The American maker of Sactionals, or modular furniture, and beanbag seats called Sacs posted an adjusted loss of 67 cents a share vs. estimates of a loss of 59 cents and a year-earlier loss of 41 cents.
The stock fell 13.6% to $33.91.
Sales in the quarter rose 53% to $41 million, while comparable-store sales jumped 43.5%. Showroom sales gained 31.7% and internet sales soared 83.5% during the quarter.
Gross profit increased 43.3% to $21 million but gross margins decreased by 340 basis points to 51.3% primarily driven by the 10% tariffs on China levied by the U.S. partially offset by reduced costs of Sactionals and Sac products, the company said.
The non-GAAP operating loss in the first quarter was $9.1 million vs. $5.4 million in the same quarter of fiscal 2019.
"As we look to the remainder of the year, we will continue to make critically important infrastructure investments in support of our growth while adjusting various aspects of our operations to offset much of the impact of tariffs on goods from China," said CEO Shawn Nelson. "Given the significant market share opportunity for our brand and our differentiated product and disruptive, direct-to-consumer business model, we believe we are well positioned to gain market share over the near and long-term using our multi-channel approach that includes showrooms, shop in shops and a vibrant e-commerce site,"
Of the four analysts reporting to FactSet, all have buy ratings on the stock.