The Lovesac Company (NASDAQ: LOVE) recently hosted an investor day to unveil its strategic framework and multi-year financial algorithm. The company's leadership team, including CEO Shawn Nelson, President and COO Mary Fox, and CFO Keith Siegner, outlined their vision for the future, including new products, growth initiatives, operational excellence, and financial ambitions.
The company's multi-year financial algorithm outlines its ambitious targets, including annual net sales growth of 10% to 15%, a gross margin rate of 59% to 60%, advertising and marketing expenditure of approximately 12.5% of net sales, annual adjusted EBITDA margin rate expansion of 50 to 100 basis points, and annual EPS growth of at least 25%.
Looking specifically at fiscal 2026, Lovesac provided preliminary expectations, including annual net sales growth of 7% to 12%, a gross margin rate of around 59%, advertising and marketing expenditure of approximately 12.5% of net sales, an annual adjusted EBITDA margin rate expansion of 100 to 150 basis points, and annual EPS growth of at least 100%.
These financial targets are based on assumptions of annual industry outperformance of 10% to 15% and a tax rate of about 26.5%, without considering any potential impact from new tariffs.
Lovesac, known for its innovative and adaptable furniture, including sactionals and premium foam beanbag chairs, has a strong focus on innovation, with its core products protected by a robust portfolio of utility patents. The company primarily markets and sells its products online, supported by showrooms and partnerships with third-party retailers.
In non-GAAP financial measures, Lovesac defines adjusted EBITDA as earnings before interest, taxes, depreciation, and amortization, adjusted for certain non-cash and other items. The company believes that these non-GAAP financial measures provide meaningful supplemental information to investors and allow for a better understanding of its business performance.
Following these announcements, the company's shares moved -1.3%, and are now trading at a price of $26.6. For more information, read the company's full 8-K submission here.