Shares of Lovesac (NASDAQ: LOVE) were down 16% as of 11:40 a.m. ET on Wednesday after the company delivered better-than-expected earnings results for the fiscal third quarter ending Oct. 30. 

While the company's earnings and revenue beat analysts' estimates, management took a cautionary tone in providing the outlook for the fourth quarter, which spooked investors and sent the stock tumbling. 

Net sales increased by 15.5% year over year, with comparable-sales growth of 8.9%. It was a strong quarter in the context of the economic environment. For example, furniture sales across the industry were down in the mid-teens year over year. Lovesac clearly has a superior brand positioning and is taking significant market share. This is an important green flag for long-term investors.

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Source Fool.com