The company is navigating a slowing economy but expects strong results to end the year.
Shares of furniture business Lovesac (LOVE 21.31%) lifted higher on Thursday after the company reported financial results for its fiscal second quarter of 2025. As of 10:50 a.m. ET, Lovesac stock was up an impressive 25%.
Lovesac gives investors acceptable numbers
For Q2, Lovesac’s management had said it expected net sales of $152 million to $160 million and a net loss of $6 million to $8 million. On the top line, the company performed within this guidance by generating net sales of nearly $157 million. And it performed a hair better on the bottom line, with a net loss of only $5.9 million.
Looking ahead to the rest of its fiscal 2025, Lovesac’s management wasn’t overwhelmingly bullish with its guidance. Previously, it thought it might generate up to $770 million in full-year net sales, but now it thinks $735 million will be the high end. Moreover, it had hoped it could earn up to $27 million in net income but now will try to muster $21 million.
Can Lovesac stock keep rising?
It’s important not to read too much into single-day moves for stocks, but this is especially true for Lovesac stock. It’s a small-cap stock with a low float, meaning there aren’t many shares available for trading. Therefore, small moves from investors can spark big swings in the stock price. In previous quarters, Lovesac stock has also made big moves only to trend back to where it was beforehand.
Lovesac sells furniture more toward the premium end of the market, and a lot is riding on the fourth quarter. It had a $19 million net loss in the first half of fiscal 2025 and expects to lose at least $4 million more in the third quarter before the fourth quarter does the heavy lifting.
This seasonality is customary for Lovesac’s business. If it can hit its guidance this year, I believe the stock will be fine — it’s trading at around 20 times its expected earnings, which is reasonable. In the longer term, I believe this is a good business with a quality product. Investors just need to keep in mind that it can be a volatile ride, potentially more so this year if the economy continues to slow.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Lovesac. The Motley Fool has a disclosure policy.
