Lovesac 4Q Results Beat Estimates; Street Says Buy

The Lovesac Company posted strong results in 4Q and FY21. The furniture company reported a 4Q diluted EPS of $1.37, which came in ahead of analysts’ estimates of $0.58. Revenue for the quarter came in at $129.7 million, up by 40.7% year-on-year and beating consensus estimates of $116.1 million.

The Lovesac Company’s (LOVE) CEO Shawn Nelson said, “Lovesac delivered landmark results in fiscal 2021, as the power of our model, our products and our operational excellence was fully manifest. This included an outstanding finish to the year with fourth quarter net sales growth of 40.7%, comparable sales growth of 45.0%, gross margin expansion of 890 basis points and a more than threefold increase in Adjusted EBITDA to $25.9 million.”

“Throughout the year, we also delivered tangible results on key strategic initiatives including compelling new product launches, creative utilization of our showrooms and other channels to expand customer touchpoints, and efficient marketing and merchandising strategies,” Nelson added.

The rise in sales in the fourth quarter was driven by an 86.1% jump in internet sales for the company due to a shift in customers’ preferences and an increase in marketing activities. LOVE’s operating margin was 16.8% of its net sales in 4Q. (See The Lovesac Company stock analysis on TipRanks)

The company is aiming towards a fully sustainable and circular business model and wants to achieve a zero-waste and emissions target by 2040.

Yesterday, Roth Capital analyst Matt Koranda raised the price target from $50 to $80 and reiterated a Buy rating on the stock. Koranda believed that the company would post strong 4Q earnings due to sustained strong demand in the category of home goods that could last for the foreseeable future.

Wall Street currently rates LOVE as a Strong Buy based on 5 Buys. An average analyst price target of $70.75 implies a 11.8% upside at current levels.

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