Thu. Sep 19th, 2019

Lovesac’s stock rockets after Q2 results beat expectations, as manufacturing keeps moving out of China

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Shares of Lovesac Co.

LOVE, +5.62%

soared 23% in premarket trading Wednesday, after the beanbag and specialty furniture retailer reported a narrower-than-expected fiscal second-quarter loss and revenue that rose above forecasts. Separately, the company said it has reduced its manufacturing in China to 44% of its total this month from 75%, which puts it on track to be completely out of China if necessary by the end of 2020. For the quarter to Aug. 4, the net loss narrowed to $4.8 million, or 33 cents a share, from $7.0 million, or $3.71 a share, in the year-ago period. Excluding non-recurring items, the adjusted loss per share was 31 cents, compared with the FactSet loss consensus of 51 cents. Sales grew 45% to $48.15 million, above the FactSet consensus of $47.8 million. Gross profit margin decreased to 50.4% of sales from 53.6%, primarily because of of the 10% China tariffs, which was partially offset by lower costs of Sactionals and Sacs products, helped by the ongoing shift of manufacturing from China to Vietnam. Lovesac’s stock has tumbled 19.8% year to date through Tuesday, while the S&P 500

SPX, +0.03%

has advanced 18.9%.

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