyst
: Hey. Good morning. The first question I want to ask, just with regard to the reshoring comments, and I know, Shawn, we've talked about
this for a while now, plans for Lovesac to bring more manufacturing back to the United States. So it seems the conversation suggests that
it's happening and happening aggressively.
So the question I want to ask is, I mean, if we think about the model for Lovesac, the comment suggests it should be neutral-ish to, I guess,
gross margins or gross profits. But I mean, what would be the longer-term benefits to the Lovesac model with bringing manufacturing back
to the US?
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DECEMBER 11, 2025 / 1:30PM, LOVE.OQ - Q3 2026 Lovesac Co Earnings Call
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