Lovesac – Twersky Law Group, a highly regarded and reputable law firm based in New York, wishes to inform investors about a significant development in the form of a class action lawsuit against The Lovesac Company (“Lovesac” or “the Company”) (NASDAQ: LOVE) and certain officers of the company. This lawsuit has been filed on behalf of all individuals and entities that purchased or otherwise acquired Lovesac securities from March 30, 2023 through August 16, 2023 (the “Class Period”). Investors who acquired Lovesac securities during this defined timeframe are strongly encouraged to participate in this case by contacting firstname.lastname@example.org. The deadline to file a motion for appointment of lead plaintiff is February 20, 2024.
The fundamental objective of this class action lawsuit is to recover for the benefit of investors who purchased Lovesac securities during the Class Period, the losses they sustained as a consequence of the misleading statements made by Defendants in violation of the federal securities laws.
ALLEGATIONS AGAINST LOVESAC
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 shopin-shops. The Company also fulfills last mile product delivery services through logistics and transportation carriers. 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: (i) Lovesac did not properly account for last mile shipping and freight expenses; (ii) accordingly, Lovesac’s disclosure controls and procedures and internal control over financial reporting were ineffective and deficient; (iii) 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; (iv) accordingly, Lovesac was likely to restate one or more of its previously issued financial statements; and (v) 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, “[i]n 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, “[i]n 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 “[w]hen 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 “[w]hen 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.
- Lovesac is a furniture company known for its innovative modular furniture, particularly its signature product, the “Sactional.” The Sactional is a modular sectional sofa that can be rearranged and customized to suit different spaces and preferences. Lovesac also offers other products such as bean bags, comfortable seating, and accessories.
JOIN THIS CASE
It is important to note that a class action lawsuit has already been filed in connection with these allegations. Therefore, for those individuals who suffered financial losses in their investments in Lovesac during the Class Period, there is a limited opportunity to seek appointment as a lead plaintiff. This process entails requesting the Court to designate them as the primary representative on behalf of the entire class. The deadline for submitting such a request is February 20, 2024. It is important to emphasize that while becoming a lead plaintiff can offer certain advantages, participation in the recovery process and the potential for financial compensation does not mandate serving as a lead plaintiff.
Twersky Law Group, a distinguished legal firm renowned for its attorneys expertise in handling securities fraud class actions and shareholder derivative suits, who have a long-standing track record of successfully recovering significant sums of money for investors nationwide. With an unwavering commitment to seeking justice for their clients, the firm’s attorneys are resolute in pursuing fair compensation on behalf of those affected by alleged securities law violations. As with any legal matter, it is essential to understand that this announcement constitutes attorney advertising. Past case outcomes and results achieved do not guarantee similar outcomes in this particular case.