Case Summary

The Lovesac Company

NASDAQ: LOVE

Case Details

  • Gutknecht v. The Lovesac Company et al.
  • Class Period:March 30, 2023 - August 16, 2023
  • Date Filed:December 19, 2023
  • Jurisdiction:U.S. District Court, District of Connecticut
  • Docket Number: 3:23-cv-01640
  • Lead Plaintiff Deadline: February 20, 2024
Days Left to
Seek Plaintiff
0

Overview

A class action lawsuit has been filed against The Lovesac Company (“Lovesac” or the “Company”) (NASDAQ: LOVE) and certain of the Company’s current and former senior executive officers alleging violations of the Securities Exchange Act of 1934. The lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired Lovesac securities between March 30, 2023, and August 16, 2023, both dates inclusive (the “Class Period”) and investors have until February 20, 2024, to seek appointment as lead plaintiff of the Lovesac class action lawsuit.

Lovesac designs, manufactures, and sells furniture, marketing its products primarily through the lovesac.com website, as well as through showrooms at top-tier malls, lifestyle centers, mobile concierges, kiosks, street locations, and in store pop-up-shops and shop-in-shops. The Company also fulfills last mile product delivery services through logistics and transportation carriers.

The lawsuit alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Lovesac did not properly account for last mile shipping and freight expenses; (2) accordingly, Lovesac’s disclosure controls and procedures and internal control over financial reporting were ineffective and deficient; (3) as a result of all the foregoing, Lovesac overstated its gross profit and operating and net income, as well as understated its shipping and handling costs and accrued freight and shipping expenses, in its previously issued financial statements; (4) accordingly, Lovesac was likely to restate one or more of its previously issued financial statements; and (5) as a result, the Company’s public statements were materially false and misleading at all relevant times.

On August 16, 2023, Lovesac disclosed in an SEC filing that, in June 2023, the Audit Committee (the ‘Audit Committee’) of the Board of Directors of Lovesac commenced an internal investigation related to the recording of last mile shipping expenses, resulting from the discovery of a recorded journal entry in the quarter ended April 30, 2023, to capitalize $2.2 million of shipping expenses that related to the fiscal year ended January 29, 2023. Lovesac further advised that, in addition to the aforementioned journal entry, the Company has identified through the investigation certain errors with the methodology used by the Company to calculate the accrual of its last mile freight expenses applicable to the Company’s financial statements for the fiscal year ended January 29, 2023, and the thirteen weeks ended April 30, 2023 (the ‘Prior Financial Statements’).

Lovesac stated that, as a result of the identified errors related to last mile freight expenses, the Company believes that previously reported operating income and net income were overstated by approximately $1.5 million to $2.5 million and $1.0 million to $2.0 million, respectively, for fiscal year 2023 and that when aggregating this error with other estimated required correcting entries the Company believes that operating income and net income were overstated by approximately $2.0 million to $3.0 million and $1.5 million to $2.5 million, respectively, for the fiscal year ended January 29, 2023. In addition, Lovesac disclosed that it believes that the identified errors related to the accrual methodology, together with the incorrectly recorded entry related to last mile freight expenses resulted in the overstatement of previously reported operating income and net income of less than $0.5 million, respectively, for the thirteen weeks ended April 30, 2023 and that when aggregating these errors with other estimated required correcting entries the Company believes that operating income and net income were overstated by less than $0.5 million, respectively, for the thirteen weeks ended April 30, 2023.

As a result of the foregoing errors, Lovesac concluded that its financial statements for fiscal year 2023 included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2023, management’s report on internal control over financial reporting for the fiscal year ended January 29, 2023, the associated audit report and report on internal control over financial reporting of the Company’s independent registered public accounting firm, Deloitte & Touche LLP , and the Company’s condensed financial statements included in the Company’s Quarterly Report on Form 10-Q for the thirteen weeks ended April 30, 2023, should no longer be relied upon. Accordingly, Lovesac advised that it would restate the flawed financial statements in question. Following these disclosures, Lovesac’s stock price fell $0.70 per-share, or 2.95%, to close at $23.06 per-share on August 17, 2023.

*          *          *

If you purchased or otherwise acquired publicly traded Lovesac (NASDAQ: LOVE) securities between March 30, 2023, and August 16, 2023, both dates inclusive, and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. 

Again, the deadline to apply to the Court to serve as a lead plaintiff in the Lovesac lawsuit is February 20, 2024.

Join This Action

Name(Required)
Address(Required)
Are you a current or former employee at the company?(Required)

Purchases

Purchases Buy Date Quantity Purchase Price per share or security Actions
       

Sales

Sale Type Sale Date Quantity Sale Price per share or security Actions
       

Upload Documents

Drop files here or
Accepted file types: xls, xlsx, doc, pdf, jpg, jpeg, Max. file size: 50 MB, Max. files: 5.