Lovesac Enters the Market With a Bang

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Lovesac Co. (NASDAQ: LOVE) entered the market with a bang on Wednesday. Its initial public offering (IPO) went off at $25 per share, after having priced at $16. The first trade was 56% above the IPO price. Since then shares have slumped, but they are still at a premium to the original pricing.

According to the original terms, the company was offering 3.3 million shares in the range of $13 to $15 a piece, with an overallotment option for an additional 495,000 shares.

Roth Capital Partners acted as the sole book-running manager for the offering, and Craig-Hallum Capital Group is the co-manager.

This company designs, manufactures and sells unique, high-quality furniture comprised of modular couches called Sactionals and premium foam beanbag chairs called Sacs. It markets and sells these products through modern and efficient showrooms and, increasingly, through online sales. Management believes that its e-commerce centric approach, coupled with its ability to deliver large upholstered products through nationwide express couriers, are unique to the furniture industry.

The company had total net sales of $101.8 million in the fiscal year ended early February, up from $76.3 million a year ago, while the net loss narrowed to $5.5 million from $6.9 million.

Lovesac intends to use the net proceeds from this offering primarily:

  • To increase sales and marketing
  • For product development
  • Repayment of amounts drawn from our credit facility with Wells Fargo
  • For working capital and other general corporate purposes.

Shares of Lovesac were last seen up about 27% at $20.28, with a range of $19.33 to $25.01 on the day thus far. Also, about 1.4 million shares had moved as of 11 a.m. Eastern.

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