Lovesac to restate yearly, quarterly income figures following internal audit

STAMFORD, Conn.—Due to an error in identifying its last-mile freight expenses, furniture retailer Lovesac reported in an SEC filing Aug. 17 that it is revising its operating income and net income for the fiscal year ended Jan. 29 and the quarter ended April 30.

The error resulted in an overstatement of $1.5 million to $2.5 million in operating income and $1 million to $2 million in net income for fiscal 2023. The error also resulted in an overstatement of operating and net income for the quarter by less than $500,000 for both as well.

According to Furniture Today’s Top 100 listing, No. 25 Lovesac reported furniture, bedding and accessories sales of $651.5 million for 2022.

In June, the audit committee of Lovesac’s board of directors began an internal investigation related to the recording of its last-mile shipping expenses and discovered a journal entry in its quarterly report that capitalized $2.2 million shipping expenses related to its fiscal year. The audit also found certain errors with the methodology used by the company to calculate the accrual of last-mile freight expenses for financial statements for the year and quarter.

As a result of the findings, Lovesac’s audit committee and management decided the prior financial statements will be restated and any previously issued or filed earnings releases, investor presentations or communications are no longer to be relied upon.

Plans are for Lovesac to complete its restatements and file separate Form 10-K/As that will include the restated financial statements for fiscal 2023, ended Jan. 29, and also for the quarter ended April 30.

Lovesac’s stock price fell briefly with the announcement, dropping to $20.82 per share from $24.40, before ending the day at $23.06.

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