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Lovesac (LOVE)

Participants
Rachel Schacter SVP, ICR, IR
Shawn Nelson Founder and CEO
Jack Krause President and COO
Donna Dellomo EVP and CFO
Camilo Lyon BTIG
Maria Ripps Canaccord
Brian Nagel Oppenheimer
Thomas Forte D.A. Davidson
Matt Koranda ROTH Capital
Alex Fuhrman Craig-Hallum
Call transcript
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Operator

Greetings. Welcome to The Lovesac's First Quarter Fiscal 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please not that this conference is being recorded. the to turn ICR. Schacter now will call Rachel over of I you now Rachel, begin. may

Rachel Schacter

Operating morning, Good is Officer; and Chief Chief you. With Shawn Executive Donna Chief Financial President Officer. Krause, Thank Jack everyone. Nelson, call me and Dellomo, Officer; on the

information started, events the our and statements financial These will we our some such get remind about that statements Actual results from prospects. statements. materially forth include expectations, and and would future plans I Before include financial our to forward-looking like you differ of discussed future projections set future regarding performance. may those in

For company’s these filings risks today’s of a SEC, the uncertainties, which includes discussion you the with press should review release. and

of this All make update required of obligation You law. that we them are statements call today future no as events. and on should and as not rely beliefs on forward-looking to except on our based assumptions forward-looking undertake as applicable we predictions by statements

will to Our a substitute information including be from release. to, measure in GAAP the as not include most non-GAAP reconciliation EBITDA and financial A been considered or supplemental financial measures in directly discussion in should as results. These EBITDA. non-GAAP financial our for, isolation measures today such of adjusted non-GAAP addition and measures, GAAP has comparable financial provided press our

over Nelson, Chief Shawn The the Executive to Company. Now call I turn like would of Lovesac to Officer

Shawn Nelson

in XXXX amount on you year accomplishments, fiscal and fair philosophy ago morning, thank Good detail. us weeks I that Rachel. you, of forward Lovesac's Thank where go operating CTC discussed end eight our joining was were strategy and today. everyone, a for out It call we our just

few our financial my up by a quarter Donna quarter review our highlights wrap remarks results initiatives. will of our a first keep our outlined progress items our performance operational reviewing outlook. relating will with other prepared to first the before our on growth and today Jack I key So financials and of brief remarks

continue to year. our We very with overall last our are on pleased build results we momentum as from first quarter

As QX. to the comps two-year fiscal Even of onset first a was relative two-year XXXX strong quarter and late a in closures with basis, of at XX.X%. reminder, we subsequent business very anniversaried the showroom performance the on pandemic combined

Now our let highlights me review of quarter first the performance.

fully Adjusted sales in offset of year in our encouraged For total across fragmented we've very on first across demand period. for prior and focus other total with comparable expand the our and the This experience, our new and and start partially EBITDA to profitability share heavily decrease continued shift in XX.X% growth both, XX.X% strength opened. quarter, that to the Internet reflecting the net broad-based marked of million, back go-to-market sales improving to $XX.X showroom saw our strong the We industry. as existing strength were showrooms achieved are by to offering, demand delivered seek and position our versus to combined this strong market we of environment sales customer time increased the and is million continue products year up reflective $X.X a channel growth customers. now XXX.X% QX. be by We the

showrooms the We for performance with starting quarter, detail. will comp brand our speaks callouts, channel continue our priorities our strategic advance during and A in notable itself. to across few which discuss partners, Jack presence

performance also our seeing strength Buy We Best are in of shop-in-shops. the

of for pleased the leases meant have already balance to moving all opening. our open We are of toward signed year the and showroom to

in already adding allow the to for year, team even slated and innovation we scale to launches Our is us the Besides quickly this agenda are our designers humming. planned and engineers faster track talented engine to future. later on

backdrop, chain what demand I chain As and created it in-stock supply a continue The remains relates do, great the first environment. and they tight want broadly recognize in and products core and our stay of helped done to redundancies our has the international diversification navigating QX. us have team to supply around to chain few supply work the discussed our meet

As we we through ahead, carefully have to manage look this the will year.

across ESG space, to sustainable meant model, front, to continues pair On we operations. create the more them and high-quality to consumer multiple the with develop fans we relationships drive our the long-term philosophy, with to them. platforms circle in CTC CTC long-term plan our to deliver which the continue categories home or raving and services product Under

at is things to all circle consumer the on philosophy. focus long-term the heart of Our

of to making strides addition front. are sustainability Additionally, doing in our and we we're work the in as part governance the side, continued on the ESC environmental focus,

we want will to very of and areas a the perspective channel including week as board as Her innovation, build as has Vitamin member last across product we a for personalization. Phoenix's the and we filling facing new currently and Board and Sharon appointment Shoppe of distribution Directors. this Sharon continue Bill thank position member Just of over the of CEO the be all brand. consumer as Lovesac and diverse to contributions experience announced The and scale Leite in businesses loyalty, Bill serves valuable four is of Sharon years. extensive his

our our So priorities. first the execution continued quarter we strategic very across with are results in summary, pleased and

Jack As year, over and remainder strengthening elevate focused progress. that and considerable our we support to to the priorities customer growth our continuing a to the the stay against will dynamic Jack? operating environment, our that, cover hand foundation With our expanding experience of lies ahead. to brand, strategic it look on to we I'll

Jack Krause

and morning everyone. you, Shawn, Thank good

our pleased key team on our strategic now and to very which We review. strong performance continues progress quarter make our will with first the are I priorities

strategies. First, efficient marketing and merchandising

of high through flights [ph] run our We nonlinear [ph] ramping drive to and marketing from increases learnings fiscal are efficiencies target through these Hulu the include key extension media reach buys, customer of OTT. half and XX driving contributing up our are like leveraging spend. to and and second our more from returns continuing Factors to events,

spend digital which also The as we on more also spending spends include to know but drive targeting have seen digitally increases are both purchases. we our existing channels reach. We new their as such linear in. also customers more TikTok furnishing a researching platforms, higher time home buy introducing increasing We're success

Second, showroom operations. in track and remain We on approximately year. QX to this opened eight XX showrooms open

showroom capabilities Our showrooms post-purchase The first and strong appointments, continue spot added Lovesac to specialists driving mobile omnichannel quarter, To our appointments shopping showroom end, our concierge, was the generated from XX% approximately are the model productivity. further importantly be that scheduling, experience. an component of in important and on like business enhancing of

they additional These touchpoints. to live, incorporating by believe plan serve will but focused the asset up test areas business also in XX light second in our that real in yet areas touchpoint new branded will brand We in trade on consumer estate where initially incremental also the an as physical core strategy. half We our to our consumers where be locations gain manner. an represented by trade we have touchpoints is not opportunity to kiosks

initiative, our Third presence. other expanding channel

and to over the and partnership second about with half this early with to shop-in-shops. open year be next plans XX to expansion our Buy excited plans more for year preliminary open additional We our shop-in-shops Best of continue

our with very plans relationship our and physical pleased presence team pleased the of very are online and have touchpoints Costco exploring roadshows, potential strength to and are business executing our the well. as are We the with with the and we're digitally Costco in expand which future

note. news will We of updates and continue partners pursue we to will when provide also opportunities there's other with

the the second addition investments. returns to physically In our test, as capital. will to fourth, larger just disciplined we of we pilot half year while this on And a be expand making brand test continue and to concierge discussed launching in our touchpoints infrastructure kiosk mobile maximizing seek

and Our brand [ph] attractive infancy to necessary ahead. is growth support and building lies with that the and we’re runway a for infrastructure capabilities in platform the long

previously, As premium we've on the shopping for as more we're comfortable product journey customer mentioned with of configurator products. online post-purchase price and aspects are getting the customers focusing

the and confirmation it pandemic. chains played to success we the but follow-ups are through up in specialist continued set during continue from installation. associates including role cross-trained a These providing We service piloted and reach critical customer continued order, post-purchase customer's the approach all combined strategy customers the associates take the out and These activities, past the global journey, and that guiding the a program this including post-purchase customer to service see rebound shipping evolution winter. post-purchase supply post-purchase details and sales proactive from other of to as of our in showroom sales experience to

seeing success with XX% We new ago. two up years in traffic the versus quarter platform and up ecommerce XX% continued our are conversion with

accounted QX two-year in period. helped been increase order make an demand the Additionally, in important Appointments as the appointment over we XXX% comparable XX% software particularly showrooms has in launch. same the feature value sales of and drive average mentioned, for

In we across terms mitigating efficiencies, to costs, and improvements risk. of increasing chain, areas including supply delivery, make continue reducing

we're said, so helped our the agility that team's to chain supply proud pressures today. of industry us Shawn it's manage As

offset raw the shortages, reduction To promotions freight in As utilized part discussed cost with. been which there promotional import are that enabled a material have has to delays we these by others the date, have in industry are pressures, large environment. in benign pressures, we contending

ERP States continue customers. will China, and and be our Malaysia, diversify and scale we with continue to supply to in-stocks Indonesia, our optimal end us chain global implementing capacity year this by drive system the of to are increasing production new We in United Vietnam, the and help our

levers remain we will all continue to supply tight We will expect to environment. chain what use navigate a

our and we serving The our doing the proposition. with are summary, very the strong tailwinds brand teams that work home are year. in So continue category furnishings start the strengthen pandemic to pleased Lovesac within is to value all and The

look remains our value I and we focus execute strategy call will recognize to we the financials. the on long-term now of over discipline driving Donna review vision the first all to of we Donna? stakeholders. remainder will our environment our year, dynamic the to as to we continue quarter with to turn As and

Donna Dellomo

year $XX.X sales prior our partially compared on the a against pandemic in or in million increased results $XX everyone. period as closures sales $XX.X a prior was you a increase Showrooms increase The the to sales last million million quarter approaching XXXX. comparable $XX.X to framework the Jack. million by quarter showrooms the Good the it sales. increased sales Internet in the I XXXX the period last in year. first first an decrease related as sales XX.X% you, Net remarks review begin my shared quarter was channel prior XXX.X% elevated compared as as first in driven $XX.X in compared due we million first year period our fiscal in million then quarter Thank given net showroom of fiscal and update This to these quarter of morning are sales due channels the I to principally and the by or with how $XX.X closures. $XX.X showroom $XX.X fiscal XXXX offset to will to other temporary to with $XX.X XXXX increase relates to the million year our million showroom to our of locations. in digital million of fiscal of all in of of

shop-in-shops always point-of-sales in control represents $X.X million XX.X% due locations million are related transfers year XXXX to sales transactions sales first in control compared increase of to pop-up-shops as the and recorded. reflect $X.X prior transfers our Other through to shop-in-shops which not when with decorative showrooms year period. to to does and million customers the decreased sales pillows, closures a mentioned. our COVID-XX I by in reminder, which as accessories customer all increased sactional prior the the of to XX.X% product category, the compared increased Internet at comparisons orders against point fiscal to the period just fiscal net first $X.X in include channel which sales sales, $X.X which As quarter pop-up-shops or in the our placed prior made our blankets, other XXXX period and year and category year the directly XX.X% million quarter other in By increased XX.X%. million sales of includes the million the also through prior period, elevated ecommerce the driven $XX.X or to digital sales, sales $XX.X

prior as due the XX.X% XXXX fiscal decreased last from to promotional year sales the activity first less period of in compared quarter year. to sac Our

higher increase [ph] initiatives point lower our and by by We due basis to gross distribution was our period year XXX product prior sales the of partially gross negotiated and of XXX inbound XXX year product costs to warehousing tariffs to net basis and freight in improved the in basis offset mix weeks volume. prior a higher shared Turning costs, outbound margin, orders call, category impact points mitigation over XXX expenses basis XXX in planned period we higher warehouse the discounts, in driven to margin reduction exceeded throughput due on the point costs last reduction basis than with and quarter. due by promotional cover higher first few you over improvement vendor to premium by the and of sactional overall approximately a and leverage related increase last points. of shipped and activity driven quarter points estimated the promotional the primarily weight expectations Distribution

that growth investments, to expenses the based expense to investments first leverage and employment such increase decreased related decrease COVID-XX sales. to areas year-over-year costs, was headquarters offset SG&A related financial of due restrictions. the fees, hold to and percent anticipated expenses, our these that selling sales related insurance to expectations decreased resilience by in in XX.X% both primarily higher lower partially higher rent increase COVID-XX SG&A rent, multiple due as in-store travel also in the to expenses hirings infrastructure our than of an was increase to expenses, of pop-up in in the anticipate locations. travel, expenses quarter based expenses we a by XX.X% to increase half of employment Overhead headquarters equity due expenses related We expense offset in company, to our addition, lower the in partially related related expenses. that the and a credit our shift will employment card related The in sales largely increase costs, equity as driven expenses the were and selling compensation, hiring realized and The level both an on rent shop insurance. second partially warehousing higher increase to offset the and in in in costs due the In infrastructure compensation The increase in leverage was distribution overhead period put in showroom decrease year was volume. the by and fiscal SG&A net related investments Selling principally the in additional prior related in showroom net to costs due on a be the our infrastructure by related measures. and count. net to in increased due fees benefits year. showrooms

first Net to compared SG&A for the $X.X $X.X principally XX.X% first in advertising of well with spends the in revolving gross XX.X quarter operating Advertising the to as XX.X% credit. related first quarter net reinstatement fees approximately sales XXXX, interest the the income quarter to on opened. to fully or related our leverage marketing first unused XXXX decrease margin in prior compared the of marketing was investments year increase in driven showroom Depreciation as expenses prior as leverage of $XX,XXX of XXXX minimum $X.X increased due the fiscal In the to tax and the to from period Tax for period. of in basis XXX compared capital the million to of new in and $X.X to year year, line compared point principally an quarter $XXX,XXX growth million The to as XX.X% million million in increased fiscal was of were was in expense year of the sales to state income the are million prior amortization I now of net on due loss XXXX Our sales. discussed. marketing increase year sales expense investments support net the fiscal $XX,XXX just increase $X.X volume period as expenses in was quarter million locations first quarter related to showrooms. as by the last operating net first of sales to $XXX,XXX and fiscal period the liabilities. prior in

our diluted Before in terminology net our the and per their the a to XXXX refer or income as the earnings share, to an year first attention net to $X.X of please million per and comparable adjusted fiscal loss directly $X.X in $X.XX prior or we million metrics income, of issued to period. $X.XX prior our $X.X income share quarter million of loss reconciliation net in million the in XXXX between the $X.X period. fiscal release turn EBITDA, compared adjusted GAAP each first adjusted most earlier Net adjusted generated per of today. EBITDA measurements We was in compared positive quarter year share of EBITDA diluted of

sheet, revolving remain revolver ended on Turning first and performance. revolver. with charged quarter outstanding the balance release of credit to $XX,XXX of Please XXXX quarter with refer line to of in of our cash the our on fiscal XXXX equivalents strong to the first debt being million fees details $XX.X other in availability on to our cash for to ABL our earnings fiscal the the our related and million timing liquidity press $XX.X continues as we

operating of potential outlook, as XXXX. said fiscal to QX relates it wider Regarding our we pandemic still as a our in earnings environment with outcomes during we call, a are range

we you call update full be models. the your Given providing an year, as on framework will not this, for we helpful we're but that updating that provided will are that formal the share guidance during

pulled expect pandemic. to we due are XX of in restore openings growth expenses strong year another sales targeting approximately the XXXX were that fiscal and back showroom We to with

growth opportunity investments to make ahead. to continue infrastructure multi-year lies substantial that will strategically support We the

well sales year-over-year mid a where openings, scenario driven With we the by in range expect decline would digit the is showroom in additional XX% growth the in mid-single EBITDA range, adjusted margin the with hard margins pressure are expense to mitigate. just discussed. We, intensifying which margin the working others in like are our dynamics headwinds freight as gross as industry facing I the both in investment teams

will to mid and mid-single margins a offset the in pressures reasonable scenario EBITDA on in in a where outcome the therefore We disciplined help still or these side adjusted be very increases believe range. the digits sales XX% expense inflationary

driven XX% EBITDA in expect reduction adjusted slight For adjusted range infrastructure our on and high fiscal dollars expense positive same the by the our that company slightly fiscal efforts is quarter, the projected COVID-XX were year. in placed reinstatements quarter being support the less sales of strategic This last growth being of as XXXX needed investments to with we hold second put measures. growth EBITDA on financial resilience the part than dollars in

still are capital to in million range. to generate from $XX fiscal We XXXX expecting working to and in CapEx cash million be the $XX

a strong from had perspective. So, quarter first the very in net we conclusion, sales profitability and both

and growth. open would the turn on operator execution that, now dynamic for it to who focused like we we call With a can the sustainable Lovesac are as up navigate long disciplined to questions. back We operating term position Operator? environment for

Operator

you. your Instructions] of the Lyon Camilo And proceed first questions. with our Thank Please BTIG. question line comes from [Operator with

Camilo Lyon

momentum. wanted ask to morning firstly Good provided. the Gap] you a on to you. just the [Audio that great and Thank congratulations guidance start Donna, I year, just

achieve range about mid-thirties digit you sales talked growth. EBITDA mid-single you if So

from XXX ensuing down from little a expansion. freight, what suggest coming already put that please. expense just you see margin it profile over you XXX is incremental it then had points that else experiencing Is that margin up back would decelerate basis just And gross talked not a been year? pressure substantially where you pipe basis you of Is something about about half the margin the margin you've that gross of into contemplating? there would the promotions? we're points, the amount pressures freight articulate of Can yet aside I've the that You follow-up quarter

Donna Dellomo

morning. good Yes,

of similar compounding. just out there people keep think I a we're so to that freight other yes, the lot So headwinds

position difficult, container originally had our as side rates specifically making we inventory where is inbound So it's and port it although freight congestion, more it availability, to get projected need it's the and it's more ahead a us, inbound on a costing to inventory just really more get in. lot for other the good people us in that and of of bring some

not So to it's that, at related that's it's – discounting all. principally

or will the more but on do It We that, discounting in dollars even can have sure related in think with QX it's tell in that do still doing freight. strong to those it a to -- very range. is you're EBITDA I we're I reduction that going the QX. still We're when meaningful takeaway but QX make XXX% impact be the inbound positive discounting. pull to headwinds real you modeling, will more that mid-single will most adjusted in the headwinds, have we we generate your to levers planning to than digit in

line way teams the to through the So hard mitigate all to really really, top working are from SG&A.

Jack Krause

Yes, thank you This is for Jack. that.

way sell and to us Just from are will And stickiness growing, to quarters expected to quarter get to we discounts. saw lot the continue on which decreased a those. we strength brand as last at and I add the of you in think the is really couple believe company systemically leveraging what seeing well and we're enable that, the to the of

order inventory really costs been saying potential we'll has in team the mitigate second half. the and great in at freight be later in bringing to However, the

to So, margin what been of those the half. really scaling related starting just of growth the seeing half we're the is and half about strengthening of is, second headwinds a of in the impact get some talking in have and business brand. people first the the lack of really first and headwinds to But these

I think situation and transitory is we other freight trends all So, long one there's the definitely a two terms in would there, is of different agree going one term headwinds.

Donna Dellomo

were bring our also too, quarter, call, down inventory you impacted reserves. will thing Camilo, fourth vendor third in quarter discounting. gross able recall one margin, our earnings and fourth that from throw if to I things had substantial that We even we other some

not our started rebate. is, necessarily we've what in with done working it to to So, give vendors us we've

first to pricing. impactful getting the actually So on those of less the one we're rebates time impact are be and quarter going it in

us So, in that pricing year helping time. the throughout the versus is one reduction

that there's that we work with one us -- know have get we you gives So, that still vendor we that rebate.

the be as years, won't inventory just it rebate seeing as we not product discounting in it again we impactful. prior in the on in number was benefits we're any, The So, and it from reserves. call anticipate also the do reduction

So that's well. something else as

Camilo Lyon

And great question it, my correctly, to really it have reflective of I is, more just you from sounded If second you're more perspective? consumers you Got what color. remarks heard then innovation seeing the from prepared you. consumer the of coming like some products, demanding

of function true? of you. the question next of Are brand? how that is step update timing coincide change that? is, Thank a that now that now the innovation requests has And from the what’s the So and with And been sort pull does they’ve, you launch? getting on the this consumers awareness the that the expected

Jack Krause

a tell and with it can it bit about hand off you start I’ll then because Shawn seeing to little customers. we’re I what

I research our than us shows think, internal they more had. brand customers ever our value that

we’re program customer a time, at create great and a a a while of as really really value, working same a great team So and result which the discounting is great I higher the we’re service. think less, perceived again, product, to

So that’s place now. right certainly taking

happen. to seeing, also we more interestingly advertise, we’re start the stronger also advertising mouth We’re word enough, seeing of

looking telling get brand as starting seen that to which are for. our we that of of some us new percentage increase traction significantly that customers, So a we’ve we’ve is been

So very that. pleased with we’re

defer On side, Shawn the to on innovation any comments that. on I’ll

Shawn Nelson

excited track. launch to this new to year, add nothing forward We believe the look are to the lots future, more product on new come. side. Yes, later We innovation we’re on and our things about

Camilo Lyon

right, All luck. much, thanks guys. Good very

Jack Krause

you. Thank

Shawn Nelson

Thank you.

Donna Dellomo

you. Thank

Operator

comes proceed the questions. your next Our from with Canaccord. Maria question line with Ripps of Please

Maria Ripps

sort performance Good outlook. just a this the drove of was congrats I part create mentioned that anything sort of sort you your morning, a maybe little I color largely of it related warehouse that of to quick this drove more the in there And strong pull does saw any And it on very you to you efficiency? warehouse have of Was forward? I on sort out And wanted this later sort think that bit performance? trends to that strong follow-up. numbers. what April relative and throughput. forward going of for Donna; then else And revenue recognition get drove

Donna Dellomo

morning. Good

finance So we anything able to we is or that them to Again, very we rallied. inventory work get really estimated. we think the not that and what else, estimate, the drives hours the they just had it’s want did looking warehouse our that at has capacity that extra a estimate team in have something be conservative out the We warehouse throughput any is, were thing to more because do don’t throughput the revenue.

the did warehouse accelerating time. extra any So job in at without coming we working what teams the the a in we capacity the of what And on end quarter. do is, do very conservative is estimates great

really that No, that’s do based revenue forward? on pulled So feel seeing. what And any we we is. brought that we’re or what

revenue we’ve can forward we’ve we guidance into see any provided that that feel not the pulled do For QX, QX. on you

Maria Ripps

this sales the about of it. dynamic And sort impressive showrooms continues? obviously helpful. between you thinking quarter, growth as very very are secondly, That’s showroom Got the and how Internet reopening

Jack Krause

Yes, eCom being a primary touchpoints, that where in between physical which showroom. and been touchpoints areas we’re strengthens consistent are showrooms we a the see now where in create brand look, we know, and historically, we’re very of synergistic we source dynamic right were we trade is our

discussed and will is. like a well Buy tests as We’ve in grow and to trade things the the continue areas executions, to well as we will Best as lot potential we the penetrate So of for potential showrooms concierge continue the with of future. kiosk such asset light as

So aggressively, touchpoints, as do as strengthening experience. a way to at return touch possible, continue looks but really many in brand we’ll our that while to best ability delivering we’ll highest the be customers it something the do capital, our potential will on

next strategy will strong development a of four continued be to there over So touchpoint three the a years.

Maria Ripps

Got you both. it, thank

Operator

comes the Oppenheimer. question Nagel proceed next questions. line your The with Thank from of you. with Brian Please

Brian Nagel

a to Great good I year. quarter. too add on Hi, of want start my congratulations the morning. great

Shawn Nelson

Thanks.

Brian Nagel

parts my QX is suggests strength and clearly your different the different So as first economy question, differences are any the differently, performing places, sales, country, continued stores perform your regard activity? and showrooms with the then guidance in reopening sales paces, to regional strong but -- just are different in you now reopenings different seeing QX, of

Shawn Nelson

I seeing anything getting note what we’re normal to whole a Not particular have pandemic called say relationship the now strength we're seeing we’re that note. guess how is, of would during as performing particular the it’s our a, back in nothing showrooms new period think business, were. open now. in markets across And I to right to I been the

Brian Nagel

question marketing the Well the I it. comments at talked TikTok in prepared of I your have, Jack, and you the overall you look some about efficiency mean crosscurrents the think do marketing efforts, what new now, think, their Got we I is marketing second at how should clearly pandemic going about Lovesac this of but and probably with efficiency that how some were point? overall doing forward? I mean, there existing is you

Jack Krause

it’s showrooms the a and think again, Yes, of trade they’re looking at we continue to certainly for at way. we’re is And well the area, way CLV that includes a as interconnected, look it as CAC separate us to at, them which eCom. ratio so really, in But ultimate I looking to businesses. hard

seeing we’re classic us going at conversion a unlike what rates as sales think the order capital direct-to-consumer either What of We we’re efficiency at if foot been. and classical pre-shopping high including ever to costs them, those incremental driven touchpoint, I capital what as and showrooms at I include high brick-and-mortar a being traditional or square be in touchpoint very as measures, company look seeing we But it and think efficient. our in to that’s and do at online. is it it’s because would continue allow you as ever the the, So costs by per lot they’ve they’re to is look do. are been,

more that to that, more from trade they’ve the been, as but we’re we looked a forward, the which business valuation lot getting being as create to a as customer. ever trade commentary away these Really order think of the level. company So about I to alluded thinking of at Shawn if to go brands is efficient the assets areas of of total CTC strong getting more historical that’s local about businesses at in you the ways, is has and closer the much area just, that to are deployment and closer

Brian Nagel

very it, appreciate I congrats much. Okay, you again. thank

Donna Dellomo

Thank you.

Operator

Our questions. proceed Forte with from Please question Thomas Davidson. of line your with next the D.A. comes

Thomas Forte

Great, thanks.

home So, the XXXX, from but meaning sales two up we’re in just if in super think is, first XXXX, because question money very you’re that XXXX, of of cycle also of now the I have locations from economic A in going home middle of feel not calendar you the strong amount of urban. because the consumers category, Shawn, savings is from right XXXX, tied about pandemic, a a growth move large stimulus. to the and questions me. like to period suburban

through elevated your should Shawn get and because grown about the we cycle? to you’ve your grow economic during to ability minimum at over conversely two, the wanted years how company, you. not super of you’ve of couple think Jack, home I home, if the weakness, a it’s Thank thoughts a period of but young historically, interest about in periods a Lovesac next on is then talked relatively how that. historically So And

Shawn Nelson

home. I the home Tom. we would that we that are there are and thanks, many trends good for Yes, for are afoot the believe agree, good

own things to to And rare our extremely way. in for innovate be way, that Designed landscape. in continue will continues unique the We Life on our

trends office their all as headquarters the for. choose microcosm it to has lives, spot washing live of their At change, they companies to to and if Market normal staff of and kind policies now, are those it advanced accumulated accept of and I around. we that back typical want companies same savings drive we And our Lovesac a forces for unfolding grandma’s as to a close, choose time, some will and out There of years amongst in our slower. in know few be happens, house, not chosen is relocate, are are want reaction is spend more to some work to just little as money kind people will far, much And lot they have more mentioned, of from of primarily There crew, that broadly, and to street may think all a company, not some remote. be this so fact, get revenge the the to throughout maybe pandemic. that. will to some a of some American there, own lot closer on. course you because want movement a necessarily. across and some much people work we live be but where And now the Clearly the go more

that of we’ve extremely people we couch for be category. for and that couch going number believe positive, the the acknowledged purchases that’s before. know, is as The outside moving on is going years, driver, particularly driver we as to number so one And one

would our prospects. And bullish optimistic so, we agree with we’re on and very you own

a it cycle. super call Let’s

and characterization. a okay wrong, its world. in other part Lovesac, I stage is I the grow mentioned stake coin can if to in because And side in think nice rapidly. we’re and the grow to due your of that’s that’s continue the question. you what Again, believe, too,

are a company. We still small

a have small piece dominant in share category We a small, captured has captured market very no very that of leader.

stock the the much not while is that It’s you better in the and pandemic, both for happening operating on as buy happening side, every of on costs, long-term we're different new putting while in it’s this left now, what’s to about if the a from of so, XX we’re And like home merchandising couch at you which in different. facing playbook, sheer to merchandising evolve its and as operate that competitors sound playbook. just from retailer. at ship proposition look people the It’s collections, are were be hand we how because profiles. able designed to model, as about advantage, are to Most Life And play, we what’s sold less headwinds may are to vast couches if supply Designed on we face selling collections, at we’re them. seasons, an days, it look and very furnishings just products can world new compel chain into our same intend the

we’ve market lot other a And we’re of so have other ahead so gained we to super said, growth lot categories. By got will cycle. small, the us compete out And more a there’s come we’re kind way, that some products be allow that and share whether not market and share in in because to to capture. or of

And we’re for them the that, so we’re to grateful grateful. tailwinds you call want if

in stronger I our but ever. marketing bit, which has think shows advertising down come been sales spend, and than a have it

growth this, is that years we’re and this growth, back, in three, the traction sales stage and I age our dating of Our four it growth, top this brand is on at. think that exhibits gaining

point ride we we we’re of And right company so, to the and the building continue luck, able I for have enjoy to and right a to at be product can this lot we’ve the been going hopefully to think it growth. time to drive that and years but call get

Thomas Forte

Jack. quarter. you, Donna. Shawn. Great you, Great, Thank you, Thank thank

Shawn Nelson

Thank you, Tom.

Donna Dellomo

Thank you.

Operator

with line the Capital. from is question Koranda of Matt with ROTH proceed next Please questions. your Our

Matt Koranda

thanks. guys, Hi,

could one I it we a dynamic a are there just each coming sort a first as back fiscal see trouble telegraphed like just little just roles SG&A. quarter of dynamically? quarter sounds on and bit talk the if that year. later this each happening? about filling is on can headcount you But kicking may sort hires, questions, just two aren’t maybe It or you’re they costs Where maybe Just like to bit come highlight little of wanted seems having still

Donna Dellomo

we quickly we think more in been a anything moving But can could and we it's the bring little There’s just, in how there’s intentional positive no thought or bit no have recruit down. may I kicking people.

the So to just the bit we to have be shifting sure a in to few original making make that hire. hire hires little we intend to a still we’re quite want and we the from year, made it’s right plan, need later

had be may is little than that’s process helpful. a taking anticipated. the we longer So Hopefully, what

Jack Krause

ever -- it I we’ve I of bit that market Yes, is obviously about there’s color, to little more of and you everybody and seen. recruiting add any think from is just tell thinking actually, cool responses that. and tight we’re our Pretty to quantitatively, than there I can a a know, perspective, seeing it labor ads

is coming So resulting we’re with great stickiness the as same talent in brand, seeing type really of the which recruiter, in. a

we’ve as which throughput, our increasing and digest our really associates incorporated bigger process, of have than associates, think reduced boarding then to ability is as And probably good the internal our many may I part great well. that is hires. really it’s of stickiness, I and because but the a also our appetite was quality think our on for

that like towards go talked So It come we’re going rate not to investment to to. continue levels always it in that about. we’ve the the we’d constant just may

Matt Koranda

you could And just quarter, how Internet that’s talk helpful. out the if high growth of I there. see to thoughts playing up XX%, we your predicated any see it ramp helpful get or for guidance coming be between that then as wanted maybe or on on back revenue about of showroom, from sort Okay, I to next whatnot, the shop-and-shops, is online outlook, of And guess other. it’d and additional a Costco to revenue other breakdown

Jack Krause

during we’ve period, other more out consistently you business. see look some think dramatic immediate think the I look of think that that in than expecting. what And easily think of do, business of comp our post-pandemic things, because to we across at the I if even trends changes you’ll the pandemic start the the dynamics our and segments has to the trackable at a a is, been basis, been are different to two-year saw I with it would way what comps you look is best we two-year quoted I I coming as numbers, at and it lot

Matt Koranda

Okay, queue. Thanks guys. I’ll in back that’s jump helpful.

Operator

you. Thank

with is line Fuhrman proceed question questions. from your Alex next of Our Craig-Hallum. the with Please

Alex Fuhrman

just you back and much very thinking just your sounds the accelerating. great congratulations year. the discounting like been taking response has it the in have problem for And questions Thanks kind Great. wanted my but I promotions chain from a how growth you’ve sales been here, of constraints, about actually and perspective mean, supply big great promotional ask picture to on cutting broadly, to start think pricing? about I on to activity, to and

As There’s has differently? your about that and think about an going priced that you you is or product a and been pricing kind think it under possible less forward? in be little promotional bit at historically, just QX, of what look to opportunity experienced

Jack Krause

question. Good

that the increase execute, that customers. think say a the brand years, we’ve been in last of the, brand significant is the relative of in the hasn’t had. really to have historically underpriced, in we to I minds our value the I what -- as the couple we’ve would seen started product our But

service the I so think customer And themselves, getting in delivery package is more product, value terms that a of and improvements, expects for products of a lot the the way the quality we’re seeing higher we pay. product improvements, they the

invested historically to product that grow and and dramatically So certainly, would and invest be innovation, we and continue discounting think to and the desire I marketing our dollars expansion. in

as will So we them. take these we see opportunities,

benign Now, focused very right on of dynamic I year opportunity. we want sure last what’s of environment, look for I Because historically, relationship, strategically has we which strategically, we’re our, we in too now. and as that think execution happening agile to been an we it’s know value And environment. get a make I terms now us think right don’t conservative because in given we’ve also pretty price a think

show So increasing increasing a and on signs less to the that good delight and we’re win as a operate happening and great not really mouth, only of trends, but we’ve through premium ROIs really we’re relative of seeing stickiness that’s discounted brand advertising, increasing the word the to to value seeing as brand, intend things traction surprise the being All brand actually customer. we product brand, and and discussed,

that transitory But we some we’re the pursue to long-term aware know before that. right we any in exactly decisions, past XX make make the also we’ll go. may again, we very So we’ve months, to seen be sure and dynamics that way strategically, want

Alex Fuhrman

helpful. really Jack. that's Great, Thanks,

Operator

and we’ve reached I’ll closing the hand At our call session you. this for the of remarks. management question-and-answer Thank time, to end back

Shawn Nelson

call. earnings so support. you for us for thank everybody’s Yes, appreciate fiscal XXXX much We our joining QX

entire team forward very are We we continuing conversation the you. our #Lovesac of results to continues to tremendous deliver look appreciative and who family with

Operator

Thank conference. you. conclude today’s This will

participation. this at your your Thank may lines you for time. You disconnect