As 2024 drew to a close, there didn’t seem to be much investor love for Hunter (NASDAQ: LOVE). Shares of the specialist furniture maker were shunned after it made a less-than-inspiring announcement quarterly earnings report. A gloomy update from analysts did not help improve the situation. In December, Lovesac’s shares lost more than 37% of their value.
A big part of it sale it happened in the middle of the month after Lovesac released data for the third quarter of fiscal year 2025. They found that net sales fell nearly 3% from last year to $149.9 million during the period. Net loss widened to $4.9 million, or $0.32 per share, from a $2.3 million shortfall in the third quarter of fiscal 2024.
Collectively, analysts who follow the stock expected better. They modeled a top line of more than $155 million and a net loss of $0.24 per share.
Lovesac chalked up its revenue decline to a more than 9% decline in multi-channel sales. This was at least somewhat offset by a net increase of 28 new company showrooms.
He also struck an optimistic tone when discussing his immediate future. The company quoted CEO Shawn Nelson as saying, “Our growing portfolio of innovative products is resonating with customers and creating new avenues for sustainable growth going forward.” He cited the recently launched reclining seat as one product that exemplifies this innovation.
However, Lovesac predicts a decline in sales on an annual basis. He offered guidance for all of fiscal 2025, asking for $660 million to $680 million, which would be significantly lower than the $700 million he earned in the previous frame. On the positive side, management expects to finish in the black, with annual net income of $4.5 million to $12.5 million.
Less than a week after releasing its quarterly results and ahead of the company’s investor day, Lovesac released an update on its future expectations. It aims for annual net sales growth of 10% to 15% and wants to improve its annual profitability by at least 25%. However, judging by the market’s reaction, it seems that more than a few investors are skeptical that these targets can be met.
Davidson prosecution analyst Thomas Forte could also be considered a Lovesac skeptic. After the earnings announcement, Forte cut its price target on the stock quite dramatically. It now thinks it’s worth $35 a share, down significantly from its previous $44.
I don’t think investors should ever trade a stock solely or primarily based on quarterly results, but this company’s latest report raises a few concerns. Let’s see if they can right the ship in the new year.
