LOVE · Lovesac
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $18.70
Note written ·
Price against the kill line
19.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $18.70, on record since 11 November 2026. The shares are down 11.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $18.70, the highest close since the July peak, which would show the shares leading the S&P 500 again. Third-quarter net sales above the $150 million top of the guide would point the same way.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Consumer Discretionary
Quarter to 2 August 2026, filed 10 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 161
- Revenue, change on a year (%)
- +0.4
- Gross margin (%)
- 68.4
- Operating margin (%)
- 6.8
- Free cash flow, four quarters ($M)
- 45.3
- Price to earnings (×)
- 12.2
- Free-cash-flow yield (%)
- 20.7
All filed numbers
What Lovesac reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 161 | +0.4 | 68.4 | 6.8 |
| first filed | 138 | −0.1 | 52.1 | −12.6 |
| first filed | 248 | +2.7 | 58.1 | 18.1 |
| first filed | 150 | +0.2 | 56.1 | −10.5 |
| first filed | 161 | +2.5 | 56.4 | −5.5 |
| first filed | 138 | +4.3 | 53.7 | −10.8 |
| Pre-tax income ($M) | 12.2 |
| Net income ($M) four quarters: 17.9 | 7.4 |
| Diluted shares, change on a year (%) against the quarter to 3 August 2025 | +0.2 |
| Operating cash flow ($M) | 67.1 |
| Capital spending ($M) | 21.8 |
| Free cash flow ($M) | 45.3 |
| Cash and short-term investments ($M) | 68.8 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) −8.1% on a year | 12.5 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 16.7 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 210 |
| Market value ($M) | 218 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | 12.2 |
| Price to book value (×) | 1.0 |
| Free-cash-flow yield (%) | 20.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 22.1% of shares outstanding sold short, 16.5 days of average trading to cover, −1.0% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $515K | $92K |
The thesis
Lovesac's shares are more likely to lag the S&P 500 over the next three months. Management cut fiscal 2027 guidance on 10 September 2026, and the Cush launch of 22 October 2026 has no reported sales yet. The third-quarter report, expected around 10 December 2026, decides whether sales and losses stay inside the lowered guidance.
The shares closed at $15.23 on 12 November 2026. That is the third straight lower close after $16.52 on 9 November 2026, and 11.9% below the price three months earlier ($17.29 on 14 August 2026). The 52-week intraday high is $19.25, set on 7 July 2026. The last close sits 20.9% below it.
On 10 September 2026 management cut fiscal 2027 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) guidance to $31.5–35.5 million from $35–46 million. Net sales guidance fell to $690–710 million from $700–740 million (company releases, 15 June 2026 and 10 September 2026). Net income guidance of $14.5–18.5 million includes $21.0 million of one-time tariff refunds and interest, so the operating business is guided lower.
The market has priced in the cut: the shares closed at $15.23 on 12 November 2026, just above their 50-day average of $15.15 and 200-day average of $15.20, and below the $20 and $18 analyst targets set after the cut.
Bullish and bearish views on The Lovesac Company
The bull case on The Lovesac Company (LOVE), in brief: second-quarter sales grew slightly. The bear case: underlying profit guidance fell.
Bull case
- Second-quarter sales grew slightly. Net sales were $161.2 million for the quarter ended 2 August 2026, up 0.4% from $160.5 million a year earlier. Showroom sales rose 4.6% to $114.1 million (fiscal second-quarter 2027 results release, 10 September 2026).
- A third product platform reaches the holiday season. Cush uses three core pieces that form nine configurations. It went on sale at select showrooms on 22 October 2026 and then online (company press release, 26 October 2026). The third-quarter guide of $140–150 million in net sales does not break out Cush.
- The balance sheet carries no debt. Cash was $68.8 million on 2 August 2026. The company repurchased $7.2 million of stock in the first 26 weeks of fiscal 2027, and about $54.1 million of authorization remained after the 26 March 2026 expansion (results release, 10 September 2026).
- Short interest is large relative to the float. Short interest was 2.81 million shares, 26.34% of the 10.68 million-share float, with 12.65 days to cover on 5 September 2026 (stockanalysis.com). A positive surprise in the report could force covering.
- Insider filings show no open-market selling. The latest Form 4 is a grant of 5,238 shares to director Alan Boehme, dated 9 September 2026 (SEC Form 4, filed 11 September 2026).
Bear case
- Underlying profit guidance fell. Fiscal 2027 adjusted EBITDA guidance dropped by $3.5 million at the low end and $10.5 million at the high end, to $31.5–35.5 million. Net sales guidance fell to $690–710 million (company releases, 15 June 2026 and 10 September 2026).
- Reported margin overstates the business. Second-quarter gross margin was 68.4% as reported and 56.0% excluding refunds of tariffs charged under the International Emergency Economic Powers Act. The refunds and interest totaled $21.0 million, and adjusted EBITDA was a loss of $1.3 million (results release, 10 September 2026).
- Same-store sales are falling. Omni-channel comparable sales fell 1.9% and internet sales fell 5.3% to $40.2 million in the second quarter, while the company added 14 net showrooms to reach 284 (results release, 10 September 2026).
- The third quarter is guided to a loss. Management guided net sales of $140–150 million, a net loss of $9–12 million and an adjusted EBITDA loss of $7–10 million (results release, 10 September 2026).
- Analysts lowered targets after the cut. Canaccord cut its price target to $20 from $22 on 10 September 2026, and DA Davidson cut its target to $18 from $20 on 11 September 2026 (Investing.com analyst ratings reports).
- Tariff exposure moved, not ended. Sourcing shifted from China to Vietnam, Malaysia and Indonesia, where duty rates roughly doubled (company disclosures, 10 September 2026).
Price setup
The shares closed at $15.80 on 6 November 2026, $16.52 on 9 November 2026, $16.09 on 10 November 2026, $15.78 on 11 November 2026 and $15.23 on 12 November 2026 (adjusted daily closes). The last close sits just above both the 50-day average of $15.15 and the 200-day average of $15.20. A close below both averages would put the shares under the range they have held since the guidance cut.
The 52-week intraday high is $19.25 (7 July 2026). The 52-week closing low is $10.54 (20 March 2026). The three-month change is –11.9%.
The float is 10.68 million shares, beta is 2.03 and short interest was 26.34% of float on 5 September 2026, so large moves in either direction are plausible. The earnings date is about four weeks away, and the shares trade into a report that either confirms or breaks the lowered guide.
Catalysts ahead
- ~26 November 2026 (est.): Company announcement of the fiscal third-quarter 2027 report and call date. Last year the date was announced on 26 November 2025 for a 11 December 2025 report, so the announcement fixes the timing of the event that decides the call.
- 27 November 2026: US Black Friday, the start of holiday shopping. Early holiday demand commentary bears on whether the Cush launch lifts fourth-quarter sales.
- ~10 December 2026 (est.): Fiscal third-quarter 2027 results, guided to net sales of $140–150 million and an adjusted EBITDA loss of $7–10 million. Tests whether the lowered fiscal 2027 guidance holds; the first and second-quarter reports both came on Thursdays, 11 June 2026 and 10 September 2026.
What would change the view
A daily close above $18.70, the highest close since the July peak, which would show the shares leading the S&P 500 again. Third-quarter net sales above the $150 million top of the guide would point the same way.
What it trades with
Lovesac sells premium modular furniture, so its sales follow discretionary home spending, housing turnover and consumer confidence. Its beta of 2.03 (stockanalysis.com, 5 September 2026) means it tends to move about twice as far as the market. With a small float and heavy short interest, company news can move the shares more than sector news. Tariff policy and sourcing costs link it to other import-dependent home goods retailers.
The evidence, claim by claim (8)
- Net sales $161.2 million, up 0.4% from $160.5 million; omni-channel comparable sales down 1.9%; showroom sales up 4.6% to $114.1 million; internet sales down 5.3% to $40.2 million; 284 showrooms after 14 net additions. Lovesac fiscal second-quarter 2027 results release · as of
- Gross margin 68.4% as reported and 56.0% excluding tariff refunds; $21.0 million of refunds and interest received; net income $7.4 million ($0.51 per diluted share); adjusted EBITDA loss of $1.3 million. Lovesac fiscal second-quarter 2027 results release · as of
- Fiscal 2027 guidance now net sales $690–710 million, adjusted EBITDA $31.5–35.5 million, net income $14.5–18.5 million; the range reaffirmed on 15 June 2026 was net sales $700–740 million and adjusted EBITDA $35–46 million. Lovesac fiscal second-quarter 2027 results release; company release 15 June 2026 · as of
- Third-quarter guidance: net sales $140–150 million, net loss $9–12 million, adjusted EBITDA loss $7–10 million. Lovesac fiscal second-quarter 2027 results release · as of
- Cush, a third modular seating platform alongside Sactionals and Snugg, went on sale at select showrooms on 22 October 2026 and then online. Lovesac press release via PR Newswire · as of
- Canaccord cut its price target to $20 from $22 on 10 September 2026; DA Davidson cut its target to $18 from $20 on 11 September 2026. Investing.com analyst ratings reports · as of
- Short interest 2.81 million shares, 26.34% of a 10.68 million-share float, 12.65 days to cover; beta 2.03. stockanalysis.com statistics page · as of
- Cash $68.8 million and no debt at quarter end; $7.2 million of stock repurchased in the first 26 weeks of fiscal 2027. Lovesac fiscal second-quarter 2027 results release · as of
Sources
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