The Lovesac Company (LOVE) Earnings Call Transcript & Summary

Thanks. Morning, everybody. Joining me today are Shawn Nelson, our Chief Executive Officer; Mary Fox, President and Chief Operating Officer; and Keith Siegner, Chief Financial Officer. Before we begin, please keep in mind that certain items we'll discuss will contain forward-looking statements about upcoming events and how our finances will perform going forward. That covers statements regarding our expectations for the future, financial projections, and our plans and prospects. Results in reality could vary materially from what those statements describe; to review these risks and uncertainties, please look at the company's SEC filings, which include the press release issued today. You shouldn't treat our forward-looking statements as forecasts of what will happen later. Every forward-looking statement we're making on this call rests on assumptions and beliefs held as of today, and we take on no duty to revise them, except where applicable law requires it. Today's discussion will also reference non-GAAP financial measures, among them EBITDA and adjusted EBITDA. These non-GAAP financial measures ought to be viewed alongside our GAAP results, not as a replacement for them or by themselves. A reconciliation linking the closest comparable GAAP financial measure to that non-GAAP financial measure appears as supplemental financial information in our press release. I'd now like to hand the call over to Shawn Nelson, Chief Executive Officer of The Lovesac Company.

Thanks, Liz. Morning, everyone, and thanks for being with us today. To kick off this call, I'll go over what stood out in our third quarter of fiscal 2024, give a quick update on what we've accomplished operationally, and wrap up with our outlook. After that, Mary Fox, our President and COO, will bring you up to speed on how we're doing against our strategic initiatives, and then Keith Siegner, our CFO, will walk through our financial results along with a few other items tied to our outlook in greater detail. Now to the highlights of our results. Since we last spoke with you 4 weeks ago, not much has shifted. Lovesac continues to deliver solid financial performance and beat the broader category, backed by a balance sheet in very strong shape. When it comes to Q3, we're pleased to report that both revenue and earnings came in line with the guidance we shared during our November 3 second quarter call. The headline here: net sales for the third quarter grew by double digits, even though the category itself fell by double digits. To be clear, the broader environment looks pretty much the way it did a month ago. Persistent macro uncertainty has shoppers acting cautiously and putting pressure on the furniture space, which by our estimate was down somewhere in the mid to high teens during Q3. Even so, our approach hasn't really changed either, and it continues to produce results. The way we stand out as a brand, earn affection and repeat business from shoppers, comes down to our disruptive Designed For Life platforms, product innovation that makes an impact, marketing that draws people in, and a highly efficient omnichannel presence. To put a finer point on it, net sales for Q3 totaled $154 million, which is 14.3% higher than the same period a year ago and 32% better measured over two years. For the quarter, comparable net sales across omnichannel rose 2%, and that figure matters greatly to us as a gauge for running our distinctive omnichannel operation. Gross margin improved while SG&A deleverage fell considerably, matching what we had anticipated, and together those factors produced significantly stronger profitability than we saw in the third quarter of fiscal 2023. We posted adjusted EBITDA of positive $2.5 million, which is a swing from negative $6.9 million during the same period a year earlier. On the bottom line, net losses came in at $2 million, better than the $7 million net loss we recorded in Q3 of last year, and keep in mind that figure absorbs nonrecurring costs tied to the restatement, which we've flagged in our press release. Across every one of our priorities, the Lovesac team keeps delivering — whether that's our innovation agenda, adding to our physical footprint, the omnichannel experience spanning order through delivery, or marketing efficiencies. Mary is going to walk through how these growth strategies are progressing in more detail shortly. Turning to the year's last quarter, which takes in the crucial holiday selling weeks, here's what I want to flag: the macro backdrop, and along with it the discretionary home category, has stayed tough. On our prior call we told you we weren't building in any significant rebound in category growth anytime soon. And sure enough, the promotional landscape across the Black Friday and Cyber Monday stretch proved more competitive than it was a year earlier. Even so, as we discussed with everyone a month back, we shifted our approach—raising the promotional offer somewhat and delivering messaging that was relevant and distinctive, while at the same time holding gross margins at a strong level. Considering everything, and now that Black Friday and Cyber Week have come and gone, I'm glad to report that Lovesac has kept expanding and beating the sector. Consequently, we're narrowing our net sales outlook for the entire year even more, to a range of $710 million to $720 million, reflecting growth from high single digits to almost double digits, even when you strip out the extra 53rd week this year—an exceptionally impressive result. We aren't prepared to give guidance for fiscal 2025 as of today. That said, we'll manage costs carefully, prioritizing efficiency while also making forward-looking investments in new offerings to fuel profitable expansion. To sum up, we're happy to report third quarter outcomes that matched what we anticipated and that yet again surpass what rivals achieved. The operational strides we're achieving with our expansion plans, plus careful spending in essential foundational domains such as technology, fresh product development and consumer insights, keep strengthening our flywheel—thus boosting shopper demand and widening our market dominance, which we think can endure far into the future. Last, I'd like to express gratitude to the whole Lovesac crew for their relentless implementation of our plans and achievement of our targets, particularly throughout this pivotal season. Our game-changing approach lets us keep growing, flourishing, creating and putting resources into this company, yet it's our staff who guarantee a superb client journey and are the reason our Lovesac family keeps expanding so consistently as we share a wonderful holiday period. Having said that, I'll pass things to Mary so she can discuss our strategic goals and advancements in greater depth. Mary?

Thank you, Shawn, and good morning to all of you. As Shawn mentioned, with a 14.3% increase in sales, our results for quarter 3 once again demonstrated growth that leads the industry, powered by our distinctive omnichannel business model. Crucially, when you look at the full year, our sales have risen 196% compared to pre-pandemic levels, and our adjusted EBITDA margin has grown 880 basis points during that same span. Outperformance in our category persisted this quarter, with demand versus last year showing strength during Cyber 5, running from Black Friday through Cyber Monday, and our early results make us very happy. A few Cyber 5 highlights: we had our 2 biggest sales days and the biggest week ever in our history. We think this sales peak, which is unique to our business within our category, stems partly from what we've invested in building a brand that has no equal in the furniture category, combined with getting delivery to customers' homes in only a handful of days. Our unambiguous growth strategy and the team's steady execution against those strategies let us keep fueling our flywheel and push operational excellence throughout the business. Now I'll share quarter 3 operational progress highlights. First, product innovation. In quarter 3, we broadened distribution of our recently launched Angled Side, which is now offered across our entire showroom base plus our e-comm platform, and the impact and feedback have made us very happy. Angled Side results are actually surpassing our original expectations, which were ambitious, underscoring how it meaningfully drives our overall continued growth and category outperformance. As I've said previously, we teamed up with Architectural Digest to introduce Angled Side to consumers and the designer world. Influencers attended the event, along with media outlets like Vogue and Glamour and, naturally, Architectural Digest. Beyond producing more than 1 billion impressions, the event was accompanied by Architectural Digest paid media, further strengthening the success we've witnessed since launch. In short, Angled Side's early performance has us very happy, since after only a few months it's nearing the status of Lovesac's #1 style choice. We're also rolling out some powerful collaborations for the holidays, among them a partnership with Nordstrom and Swarovski to create a Footsac that will be showcased inside Nordstrom and on nordstrom.com this holiday; we keep proving that we'll capture market share via our new product introductions and brand collaborations as awareness and appreciation keep rising, all of which bolster the strength of our customer-centric business model. Our omnichannel experience. This model is powered by a blend of our physical touch points and our digital platform. In the third quarter, we opened 10 showrooms and 16 Best Buy shop-in-shops. Regarding our Best Buy partnership, sales climbed 42.8% in quarter 3, fueled by greater shop-in-shop presence compared with last year. Our e-commerce channel kept delivering strong growth and rose 20% for last year, contributing significantly to our category outperformance. Our omnichannel strategy, along with what we've put into touchpoint and website tech, keeps pushing customer satisfaction scores higher, since we're always watching feedback and making the shopping experience better. Ahead of the holiday code freeze, we rolled out major upgrades to the online shopping journey, such as new configurators that make rebuying easier, plus improvements to the post-purchase experience and stronger platform security. Tight coordination among e-commerce touchpoints lets us keep enhancing that omnichannel experience. Number three is our brand ecosystem. Sitting at the heart of that ecosystem is our cost-effective marketing, a powerful engine for awareness, familiarity, love and, in the end, acquiring customers, which underpins our robust ratio of customer lifetime value to acquisition cost. On the whole, we stay nimble with our marketing mix, because the setting in which customers engage with our category keeps shifting. Let me walk through a few things we've been up to. On awareness, generally speaking, becoming more efficient and extending our reach let us grow reach while also sharpening targeting at the same time. Live sports upfronts stand out as a prime illustration of that progress. Speaking of which, I hope all of you caught our latest commercial, which scored very well on every metric. We keep taking a hard look at how our digital marketing programs are optimized, namely SEM and social efforts, which have produced gains in overall ad exposure and cost measures, as well as better conversion rates and ROI. We've enjoyed considerable success through certain social partnerships that deepen how our brand connects with culture. Charli D'Amelio posted from her new home about a Lovesac product she asked for. As you're aware, her TikTok following exceeds 151 million, and she has more than 9 million YouTube subscribers. We teamed up with Justin Pugh on a special sac after his Saturday Night Football intro mentioned straight off the couch. Together, those 2 collaborations brought in over 35 million impressions, and they're only a handful of examples of what our team is doing to build brand love and stickiness. Also worth noting, direct mail campaigns delivered strong ROIs for us once more, driving customer acquisition and also helping raise our customers' lifetime value. Last, we were thrilled that Esquire included StealthTech among its best 37 gadgets for 2023. That's correct — a couch landed on the best gadgets list, which underscores how strong Designed For Life products powered by technology are. And lastly, disciplined infrastructure investments and efficiencies. In quarter 3, we kept investing in technology and research and development as we scale the business over the long term; we finished the national rollout of PredictSpring, our new POS system, across all our touchpoints; that rollout improves the customer experience via faster transactions and opens up new, modern payment choices, like Pay By Link capability. Fast delivery keeps boosting how happy our customers are, and the money we've put into our supply chain — still slated to wrap up before this year ends, as we've said — should help push inventory productivity up by 20%, matching what we told you before. Like we noted three months ago, we're still moving forward with circular operations and open box inventory, since our attention is on making execution sharper and the brand experience better. On top of that, units going back to stock are up over 48% compared with a year ago. Thanks to these efforts, we anticipate gains in working capital plus related cost savings in inbound freight and warehousing, which showed up in quarter 3 and will keep coming through in quarter 4. Putting money into Gladly, the platform we use for customer service, has let us serve shoppers better as part of our sales and service strategy, lifting C Love customer satisfaction scores by more than 8 points in quarter 3 versus the same quarter a year earlier, along with a striking gain in service performance compared with last year throughout Cyber 5; operational excellence is our sharpest focus, and we'll keep managing our cost structure and capital allocation as we turn in operational performance that beats our competitors. To sum up, we're happy with how the third quarter went and with our steady, ongoing record of taking market share. I'd like to add my own thanks, alongside Shawn's, to our incredible team members for helping produce these financial and operational results. For the major holiday weeks just behind us and those still ahead, one certainty is that we're prepared for them and eager to finish out our fiscal year, having grown our market share gains, widened our physical footprint with highly productive locations, strengthened our digital go-to-market position, made key infrastructure investments and accomplished all of it while pushing our innovation agenda forward. Now I'll hand the call to Keith so he can go over our third quarter results and what we expect in the fourth quarter. Keith?

Thank you, Mary. Let me begin with a short review of the third quarter, and then I’ll walk through what we anticipate for the rest of fiscal ’24. Net sales increased by $19.2 million, or 14.3%, to $154 million in Q3 of fiscal ’24, and that improvement compared with last year was driven by web and showrooms; it was in line with our forecast for the period, helped by our 25th anniversary event and the introduction of Angled Side. Showroom net sales rose $15.7 million, or 18.9%, to $98.7 million in the third quarter, up from $83 million a year ago. That showroom increase reflected a 2% gain in omnichannel comparable net sales growth due to more point-of-sale transactions along with heavier promotional discounting in the prior-year period, as well as 41 net new showrooms added versus the same quarter last year. Beginning this quarter, we have replaced the comparable sales growth measures we formerly reported with a new metric, omnichannel comparable net sales growth. This measure corresponds more closely to how we evaluate and manage the financial results of our omnichannel operations; it also removes the distortion caused by previously including demand-based figures, such as orders placed but not yet shipped, so it should be considerably more useful for your modeling. Internet net sales increased $6.7 million, or 20.1%, to $40 million in Q3 of fiscal ’24, compared with $33.3 million in the prior-year quarter. Other net sales, which include pop-up-shop, shop-in-shop and open-box inventory activity, decreased $3.1 million, or 17.1%, to $15.4 million in the third quarter of fiscal ’24. That decrease was primarily due to a smaller volume of open-box inventory transactions, at just $2.5 million versus $4.2 million in the third quarter of fiscal ’23. Our open-box inventory transactions with ICON are part of our circular operations, Designed For Life and ESG initiatives. As we noted last quarter, these transactions are becoming less material as our efforts to improve how we process returned product gain traction; that better aligns with our sustainability objectives and should also help Lovesac retain more profit; in the future we may participate in a limited number of open-box inventory transactions with ICON to keep our warehouses operating as efficiently as possible. Shifting to product category, in Q3 our Sactional net sales grew 18%. Sac net sales declined 10%, while our other net sales, which include decorative pillows, blankets and accessories, decreased 15% compared with the prior year. Gross margin expanded by 920 basis points to 57.4% of net sales in Q3, versus 48.2% in the same quarter last year, mainly because total distribution and related tariff expenses fell by 1,070 basis points. That was partially offset by 150 basis points of pressure from increased promotional discounting. The reduction in overall distribution and related tariff costs compared with last year was driven largely by a favorable 1,160 basis point decline in inbound transportation costs, partially offset by a 90 basis point increase in outbound transportation and warehousing costs. In addition, our results included $57 million and $57.5 million in related figures tied to those movements. SG&A expense as a share of net sales was up 420 basis points in the third quarter, which is half the deleverage we recorded in the second quarter. That deleverage was driven mainly by employment cost deleverage, selling-related costs connected to the Lovesac credit card, continued investments intended to support current and future growth, and professional fees. In dollar terms, overhead expenses increased $10 million, primarily reflecting a $6.3 million rise in professional fees and a $3.7 million increase in infrastructure investments within other miscellaneous items. Employment costs were up $2.9 million, largely due to more new hires in fiscal '24. Selling-related expenses rose $1.5 million, mostly from credit card fees tied to higher net sales and an increase in credit card rates. We estimate that nonrecurring incremental fees related to the restatement of prior period financials were roughly $1.7 million in the third quarter. Advertising and marketing expenses increased $2 million, or 10.8%, to $21.1 million in the third quarter of fiscal '24, compared with $19.1 million a year earlier. Advertising and marketing expenses were 13.7% of net sales in the third quarter, versus 14.1% of net sales in the same period last year. Operating loss for the quarter was $3.6 million, compared with an operating loss of $10.1 million in last year's third quarter, and that was driven by the factors we just covered. Before we move on to net loss, net loss per diluted share and adjusted EBITDA, please see the terminology and the reconciliation between each of our adjusted metrics and their most directly comparable GAAP measurements in the earnings release we issued earlier this morning. Net loss for the quarter was $2.3 million, or negative $0.15 per diluted share, compared with a net loss of $7.4 million, or negative $0.48 per diluted share, a year earlier. In the third quarter of fiscal '24, we recorded an income tax benefit of $1 million, versus $2.8 million in the third quarter of fiscal '23. That change in benefit is driven mainly by the smaller net loss for the quarter. Adjusted EBITDA for the quarter was income of $2.5 million, compared with an adjusted EBITDA loss of $6.9 million a year earlier. Adjusted EBITDA in the third quarter beat our expectations, mainly because of upside to gross margins. Now to our balance sheet. Total merchandise inventory levels match our projections and have flattened out, as we mentioned on our previous call. That's true even with the addition of Angled Side SKUs, and we see this as a clear sign of how unique our business model is. Our confidence is extremely high regarding both the caliber and the volume of our inventory, along with our capacity to sustain in-stock positions and delivery times that lead the industry; we closed out the third quarter with a very robust balance sheet, which included $37.7 million in cash and cash equivalents, plus $36 million available on our revolving line of credit with zero borrowings. We also recorded $57 million in something, and another $57.5 million in something else. For additional information about our third quarter financial results, please see our earnings press release. Now turning to guidance, beginning with the fiscal fourth quarter; we project net sales ranging from $260 million to $270 million. Adjusted EBITDA is anticipated to land between $48 million and $56 million. That figure incorporates gross margins slightly below 60%, merchandising and advertising between 10.5% and 11% as a percentage of net sales, and SG&A ranging from 31% to 32% as a percent of net sales. We project net income in the range of $29 million to $33 million. That includes roughly $1.5 million of nonrecurring incremental expenses tied to our restatement of prior period financial statements; diluted income per share is projected at $1.77 to $2.02, based on 16.6 million diluted weighted average shares outstanding; now moving to the full year fiscal 2024. We are narrowing the range of our full year guidance for net sales to $710 million to $720 million. Adjusted EBITDA is expected to come in between $54 million and $62 million. That includes gross margins of 57% to 57.5%, merchandising and advertising of roughly 13% as a percentage of net sales, and SG&A of roughly 38% as a percentage of net sales. We project net income falling between $22 million and $26 million. These fiscal 2024 estimates incorporate $4.5 million to $5 million of nonrecurring incremental expenses tied to our restatement of prior period financial statements. We project diluted income per common share in the range of $1.35 to $1.60, with approximately 16.5 million estimated diluted weighted average shares outstanding. As a reminder, the 53rd week in the fourth quarter is anticipated to add approximately $6 million in net sales. Briefly on our cash balance outlook. We were quite pleased to have reported such a strong cash position for the third quarter, which is normally our lowest quarter ending cash balance of the year because of the inventory build ahead of the strong holiday sales period. As we convert inventory to cash through the busy season, we continue to project that we will finish fiscal '24 with a higher net cash balance than we finished fiscal '23. So to wrap up, we're happy with our third quarter results and how early holiday sales have supported the continuation of competitively superior results as reflected in our outlook. Market share gains, strengthening foundations, exciting new growth drivers and a healthy balance sheet, put Lovesac in an enviable position. The deeper my exposure to the teams becomes, the greater my enthusiasm grows regarding how we've all committed together to making the most of what lies in front of us; anchored by expansion as a priority and supported through a returns-driven framework for careful redeployment of capital, my confidence in what's coming remains solid. At this point I'll hand things over to the operator so we can begin the Q&A portion.

To start with, I realize it's quite early and you aren't giving guidance for next year, but could you perhaps discuss what you currently expect in terms of category growth and consumer demand for next year? And what sort of macro assumptions are built into your internal forecast for next year?

Maria, great to hear from you. Thanks for asking. Sure — as you'd expect, our entire focus right now is on quarter 4 and this hugely important holiday period. Once we get to our quarter 4 earnings, we'll share more. When it comes to our plans for next year, we still expect the macro environment to be choppy and cash to remain challenging, and that's how we've planned. But as our results this year and last year show, we keep clearly outperforming the category by a wide margin, driving enormous growth. And I think a huge part of that traces back to the fact that our brand's strength just keeps growing. I think our customers — even just being in the showroom last week — simply love the brand. They believe in Designed For Life. So we intend to stay pragmatic and prudent with our investments, with a clear deep focus on ROI. But of course, the moment things turn — and we hope they will as the category begins to improve — we'll be the fastest ones able to chase into that growth. We saw that during COVID, so we feel good. And clearly, that's the benefit of our supply chain.

Yeah. Maria, Keith here — I'll just build on that a bit. What I mean is, for me, one of the genuinely compelling things about how this business model works is that we don't lead with merchandise; our main focus is on selling seats, sides, and sacs along with the different covers. That setup lets us ramp up when the macro delivers pleasant upside surprises, and that's a real edge. We begin from a place where we ship in under 2 weeks, and if a truly significant upside macro surprise came along, we could stretch that window slightly if we had to. So in effect, we keep the capacity to take part in upside macro surprises in a manner I'd call essentially without peer.

Understood. That helps. Moving to my second question, you've achieved significant improvement in gross margin across the last few quarters. Could you share your thinking on safeguarding that margin as opposed to perhaps giving some of those savings back to customers to boost unit sales, particularly in the short term given the current macroeconomic conditions?

Absolutely. I'll take that one. We're quite happy with where we are, and many different elements are responsible, which we covered during the call—or which I covered earlier during the call; and as you can tell from the guidance we provided for the fourth quarter, we expect gross margin to keep expanding throughout Q4, roughly speaking, about half the year-over-year gain we delivered in Q3. That said, here's my perspective: we've reached what we consider a sound range for ourselves. Assuming no significant disruptions—be it inbound freight or outbound freight, there's always a chance of some kind of systemic shock. But absent anything of that nature, we're feeling fairly confident about this. What it then turns into for us is a juggling act involving pricing, involving promotions, involving overseeing all those inbound and outbound freight expenses, along with how we deploy our marketing and our ineffective promotions we provide via financing, via the Lovesac credit card. So taking everything into account, these appear to be fairly durable and sound levels for us, once again, assuming no systemic shock.

Solid quarter. Great kickoff to the holidays. Congratulations.

Thanks.

The first thing I'd like to ask — and this kind of piggybacks on that earlier question about gross margin. You brought it up in your remarks, and we've been hearing the same thing from other places: the environment has gotten more promotional, there's a more promotional feel out there. So my question on gross margin, thinking about the results you just reported for Q3 and what you're guiding to for Q4: to what extent are consumers responding better when you discount? As you do that as part of your strategy, how big a factor has it become for the business?

Yes. Look, I'd say discounting is an extremely effective instrument in our toolkit, particularly since we start from high gross margins, plus the competitive dynamics around our distinctive products. We aim to use them very strategically. As you're aware, we're working to create a company that lasts forever, for 50 years. We're working to create a brand that spans generations, one that stands for something. That's why we've long relied on promotions at fairly healthy levels, because in this industry especially, it's a considered purchase. People invest a considerable amount of time looking into products, looking into competitors, looking into what we offer before deciding to buy. What we've discovered, particularly around the holidays, is that while our business spikes — as everyone knows — during Q4, somewhat unusually for our category. Lovesac, and sometimes we wonder, is that a blessing or a curse? But we welcome the additional business that comes from the exposure of being present in shopping centers at this time of year, when there's foot traffic and so on. Yet in reality, the majority of those sales, based on what we see and what I've seen firsthand in the field at the front lines and in showrooms, stem from these considered processes in which customers weigh the value. And then honestly, they use the holiday season to tip them over the edge and at last make that purchase for themselves. In fact, most of the time it isn't a gift or even connected to gift-giving; it's more of a psychological justification to buy. That's why at this time of year especially, how we handle promotions is truly crucial, because we have customers who may have been shopping with us across the whole year and finally take the plunge, waiting to find out whether they could do better, and so on. So we've applied, I believe, a fairly disciplined approach this season, especially since it's possibly the most promotional season there's ever been, at least in recent memory, given where the industry stands right now. As a result, our promotions are lower than what we see from really any of our competitors. And as the numbers show, we're competing very robustly. My sense is that our expansion in this category is likely the strongest around; because of that, we believe we've struck the proper mix between promotional activity and sound underlying business health for the category at this moment. And what's great is that if category conditions were to deteriorate or simply keep dragging along, we'd be in a solid position to push promotions even harder and propel the business should that become necessary. That said, we aren't pursuing sales purely for the sake of pursuing sales. Once again, our aim is to strike a balance: cultivating a brand that consumers are able to cherish and rely on, one that stays consistent, while also, naturally, contending in the moment and producing cash along with profits and returns for investors.

Shawn, Brian, I'd like to expand on that a bit, if I may. What we're also seeing is that customers enjoy a bargain and the thrill surrounding it, yet that isn't necessarily about having the cheapest price. And as we've told you previously, close to 40% of shoppers who arrive at our brand never even comparison shop us against a competitor. So regarding gross margins staying where they are, we feel quite confident. In certain locations we've been raising prices on a selective basis as we've stepped up, especially for our premium fills, and the results from that have been excellent; so the leases we offer are being tweaked all the time. And our results show it — we're capturing enormous market share and beating everybody else, which tells us this algorithm is delivering for us. According to the Goldman Sachs report that came out yesterday, promotional activity ran high during quarter 3, roughly 40%, and stayed at a comparable level throughout November, while ours is considerably lower. So once more, I'd say, just < > but when it comes to gross margins, we feel good.

That's really useful. For my second question, switching subjects — I believe it was Mary who mentioned, or rather pointed out, I suppose, how the partnership with Best Buy keeps delivering good results. So what I want to ask is this: I realize your company typically plays its cards close to the chest regarding what's ahead. Still, ought we to anticipate additional distribution-style alliances with retailers such as Best Buy, essentially to help push Lovesac merchandise into the market?