ATLANTA, GA –– Luvu Brands, Inc. (OTCQB: LUVU), a U.S.-based manufacturer of lifestyle, wellness, and comfort products, today announced financial results for its third fiscal quarter ended March 31, 2026. The Company delivered meaningful improvements in revenue, profitability, and cash generation, reflecting continued execution of its cost optimization strategy and operational discipline.
Third Quarter Fiscal 2026 Financial and Operational Overview
During the third quarter of fiscal 2026, Luvu Brands generated double‑digit revenue growth, expanded gross margins, and delivered positive net income—demonstrating the strength of its vertically integrated operating model and the effectiveness of its cost control initiatives. Louis Friedman, the Company CEO and Founder, stated “Our Q3 performance demonstrates the strength of our operating model and the effectiveness of our cost optimization strategy. We delivered on our plans, all while maintaining our commitment to product quality and customer experience.”
Strong Revenue Performance
Net sales for the three months ended March 31, 2026, increased 12.0% to $6.55 million, compared to $5.85 million in the prior‑year period. Key product categories and channels drove improved demand results and expanded our customer base. For the nine‑month period, net sales rose 2.6% to $19.27 million from $18.79 million in fiscal 2025, reflecting resilient performance despite a challenging consumer environment.
Gross Profit and Margin Expansion
Gross profit for the third quarter increased to $1.84 million, compared to $1.60 million in the prior‑year period. Gross margin expanded to 28.0%, up from 27.4% last year, driven by improved product mix, manufacturing efficiencies, and supply chain cost controls. Year‑to‑date gross profit totaled $5.29 million, compared to $5.10 million in the prior‑year period.
Operating Expense Discipline
Operating expenses decreased as a percentage of revenue, falling to 25% of net sales, compared to 27% in the prior‑year quarter. The improvement reflects the Company’s ongoing cost optimization program, including supplier consolidation, automation of manual processes, zero‑based budgeting, contract renegotiations, and streamlined organizational structure.
As a result, operating income improved to $227,000, compared to breakeven in the prior‑year period. Christopher Knauf, the Company CFO, stated “We continue to operate with financial rigor. The improvement in Adjusted EBITDA and cash generation demonstrates the strength of our model and positions us well for continued progress.”
Net Income and Adjusted EBITDA
Net income turned positive at $174,000 for the three months ended March 31, 2026, compared with a net loss of $(88,000) from the same period in the prior year. That is a $262,000 year-over-year improvement. Adjusted EBITDA for the three months ended March 31, 2026 increased to $317,000 from $116,000 in the prior-year quarter, reflecting stronger operating leverage and continued cost discipline.
For the nine months ending March 31, 2026, Adjusted EBITDA increased to $688,000 from $512,000, reflecting continued operating leverage and cost discipline. Net loss was $(724,000) versus $(104,000) in the prior year, driven primarily by a $764,000 deferred tax provision related to the new operating-lease accounting treatment of the $813,000 right-of-use asset, which will be amortized over the remaining lease term.
Liquidity and Cash Flow
As of March 31, 2026, cash and cash equivalents totaled $1.23 million, an increase of 67.3% from the prior‑year period. Operating cash flow for the nine‑month period exceeded $690,000, driven by improved profitability and working capital management. The Company continues to prioritize liquidity, operational efficiency, and disciplined capital allocation.
Strategic and Operational Highlights
- Cost Optimization as a Growth Engine: Operating expenses declined as a percentage of revenue for the third consecutive quarter, driven by supplier consolidation, process automation, and tighter spend controls across the organization.
- Cash Generation Strength: Operating cash flow more than tripled year‑over‑year for the nine‑month period, supported by improved profitability, better inventory management, and disciplined working capital execution.
- Manufacturing Investment: The Company extended its manufacturing facility lease under improved terms, supporting capacity planning and continued investment in its vertically integrated, “Made in USA” production strategy.
- Balanced Growth Priorities: Savings from cost initiatives are being reinvested into high‑margin product lines, direct‑to‑consumer platform enhancements (including marketing and conversion improvements), and manufacturing automation to support scalability and margin expansion.
Luvu Brands intended to maintain its disciplined cost structure while investing in initiatives that support margin expansion and scalable growth. Management remains focused on strengthening the balance sheet, optimizing working capital, and driving operational efficiencies across the business.
Additional Information
More information, including financial statements and SEC filings, is available at www.luvubrands.com.
For investor inquiries, please contact:
Christopher Knauf
Chief Financial Officer
770‑246‑6426
chris.knauf@luvubrands.com
Forward-Looking Statements
Certain matters discussed in this press release may be forward-looking statements. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company’s products in the market; the Company’s success in obtaining new customers; the Company’s success in product development; the Company’s ability to execute its business model and strategic plans; the Company’s success in integrating acquired entities and assets, and all the risks and related information described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the financial statements and related information contained in the Company’s Annual Report on Form 10-K and interim Quarterly Reports on Form 10-Q. Examples of forward-looking statements in this release include statements related to new products, anticipated revenue, and profitability. The Company assumes no obligation to update the cautionary information in this release.
*Use of Non-GAAP Measures – Adjusted EBITDA
Luvu Brands management evaluates and makes operating decisions using various financial metrics. In addition to the Company’s GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. While Adjusted EBITDA is not a measure of performance in accordance with GAAP, management believes that this non-GAAP measure provides useful information about the Company’s operating results. The table below provides a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure. As used herein, Adjusted EBITDA income represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and stock-based compensation expense.
