Specialty mattress producer Purple Innovation said fourth-quarter sales fell 11.6% to $129 million, but the Lehi, Utah-based company slashed its net loss compared to the final quarter of 2023 and boosted its gross margin.
In addition, Purple reported positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the first time in eight quarters while generating positive cash flow.
“This accomplishment reflects our team’s disciplined execution, operational improvements and strategic cost-saving initiatives throughout the year,” said Rob DeMartini, CEO. “Looking forward, we are confident the durability we structured into the business through recent cost-saving initiatives and the support of the additional borrowings under our term loan will enable the continued execution of our Path to Premium strategy.”
He attributed the sales decline to continued weak demand throughout the mattress industry. Plus, sales in the fourth quarter of 2023 were boosted by a major product launch, he explained.
The most recent quarter’s gross margin was 42.9%, up from 33.2% in the 2023 fourth quarter, and the net loss fell to $8.48 million or 8 cents per share. In the comparable quarter, the loss totaled $18.3 million or 17 cents per share.
For the 2024 calendar year, sales declined 4.4% to $487.9 million. The company said direct-to-consumer revenue was down 4.4% to $283.7 million, while wholesale revenue was off 4.5% to $204.2 million.
Gross margin improved to 37.1% from 33.7% in 2023, and the full-year net loss totaled $97.9 million or 91 cents per share. That compares with 2023 net loss of $120.8 million or $1.17 per share.
For 2025, the company is projecting another sales decline, with total sales estimated at $465 million to $485 million. Adjusted EBITDA is projected to be break-even to a positive $10 million. The company said it expects quarterly sales and adjusted EBITDA to improve sequentially throughout the year.
Separately, Purple said its board of directors had formed a special committee of independent directors to “evaluate strategic alternatives and maximize shareholder value.” The review may include consideration of a sale, merger or other financial transaction. The committee was formed following “inbound expressions of interest,” the company said.
“Following the company’s recent receipt of expressions of interest — reflecting our attractive position as a leading independent premium mattress brand — we believe it is in the best interests of all Purple stakeholders to initiate a formal review of strategic alternatives,” said director Gary DiCamillo, chair of the special committee. “We embark on this process from a position of strength, having delivered positive adjusted EBITDA and positive cash flow performance in the fourth quarter of 2024, while meaningfully enhancing our financial position through the expansion of our existing credit facility.”
