Despite 12.5% Q1 sales increase, Purple still posts loss

LEHI, Utah – Purple Innovation reported a net loss of $50.2 million for the first quarter ended March 31, a 93.8% decline compared with a net loss of $25.9 million in the same quarter last year.

The company reported a net sales increase of 12.5% in the quarter to $120 million, compared with net sales of $106.7 million in the prior year period. Purple attributed the increase in sales to its new product lineup and increase in wholesale floor slots. Those gains were offset by “soft industrywide demand” for home products.

Purple said its wholesale revenues climbed 33.1%, while direct to consumer business remained steady with the same quarter last year. The company saw lower e-commerce sales, but those were offset by sales growth in Purple’s branded showrooms and a shift in sales toward higher-priced mattresses. The company also opened an additional five showrooms over the past year.

The company said it recognized a loss of $23.6 million in connection with its refinancing agreement in January, along with a $3.4 million loss on debt extinguishment and $4.5 million of interest expense. Purple said its adjusted net loss for the quarter was $20.4 million.

“We are encouraged by our start to the year as our first quarter performance was in-line with our guidance despite continued industry softness,” said Robert DeMartini, CEO. “Momentum in our business has been accelerating since the mid-2023 launch of our new product portfolio and brand repositioning, leading to market share gains and a return to growth.

“We are making important progress executing the key initiatives that we believe will deliver sequential top-line improvement as 2024 unfolds and allow us to generate positive adjusted EBITDA in the second half of the year,” he continued. “Longer term, we are confident that Purple’s innovative and differentiated sleep technology combined with the team and strategies that we have in place will fuel profitable growth and increased shareholder value.”

Gross margin in the first quarter dropped 34.8% compared with 38% in the year-ago period. The company attributed the decline to a shift in revenue to its wholesale channel, which carries a lower margin that its DTC channel; use of airfreight in the first part of the quarter; liquidation of discontinued products; and costs associated with product shipped early in the second quarter.

Purple reported cash and cash equivalents of $34.5 million as of March 31, compared with $26.9 million as of Dec. 31, 2023. Earlier this year, the company amended and restated its two primary debt facilities into a new $61 million term loan, adding $22 million of liquidity.

Looking ahead, the company said it was holding its 2024 full year outlook for revenue to be in the range of $540 million to $560 million.

See also:

  • Purple sees first revenue increase in 8 quarters
  • These 5 things caused Purple’s Q2 earnings results to falter

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