- Purple on Thursday reported fourth-quarter net revenue fell 22.2% to $145.1 million. By channel, revenue from its website fell 43.4%, but showroom revenue increased 41.3%, driven by the opening of 27 showrooms. Wholesale revenue increased by 0.3%, largely in part due to the acquisition of Intellibed in September.
- The DTC mattress brand’s operating loss during the period narrowed to $11.1 million from $31.1 million last year, but its net loss grew 222.5% year over year to $70.2 million, according to a company press release.
- For the full year, the company reported net revenue fell 20.7% to $575.7 million, while operating loss grew 72.4% to $40.3 million and net loss was $89.9 million from a profit of $3.9 million in the year-ago period.
While Purple slightly beat analysts’ expectations on revenue in the fourth quarter, macroeconomic pressures continue to drag down the DTC mattress retailer.
Purple stood to benefit at the onset of the pandemic as consumers turned to e-commerce as they avoided unnecessary trips to stores and increasingly invested in products for their homes as they sheltered in place. But in recent months, consumers have begun to shift spending away from the home to other areas like experiences.
Still, Purple CEO Rob DeMartini believes that recent strategic initiatives position the retailer to weather the current environment. The company has looked to cut costs, through a reduction in operating expenses — including a decrease in advertising spend — and “meaningfully” reducing headcount. “Net of showroom growth headcount is down approximately 45% compared with this time a year ago,” DeMartini said on a call with analysts Thursday. The company has also brought down advertising spend by nearly 60% compared to 2021, DeMartini added.
“These two actions allowed us to increase profitability during the back half of 2022 without sacrificing operational productivity,” he said.
The company has also worked to fill out its C-suite over the past year. DeMartini was appointed acting CEO in December 2021 and took on the role officially in March 2022. Purple also brought on a chief innovation officer in May, a chief operating officer in June, a chief marketing officer in November and a chief of owned retail this past January.
This comes as the retailer finds itself in the middle of an activist investor fight. Coliseum Capital Management, which has been seeking control over the brand’s board, on Thursday rejected Purple’s latest settlement proposal, which included allowing Coliseum to select three of the six non-management members of Purple’s seven-person board and naming Coliseum Managing Partner Adam Gray as chairman of the board. Coliseum, which owns 44.7% of the company’s shares, sent a bid to acquire the remaining shares of Purple’s common stock for $4.35 a share. Purple rejected the offer, prompting Coliseum to pursue a board takeover.
Looking ahead to 2023, Purple is going after a “premium customer set,” DeMartini said. Helped by its acquisition of Intellibed, the company is targeting a higher-end consumer with a tier of mattresses priced between $5,000 and $7,500.
“While we’ve historically had great success with marketing campaigns tailored to our DTC consumer, as our product set has expanded into the premium space, our target consumer has evolved. You can expect to see us address a higher-end consumer with our brand messaging in 2023 with a shift in messaging that better articulates the unmistakable benefits of our differentiated gel technology,” DeMartini said.
For 2023, Purple expects full-year revenue to be between $590 million and $615 million, and adjusted EBITDA to be between $13 million and $17 million.