Luvu Brands (OTCQB: LUVU) Reports Fiscal 2026 Results: 5.8% Revenue Growth, Gross Margin Expansion to 31.5%, Positive Operating Income, and Adjusted EBITDA More Than Tripled to[...]

Luvu Brands (OTCQB: LUVU) Reports Fiscal 2026 Results: 5.8% Revenue Growth, Gross Margin Expansion to 31.5%, Positive Operating Income, and Adjusted EBITDA More Than Tripled to $1.3 Million

Vertically integrated "Made in USA" manufacturer of the Liberator, Jaxx, and Avana product lines returns to operating profitability on $27.4 million in net sales; operating cash flow swings positive to $773,000.

ATLANTA, GA - September 28, 2026 - Luvu Brands, Inc. (OTCQB: LUVU), a U.S.-based designer and manufacturer of consumer lifestyle, wellness, and comfort products, today announced financial results for its fiscal year ended June 30, 2026. Net sales increased 5.8% to $27.36 million, gross margin expanded 200 basis points to 31.5%, operating income improved to $876,000 from an operating loss of $(69,000), and Adjusted EBITDA increased 218% to $1.26 million, reflecting continued execution of its cost optimization strategy and the strength of its vertically integrated, "Made in USA" operating model.

Fiscal 2026 At a Glance (Year Ended June 30, 2026)

Full Year Fiscal 2026 Financial and Operational Overview

For fiscal 2026, Luvu Brands grew net sales, expanded gross margins, and turned operating income positive, while more than tripling Adjusted EBITDA year over year. Louis Friedman, Founder, Chief Executive Officer of Luvu Brands, stated, "Fiscal 2026 marked a clear inflection in our operating performance. We grew the top line, expanded margins, and returned the business to positive operating income and positive pre-tax income - all while continuing to invest in our vertically integrated manufacturing platform. Our results reflect disciplined execution across both our Direct and Wholesale channels and a relentless focus on cost and quality."

Revenue Performance

Net sales for the fiscal year ended June 30, 2026, increased 5.8% to $27.36 million, compared to $25.86 million in the prior fiscal year. Growth was led by the Wholesale segment, which rose 8% to $19.06 million, driven by continued expansion of the Company's dropship network and higher demand from international and new customers. The Direct-to-Consumer segment grew 2% to $8.30 million, driven by new marketing efforts for the Company's Liberator, Jaxx, and Avana e-commerce websites. Fiscal 2025 amounts in this release have been revised to reclassify $1.16 million of Amazon marketplace fulfillment fees from a reduction of net sales to selling expense, and all growth rates are presented on this comparable basis. The revision had no effect on operating loss, net loss, or cash flows; see "Revision of Fiscal 2025 Consolidated Statement of Operations" below.

Gross Profit and Margin Expansion

Gross profit for fiscal 2026 increased 12.8% to $8.61 million, compared to $7.63 million in the prior year. Gross margin expanded to 31.5% of net sales, up from 29.5% last year, driven by cost reduction initiatives including expanded raw material sourcing, reduced warehouse and production headcount, and improved inventory forecasting. These gains were achieved even as the Company increased its inventory reserve by $69,000 to $301,000 during the year. Gross profit was also pressured by higher fuel, freight and raw material costs arising from the conflict in the Middle East, which began during the Company's third fiscal quarter. The Company's cost reduction initiatives, together with selective price increases, offset these higher input costs in fiscal 2026, and management is examining ways throughout the Company to offset continued increases in fuel-related costs.

Operating Expense Discipline

Total operating expenses declined to approximately 28% of net sales for fiscal 2026, compared to 30% in the prior year, reflecting improved operating leverage on a higher revenue base. Excluding depreciation, operating expenses were 27% of net sales, down from 28% in the prior year; the modest dollar increase was driven primarily by higher selling expenses related to increased payroll costs, partially offset by tighter control of general and administrative spending. As a result, the Company generated operating income of $876,000, a $945,000 improvement compared to an operating loss of $(69,000) in the prior year. Christopher Knauf, Chief Financial Officer of Luvu Brands, stated, "We continue to operate with financial rigor. Returning to positive operating income and positive pre-tax income, combined with the more than tripling of Adjusted EBITDA and a strong turnaround in operating cash flow, demonstrates the durability of our model and positions us well for continued progress."

Net Loss and Adjusted EBITDA

Income before income taxes turned positive at $429,000 for fiscal 2026, compared to a pre-tax loss of $(448,000) in the prior year. Adjusted EBITDA increased 218% to $1.26 million, up from $395,000 in fiscal 2025, reflecting stronger operating leverage and continued cost discipline.

The Company reported a net loss of $(246,000), or $(0.00) per diluted share, an improvement from a net loss of $(448,000), or $(0.01) per diluted share, in the prior year. The narrower loss reflects higher gross profit and improved operating leverage and was achieved even after absorbing a non-cash income tax provision of $675,000, consisting of a deferred tax provision of approximately $719,000 partially offset by the reversal of approximately $44,000 of prior tax accruals. The deferred tax provision principally reflects deferred tax liabilities associated with right-of-use assets, including those arising from the November 2025 renewal of the operating lease for the Company's manufacturing facility, and with property and equipment. Absent this non-cash tax provision, the Company's fiscal 2026 results reflect substantial year-over-year operating improvement.

Liquidity and Cash Flow

As of June 30, 2026, cash and cash equivalents totaled $1.20 million, an increase of 63.2% from $735,000 at the prior fiscal year end. Net cash provided by operating activities was $773,000 for fiscal 2026, a $1.18 million improvement compared to cash used in operating activities of $(410,000) in the prior year, driven by higher net sales, gross margin expansion, and the non-cash deferred tax expense. The Company continues to prioritize liquidity, working capital management, and disciplined capital allocation.

Strategic and Operational Highlights

Luvu Brands intends 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.

About Luvu Brands, Inc.

Luvu Brands, Inc. (OTCQB: LUVU) is an Atlanta, Georgia-based designer, manufacturer, and marketer of a portfolio of consumer lifestyle, wellness, and comfort brands, sold through the Company's websites, online mass merchants, and specialty retailers worldwide. The Company's brands include Liberator®, a category of iconic products for enhancing sensuality and intimacy; Jaxx®, a diverse range of casual fashion daybeds, sofas, and beanbags made from virgin and repurposed polyurethane foam; and Avana®, products for yoga, sleep comfort, and inclined bed therapy. Luvu Brands operates a 140,000-square-foot vertically integrated, "Made in USA" manufacturing facility in Atlanta and conducts its operations through its subsidiary, OneUp Innovations, Inc. The Company's e-commerce websites include liberator.com, jaxxliving.com, and avanacomfort.com. For more information, visit www.luvubrands.com.

Additional Information

More information, including financial statements and SEC filings, is available at www.luvubrands.com.

The Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2026, filed with the SEC on September 28, 2026, is available on the SEC's EDGAR database at www.sec.gov.

For investor inquiries, please contact:

Christopher Knauf

Chief Financial Officer

770-246-6426

[email protected]