Shares of U.S. furniture retailer Lovesac ( NASDAQ: LOVE ) slipped as much as 12.5% to $26.15 in Thursday afternoon trading, after initially having gained in premarket hours on a FQ2 2023 earnings beat.
LOVE earlier posted Q2 GAAP EPS of $0.45 which beat estimates by $0.04 . Its revenue increased 45% Y/Y to $148.5M, which also beat expectations by $17.99M .
Investors initially appeared to react positively to the earnings beat in premarket trading, however the shares had pared most of the gains when they opened for trading and then slipped into negative territory through the day.
LOVE shares were trading 11.9% lower as of 1525 ET. If the losses hold, they are on track to close in the red for an eight session in nine .
The Stamford, Conn.-based company sells couches, sofas, bean bags and accessories such as pillows and blankets.
Though the company posted an earnings beat, it also said that its quarterly total comparable sales growth of 31.1% was lower than the 39.5% growth in the same period last year.
LOVE's total merchandise inventory also gained significantly, ending at $146.6M as of July 31, 2022, compared to $75M as of last year.
The company said the rise in inventory was related to a stock inventory increase of $38.4M coupled with an increase in freight capitalization of $33.2M related to an increase in inbound freight expense.
LOVE CFO Donna Dellomo on the earnings conference call said that while the company was not providing formal guidance, it continued to expect fiscal 2023 gross margin rate to be about 300 bps below fiscal 2022.
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Lovesac shares down ~12%; co reports Q2 earnings beat, slower comp sales growth