The Lovesac Company delivered a modest top-line expansion in the second quarter of fiscal 2026 (QQ2 2026), with net sales reaching $160.5 million, up 2.5% year over year (YoY) and up 16.0% quarter over quarter (QoQ) as the company benefited from showroom expansion and ongoing omni-channel strength. Gross margin declined to 56.4% (down 260 basis points YoY), pressured by higher inbound/outbound transportation costs and a net reduction in product margin due to more aggressive promotions, while the company executed disciplined expense management that improved SG&A as a percentage of net sales to 40.9% from 47.0% a year ago. The quarterly results also reflected operational headwinds from tariff environments and competitive discounting, which the company has been actively mitigating through a four-point plan (cost concessions, manufacturing diversification away from China, selective pricing, and cost efficiency). Management reaffirmed a strategic shift toward a brand-first, multi-product, multi-channel growth framework and outlined a phased plan to return gross margins to the high-50s/near-60% range longer term. The company continues to invest in major brand and product initiatives (Brand Evolution, Snug, EverCouch renaming) and to expand profitable channels (online, Costco, pop-ups, and the resale Love to Buy Love Sac program). The near-term outlook projects pressure from tariffs and promotions, with guidance for full-year fiscal 2026 signaling mid-single-digit topline growth alongside a path to higher profitability through margin optimization and tighter expense management, albeit with a Q3 cadence of margin headwinds before margin recovery in subsequent quarters.