The Lovesac Company (NASDAQ: LOVE) reported financial results for the second quarter of fiscal year 2027, which ended August 2, 2026. The company announced total net sales of $161.2 million for the quarter, a 0.4% increase compared to the prior year period. This performance was driven by the addition of 14 net new showrooms, which contributed $5.1 million in sales, partially offset by a 1.9% decrease in omni-channel comparable net sales and the closure of Best Buy shop-in-shop locations.
On the balance sheet, Lovesac reported a cash and cash equivalents balance of $68.8 million as of August 2, 2026, an increase from $34.2 million in the prior year. The company has no debt and utilized its line of credit availability, which stood at $34.0 million. Total merchandise inventory was reported at $130.2 million.
Gross profit for the quarter increased to $110.3 million, representing a gross margin of 68.4%. This marked a significant expansion of 1,200 basis points compared to the prior year. The company attributed this improvement primarily to recoveries of IEEPA tariffs, which contributed 1,240 basis points, and a 250 basis point improvement in product margin driven by price increases. Excluding the impact of tariff recoveries, gross margin was 56.0%.
Net income for the quarter was $7.4 million, or $0.51 per diluted share, compared to a net loss of $6.7 million, or $(0.45) per diluted share, in the prior year. The current quarter included a net benefit of $0.86 per share from tariff refunds. Operating income for the quarter was $10.9 million, resulting in an operating margin of 6.9%.
Looking ahead, the company provided guidance for the remainder of fiscal 2027. Lovesac expects full-year net sales to be between $690 million and $710 million, with net income projected between $14.5 million and $18.5 million. For the third quarter of fiscal 2027, the company anticipates net sales of $140 million to $150 million and a net loss of $9 million to $12 million.
