Specialty mattress producer Purple Innovation said revenue fell more than 20% in the fourth quarter and calendar year 2022 as demand softened and consumers pulled back on discretionary spending.
In a March 16 call, the Lehi, Utah-based company said its direct-to-consumer business took the biggest top-line hit, with sales falling 34.5% in the fourth quarter and 30.3% for the full year.
Total revenues for the fourth quarter were down 22.2% to $145.1 million, and the company recorded a net loss of $70.1 million or 77 cents per share. That compares with a net loss of $21.5 million or 39 cents per share in the fourth quarter of 2021.
Despite the revenue decline, Purple’s gross margin increased to 35% from 34.7% in the comparable quarter, due largely to cost reductions that included a 77.7% cut in advertising spending.
Driven in part by the September acquisition of Intellibed, wholesale revenues edged up 0.3% and accounted for about 46% of total revenue for the quarter.
For the calendar year, revenue fell 20.7% to $575.7 million, and the company had a net loss of $89.7 million or $1.10 per share. In 2021, Purple recorded a profit of $4.03 million.
The company said gross margin for the year fell to 36.6% from 40.6% in 2021 due largely to higher costs for raw materials, labor and freight.
“Against a very challenging backdrop in 2022, our organization made substantial headway toward improving the efficiency of the business and strengthening our foundation for growth,” said CEO Rob DeMartini. “We executed several strategic initiatives that we believe position Purple to deliver improved results even in the face of continued market headwinds including right sizing our cost structure and lowering expenses to align with current demand, adding significant experience and expertise to our leadership team, and providing an immediate entree into the high-margin, luxury mattress category with our acquisition of Intellibed.”
DeMartini said he is optimistic the company will return to top and bottom-line growth in the second half of 2023.
“The first few months of the new year have been highlighted by the introduction of our broadest, most innovative product line in the company’s history,” he added. “The response from our wholesale partners to our new and improved offering has been very positive, adding to our confidence that the upcoming launch, which is being supported by new marketing and brand messaging and enhancements to our in-store presence, will accelerate consumer demand as the year progresses.”