STAMFORD, Conn. – Stocks for Lovesac, the furniture company known for making Sactional adaptable sofas are trading up more than 25% today after the company posted a net sales increase of 43.6% or $92.2 million in the fourth quarter of fiscal 2020, which ended on Feb. 2, compared with net sales of $64.2 million in the fourth quarter of fiscal 2019.
Gross profit dollars increased by 27.2% to $45.2 million for the fourth quarter of fiscal 2020 compared with $35.5 million in the fourth quarter of last year. Net income was $5.4 million for the fourth quarter of fiscal 2020 compared to $8.4 million in the prior-year period, which resulted in net earnings per share of 37 cents compared to net earnings per share of 62 cents in the fourth quarter of 2019.
“Our pressing priority now, however, is vigilantly safeguarding the health and safety of our associates and customers during the rapidly-evolving COVID-19 pandemic,” said Shawn Nelson, Lovesac CEO. “As previously announced, we extended our March 17 temporary showroom closures until further notice, have implemented work from home policies and continue to enforce strict sanitization procedures across our operations.”
Nelson added that while the showrooms remain closed, the company is leveraging its direct-to-consumer competitive and online advantages that replicate Lovesac’s in-store experience, and, as a result, the company has experienced a surge in e-commerce. From March 17 to April 12, the company said e-commerce went up by 400%. During Easter week, the company said comparable year-over-year sales went up by 7% with no showrooms open.
For the full year, net sales came in at $233.4 million, which is a 40.7% increase over last year’s net sales of $165.9 million. Gross profit for the full year came in at $116.7 million, which is a 28.4% increase over last year’s gross profit of $90.9 million. Earnings per share for the full year came in at a loss of $1.07 vs. $3.29 for fiscal year 2019 which is a 67.4% improvement.
In response to the pandemic, the company paid all of its associates through April 5 but has since furloughed all 445 of its part-time associates or 57% of its’ total workforce. In addition, the executive team took a 20% pay cut during the period.
“We now have an agile and lean staffing model and have redeployed our army to support online sales – with Facebook live events, using Podium (with its messaging and customer feedback), and other online outreach that has been effective towards lifting online sales,” Nelson said on the earnings call.
In the fourth quarter of 2020, the company started a test of three ‘shop-in-shops’ with Best Buy stores in New Jersey, Ohio and Pennsylvania.
“The Power Hub (that launched last year) is dipping our toe in the water in terms of technology and innovation on that front,” Nelson said on the earnings call. “I think that there are numerous options for expanding Sactionals in ways that are useful but are truly innovative. We are working on numerous patents on aspects like this. You will see some of these things roll out, and Best Buy is a chosen channel for some of those reasons.”