Lovesac (LOVE) delivered strong results for the end of the year, and beat Wall Street’s analyst estimates.
While overall sales dipped slightly year-over-year, margins expanded significantly, and profits surged as the company pulled off an impressive operational rebound from a weak Q3.
So, is now a good time to buy Lovesac stock?
Q4 Notable Points:
- Revenue: $241.5M (4.8% above estimates) (down 3.6% from last year)
- Operating Margins: 19.7% (149 basis points above estimates) (up 359 bps from last year)
- Adjusted EPS: $2.24 (20.9% above estimates) (up 7.9% from last year’s same quarter)
View Lovesac’s full Q4 earnings results + full financials, growth trends, and analyst forecasts >>>
Analysts Think Lovesac Has Over 60% Upside Today
It’s exciting to follow Lovesac today because analysts think the stock has over 60% upside, with an average price target of $32/share. This is significantly higher than the stock’s current price of just over $19/share:
Lovesac Looks Poised to Rebound on Product Momentum and Margin Strength
Lovesac ended fiscal 2025 on solid footing.
Despite a year-over-year revenue dip, the company beat both revenue and EPS estimates, drove stronger margins, and showed signs that recent innovations are starting to pay off.
Management’s tone was confident, especially around the early success of new products like the Reclining Seat. Shawn Nelson, Lovesac’s CEO noted: “Fiscal 2025 was just the beginning. Our clarity around the Designed for Life approach is ingrained into the organization, and we’ve been cooking up new ideas to build a pipeline that should last for a very long time.”
See Lovesac’s full Q4 earnings transcript >>>
1. Margins Rebound as Operational Efficiency Kicks In
Lovesac’s margins made a notable comeback this quarter.
Gross margin hit 60.4%, up 70bps from last year, thanks to lower transportation costs and tighter overhead spending.
Operating margins improved to nearly 20%, beating expectations by over 100bps.
After a rocky Q3, this shows the company’s cost discipline and supply chain flexibility are working as intended.
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2. New Products Are Driving Higher Engagement
Management explained that the Reclining Seat has quickly become one of the company’s most successful launches ever.
With over 18,500 units sold in just a few months with an even split between new and repeat buyers, it’s clear that innovation is actually moving the needle.
Lovesac is also preparing to roll out EverCouch, targeting a broader furniture market beyond modular setups.
3. Growth Outlook Supported by Strong Balance Sheet
Lovesac ended the year with $83.7 million in cash, no borrowings (only capital leases totaling $183 million), and healthy inventory levels.
The company is intentionally overstocked heading into potential tariff changes and has already diversified away from China.
Management feels confident they can manage near-term macro headwinds without sacrificing long-term goals.
TIKR Takeaway
Lovesac beat analysts’ estimates in Q4 thanks to margin improvement and strong early demand for new products like the Reclining Seat.
While revenue dipped slightly year-over-year, the company enters fiscal 2026 with a clean balance sheet, a promising product pipeline, and operational momentum.
Analyze Lovesac to see if it’s a good buy today, or find stocks that look even better!
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
