| COMPANY |
The Lovesac Company |
| COURT |
United States District Court for the District of Connecticut |
| CASE NUMBER |
23-cv-01640 |
| JUDGE |
The Hon. Kari Anne Dooley |
| CLASS PERIOD |
March 30, 2023 through August 16, 2023 |
| SECURITY TYPE |
Securities |
Lovesac investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than February 20, 2024 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired The Lovesac Company (“Lovesac”) (NASDAQ: LOVE) securities between March 30, 2023 and August 16, 2023, both dates inclusive (the “Class Period”).
Case Background:
Lovesac, a Delaware corporation with its principal executive offices in Stamford, Connecticut, designs, manufactures, and sells furniture, including beanbag chairs and modular couches
On August 16, 2023, Lovesac revealed that, after an investigation into the company’s financial statements during the first quarter of fiscal year 2024, the Audit Committee of Lovesac’s Board of Directors identified “certain errors with the methodology used by Lovesac to calculate the accrual of its last mile freight expenses” for Lovesac’s previously-issued financial statements for the fourth quarter and full fiscal year 2023 and the first quarter of fiscal year 2024. Accordingly, Lovesac’s operating and net income for fiscal year 2023 and the first quarter of fiscal 2024 were overstated by approximately $2 million and less than $500,000, respectively. Lovesac also disclosed that investors should no longer rely on the prior financial statements for Q4 and full fiscal year 2023 and Q1 of fiscal 2024. On this news, the price of Lovesac common stock declined $2.30 per share, or nearly 6%, from a close of $38.67 per share on August 16, 2023, to close at $36.37 per share on August 17, 2023.
After the Class Period, on November 2, 2023, Lovesac amended its annual financial report for fiscal year 2023, reporting that “$2.2 million of last mile shipping expenses” for fiscal year 2023 “were improperly capitalized during” the first quarter of fiscal 2024.
The complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, Defendants misrepresented and/or failed to disclose that: (1) Lovesac did not properly account for last mile shipping and freight expenses; (2) Lovesac’s disclosure controls and procedures and internal control over financial reporting were ineffective and deficient; (3) accordingly, 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 certain of its previously-issued financial statements; (4) Lovesac was likely to restate one or more of its previously-issued financial statements; and (5) as a result, Defendants’ statements about the company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: Jonathan Naji, Esq. (484) 270-1453 or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.