Lovesac will begin making the seat inserts for its best-selling Sactionals in the US this summer at a contract factory it will not own. The catch is that it had to redesign the product from scratch for automation. That was the only way the economics of domestic manufacturing worked.
How it works: The economics work because Lovesac sells one modular platform with a limited number of SKUs at high volume. That is the kind of product mix that allows automation to pay for itself.
CEO Shawn Nelson explained the approach on the Q1 FY2027 earnings call: “We’re not just making the same product out of wood here in the U.S. We’ve taken a whole new design approach to the product, designing it for manufacturing, designing it for automation.” Nelson describes the strategy as "specialization in sameness." He argues that brands with hundreds of SKU variants cannot make the same math work. RH, the luxury home-furnishings retailer, has cited that same challenge while ruling out domestic manufacturing for itself.
The redesigned inserts also include new features and refreshed intellectual property. They remain compatible with every Sactionals frame ever sold, protecting the installed base of existing customers.
The margin math: Domestic production is not expected to improve margins, at least not in the near term.
President Mary Fox said on the Q4 FY2026 earnings call the company expects gross margins to be “neutral to current levels, excluding tariffs” once the domestic line is running, with no material pickup expected in FY2027 while scale builds.
Q1 FY2027 gross margin fell to 52.1% from 53.7% a year earlier, with inbound transportation and tariff costs accounting for 380 basis points of the decline. Lovesac also applied for $20.8 million in tariff refunds, received an initial $3.4 million, and the remaining claims are on hold because of a government pause.
How we got here: The US manufacturing push is the final step in a four-step tariff response Lovesac began in April 2025. The plan included supplier negotiations, supply base diversification, selective price increases and logistics cost reduction.
Fox confirmed Lovesac exited FY2026 with none of its production coming from China, down from roughly 50% a few years earlier. Production shifted to Vietnam, Malaysia, Indonesia, and other countries.
Across the sector: Furniture companies have landed in very different places on domestic manufacturing.
La-Z-Boy: Already produces 90% of its products in the US and says it "feels really good and well-positioned" on tariffs
RH: CEO Gary Friedman has argued that scaling domestic furniture production "does not exist at scale in America," pointing to craft complexity and SKU variability as the structural blocks
Lovesac: Argues modular, standardized volume create a structurally different problem, and that the redesign-for-automation approach is what separates a feasible reshoring move from an expensive one
Production had not started as of the company’s latest earnings call. The launch is still expected in late summer 2026.
