Thread by @bradsferguson

Several weeks ago, I teased a new, under-the-radar company idea that came to my attention.
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It's The Lovesac Company (ticker LOVE).
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The company is profitable, combines high growth with low valuation, & many advantages 🧵
👀My analysis video:
👍🔔🗨️

I had to show off my Orange Theory Fitness "Hell Week" shirt in the video. 4 tough workouts
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I also worked hard to research the product. I ordered, installed, and tested the #Lovesac sactional this week.
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As Peter Lynch says, "Know what you own."

Lovesac has a unique, patented system to lock together the pieces of its sectional furniture called “sactional.”
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Don’t let the names throw you off, this is a serious business.
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Assembly was easy but time-consuming. Product is good quality. I got the StealthTech speakers…

Lovesac’s main product, the sactional, uses uniform bases plus 4 different sides to create modular furniture
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The customer puts on the removable fabric
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This allows Lovesac to stock uniform pieces and fabric kits
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These pieces easily ship from regional dist centers to customer

The largest boxes are 4 feet x 4 feet x 8 inches and contain the base plus the cushion plus the back pillow
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This is some 1st Principles savings
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Lovesac can fit 550 sactional pieces in a shipping container from Asia vs 46 couches from legacy furniture

Low number of models or SKUs allows Lovesac to stock important inventory and deliver to customers in 2-4 days from order
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No waiting for months to get furniture. Talk about customer delight! 🕺🏻💃🚀

Their latest product is called StealthTech where the speakers are built into and hidden in the furniture (except for the center channel)
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This makes home theater easy and provides a more immersive experience. You really feel the base
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StealthTech causes customer word-of-mouth

Word of Mouth (WoM) marketing is incredibly powerful as your customers become unpaid salespeople for your brand
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Already just under a third of Lovesac’s revenues are coming from referrals
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I saw Lovesac’s WoM power personally last night…

I was at a party where the recently renovated basement had a Lovesac sactional and a sac
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Prior to their purchase they heard positive reviews from both a co-worker and a neighbor
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Then their basement contractor said they had a sactional too😳😱🤯

In investing, some say “don’t fight the Fed”
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I also say, “Don’t fight Word of Mouth companies”
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Tesla is a prime example. The more Teslas Tesla sells, the more Teslas Tesla customers sell
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Lovesac has a similar advantage

The low number of parts allows Lovesac to have showrooms under 2,000 sq ft
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This keeps real estate costs low and revenue per sqft high
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this Best Buy “store in a store” which also shows off StealthTech is less than 500 sq ft
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Payback on showrooms is 1.5 yrs or ~24% IRR

Lovesac also does one week demos at Costco where they sell a set configuration
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Along with the Best Buy semi-permanent mini stores, these are successful and Lovesac is expanding all 3 (showroom, Bestbuy & Costco)

Lovesac $LOVE is trading at a value-stock P/E with growth-stock rates of growth in revenues (49% four-year CAGR) and similar comp store sales growth
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@Lovesac is profitable today with profitability hit hard by shipping costs that should moderate. @ShawnOfLovesac

Give it some love and dig deeper. Watch this video I made where I show some of my research process. Then go to the source.