Lovesac Co (NASDAQ:LOVE), the home furnishing brand best known for its Sactionals, The World’s Most Adaptable Couch, stock fell 7.88% (As on June 14, 11:25:52 AM UTC-4, Source: Google Finance) after the company posted higher than expected results for the first quarter of FY 25. Gross profit increased $1.4 million, or 2.1%, in the first quarter of fiscal 2025 compared to the prior year period. Gross margin increased 430 basis points to 54.3% of net sales in the first quarter of fiscal 2025 from 50.0% of net sales in the prior year period primarily driven by a decrease of 790 basis points in inbound transportation costs, partially offset by an increase of 240 basis points in outbound transportation and warehousing costs and a decrease of 120 basis points in product margin driven by higher promotional discounting. Operating loss was $17.9 million in the first quarter of fiscal 2025 compared to $5.7 million in the prior year period. Operating margin was (13.5)% of net sales in the first quarter of fiscal 2025 compared to (4.0)% of net sales in the prior year period. Net loss was $13.0 million in the first quarter of fiscal 2025 or $(0.83) net loss per common share compared to $4.1 million or $(0.27) net loss per common share in the prior year period.

LOVE in the first quarter of FY 25 has reported the adjusted loss per share of 83 cents, beating the analysts’ estimates for the adjusted loss per share of 99 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue decline of 6.1 percent to $132.6 million in the first quarter of FY 25, beating the analysts’ estimates for revenue of $128.7 million. This is primarily driven by a decrease of 14.8% in omni-channel comparable net sales, partially offset by the net addition of 35 new showrooms compared to the prior year period. During the first quarter of fiscal 2025, we opened 24 additional showrooms and closed 3 showrooms and 5 kiosks.

Additionally, the cash and cash equivalents balance as of May 5, 2024 was $72.4 million as compared to $45.1 million as of April 30, 2023. There was no balance on the Company’s line of credit as of May 5, 2024 and April 30, 2023. The Company’s availability under the line of credit was $33.7 million and $36.0 million as of May 5, 2024 and April 30, 2023, respectively. As previously announced, on March 24, 2023, we amended our existing credit agreement with Wells Fargo Bank, N.A. to extend the maturity date to September 30, 2024. All other terms of the credit agreement remain unchanged. Total merchandise inventory was $94.7 million as of May 5, 2024 as compared to $104.5 million as of April 30, 2023 principally related to a planned stock inventory decrease of $10.2 million coupled with a decrease in freight capitalization of $1.4 million related to the decrease in inbound freight expense.