Climate Change Data

Environmental Metrics

ESG Focus Areas

• Sustainability

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Sactionals

Environmental Metrics

ESG Focus Areas

• Sustainability

Environmental Achievements

• Launched new Stealthtech embedded surround sound system, designed for reverse compatibility with existing products, promoting product longevity and reducing waste. Details to be in first formal ESG report.

Climate Goals & Targets

Environmental Challenges

• Macro supply chain disruption

Mitigation Strategies

• Unique business model with concentrated SKU count and redundant manufacturing across multiple geographies, enabling faster order fulfillment.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Stealthtech embedded surround sound system

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Ineffective control environment resulting from a lack of a sufficient number of professionals with an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately.
• Lack of appropriate oversight and monitoring activities over accounting processes related to certain accruals and estimates.
• High employee turnover in the accounting department.

Mitigation Strategies

• Appointment of a new Executive Vice President and Chief Financial Officer.
• Replacement and hiring of additional accounting and finance resources with public company experience.
• Engagement of third-party consultants to assist in enhancing processes and policies over the existing controls and implementing new controls.
• Enhancement of the policy on manual journal entries.
• Enhancement of the Company’s organizational structure over all finance functions.
• Enhancement, design and implementation of controls over the transportation accrual and estimation process.
• Leveraging systems and workflows to enhance existing controls around financial reporting.
• Providing relevant training on internal controls over financial reporting to control owners and control preparers.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Errors in the methodology used to calculate the accrual of last mile freight expenses for the fiscal year ended January 29, 2023 and the thirteen weeks ended April 30, 2023.
• Internal control deficiencies related to the recording of last mile shipping expenses.

Mitigation Strategies

• Internal investigation commenced by the Audit Committee.
• Restatement of the Prior Financial Statements and amendment of the Annual Report on Form 10-K for the fiscal year ended January 29, 2023 and its Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2023.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Diversity, Equity, and Inclusion (DEI)
• Environmental Sustainability
• Circular Operations (CO)

Environmental Achievements

• Established new ESG targets to minimize environmental impacts across emissions, energy use, waste, and sustainable sourcing. Plan to reach zero waste and zero emissions by 2040 and repurpose 1 billion plastic bottles in products by 2040.
• Published third annual ESG report aligned with SASB guidance.

Social Achievements

• Founded a DEI council and steering committee in fiscal 2021 to lead the growth of programs supporting underrepresented groups.
• Announced measurable DEI goals in fiscal 2022 to increase women and BIPOC in leadership roles.
• Established Lovesac Gives Back committee to expand community giving programs.
• Workforce was 55% female, and women hold 46% of leadership roles in fiscal 2024.

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to macroeconomic factors, including labor shortages and manufacturing facility closures.
• Increased costs due to inflation in raw materials, transportation, and labor.
• Maintaining effective internal controls over financial reporting following previous material weaknesses.

Mitigation Strategies

• Pursuing diversification of manufacturing partners with sourcing, tariff, and geographical advantages.
• Implementing strategies to mitigate the effects of tariffs.
• Investing in additional domestic manufacturing capabilities for supply chain redundancy.
• Implementing measures to remediate material weaknesses in internal control over financial reporting, including hiring experienced personnel and enhancing control activities.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Monitor sourcing facilities for implementation of safe and ethical business practices in working hours, wages, benefits, forced labor, discrimination, and child labor.
• Require facilities to manage environmental impacts and comply with local laws and regulations.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather conditions impacting supplier facilities and supply chain.

Transition Risks

• Regulatory changes related to ESG and sustainability.
• Changes in customer preferences towards climate-friendly products.

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: SASB

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Fabrics made from recycled plastic fibers.

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Slowdown in demand for home furnishings due to macroeconomic factors such as increased inflation, elevated interest rates, weak housing market conditions, consumer debt and available credit, layoffs, political uncertainty, global conflicts and uncertainties in the global financial markets.

Mitigation Strategies

• Pricing strategies, productivity improvements and cost reductions to minimize the effects of inflation.
• Investments in infrastructure to support the Company's growth, including research and development costs on existing and future products and foundational technology investments.

Supply Chain Management

Climate-Related Risks & Opportunities