Lovesac Company (LOVE) Stock Forecast & Price Target

Lovesac reported a 2.5% year-over-year increase in net sales, reaching $160.5 million for the second quarter of fiscal 2026, aligning with market consensus and demonstrating resilience in a competitive market. The company's decision to narrow its fiscal year 2026 revenue outlook to a range of $710 million to $740 million, representing a 4% to 9% increase year-over-year, reflects confidence in its ongoing market share gains and growth potential. Furthermore, despite a contraction in gross margin, which decreased by approximately 250 basis points year-over-year to 56.4%, it remained 100 basis points above consensus, suggesting strong operational management amidst challenging macroeconomic conditions.

Lovesac is facing a challenging financial outlook due to a reduction in revenue estimates stemming from an uncertain macroeconomic environment, along with heightened gross margin pressure attributed to tariffs and competitive discounting. The company's gross margins have decreased by 260 basis points to 56.4%, while EBITDA guidance has been lowered to a range of $42-55 million, reflecting a compressed 6.7% margin at the midpoint. Additionally, concerns regarding intellectual property risks and potential competition from lower-priced alternatives further compound the pressures on future sales growth.