LOVESAC CO (NASDAQ:LOVE) Q2 2020 Earnings Conference Call Transcript

Sep 11, 2019 • 08:30 am ET

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LOVESAC CO (NASDAQ:LOVE) Q2 2020 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings, welcome to Lovesac Second Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to Rachel Schacter of ICR. Thank you. You may begin.

Executive
Rachel Schacter

Thank you. Good morning, everyone. With me on the call is Shawn Nelson, Chief Executive Officer; Jack Krause, President and Chief Operating Officer; and Donna Dellomo, Chief Financial Officer.

Before we get started, I would like to remind you that some of the information discussed will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections and our plans and prospects. Actual results may differ materially from those set forth in such statements.

For a discussion of these risks and uncertainties, you should review the company's filing with the SEC, which includes today's press release. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them, except as required by applicable law.

Our discussion today will include non-GAAP financial measures, including EBITDA and adjusted EBITDA. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of the most directly comparable GAAP financial measures to such non-GAAP financial measure has been provided as supplemental financial information in our press release.

Now, I'd like to turn the call over to Shawn Nelson, Chief Executive Officer of The Lovesac Company.

Executive
Shawn Nelson

Thanks, Rachel. Good morning, everybody, and thanks for joining us today. I will begin today's call by discussing the financial and operational highlights of our second quarter results. After which, I'll briefly review our high level thoughts around our outlook and provide an update on our tariff mitigation efforts. Then, Jack Krause, our President and COO, will outline the progress we are making on our key growth initiatives, including details on an exciting new shop in shop program that is launched in Q3. Finally, Donna Dellomo, our CFO will review our financial results and a few items related to our outlook in more detail.

We feel great about our second quarter financial results. Net sales increased by almost 45% to $48.1 million. Total comparable sales, which includes same showroom and Internet sales, increased 40.7%, driven by a strong showroom comp increase of 31.8% and significant growth in our Internet business of 71.5%.

In Q2, we again saw our comp growth driven by both transactions, as well as ticket growth, as our digital marketing strategies and multi-channel model allow us to draw new customers to the brands, while also driving repeat purchase behavior. Adjusted EBITDA was a loss of $3.3 million for the second quarter.

Operationally, we made good progress against our strategic priorities in the second quarter. A few highlights are: one, we continue to lean into marketing, including a successful Memorial Day campaign to increase brand awareness and drive sales, which