The Lovesac Company
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the District of Connecticut on behalf of those who acquired The Lovesac Company (“Lovesac” or the “Company”) (NASDAQ: LOVE) securities during the period from March 30, 2023 through August 16, 2023, inclusive. Investors have until February 20, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
On August 16, 2023, Lovesac disclosed in a filing with the U.S. Securities and Exchange Commission that, in June 2023, 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 disclosed that the investigation revealed 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 quarter ended April 30, 2023. Lovesac also announced that the methodological errors resulted in overstatements of the operating income and net income (approximately $1.5 million to $2.5 million and $1.0 million to $2.0 million) for fiscal year 2023.
In addition, Lovesac disclosed errors related to the Company’s accrual methodology, which resulted in the overstatement of previously reported operating income and net income of less than $0.5 million, for the quarter ended April 30, 2023. As a result of the foregoing errors, Lovesac concluded its financial statements for fiscal year 2023 should no longer be relied upon. Accordingly, Lovesac advised that it would restate the flawed financial statements. On this news, the price of Lovesac shares declined by $0.70 per share, or approximately 2.95%, from $23.76 per share to close at $23.06 on August 17, 2023.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as 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 a filing with the U.S. Securities and Exchange Commission that, in June 2023, 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 disclosed that the investigation revealed 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 quarter ended April 30, 2023. Lovesac also announced that the methodological errors resulted in overstatements of the operating income and net income (approximately $1.5 million to $2.5 million and $1.0 million to $2.0 million) for fiscal year 2023.
In addition, Lovesac disclosed errors related to the Company’s accrual methodology, which resulted in the overstatement of previously reported operating income and net income of less than $0.5 million, for the quarter ended April 30, 2023. As a result of the foregoing errors, Lovesac concluded its financial statements for fiscal year 2023 should no longer be relied upon. Accordingly, Lovesac advised that it would restate the flawed financial statements. On this news, the price of Lovesac shares declined by $0.70 per share, or approximately 2.95%, from $23.76 per share to close at $23.06 on August 17, 2023.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as 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.