Purple Innovation Inc. announced results for the fourth quarter and year ended Dec. 31, 2023. Net revenue for the fourth quarter was $145.9 million, an increase of 4.2% compared to Q3 of 2023. Direct-to-consumer revenue increased 2.4% compared to 2023, while wholesale revenue increased 6.7%.
However, net revenue for all of 2023 was $510.5 million, a decrease of 10.9% compared to 2022, and direct-to-consumer revenue decreased 10.2% compared to the previous year. Wholesale revenue also decreased 11.9% compared to the year prior.
The company explains this decrease was primarily due to “a continuation of the soft demand environment for home-related goods, partially offset by the positive response to the launch in May 2023 of the company’s new Premium and Luxe products.”
“The fourth quarter represented an encouraging finish to 2023 as sales finished within our guidance range and increased year-over-year for the first time in eight quarters,” says Chief Executive Officer Rob DeMartini. “Throughout last year we made meaningful progress capturing market share and repositioning Purple as a premium brand despite ongoing industry headwinds. The launch of our innovative new mattresses and new marketing campaign fueled improved sales trends across all channels in the second half. Backed by marketing efficiencies, fourth-quarter profitability was in-line with expectations highlighted by positive operating income in the month of December.”
DeMartini continues, “Looking ahead, we will continue to implement the strategic initiatives that are clearly resulting in operating and financial improvements. Specifically, our focus is on further share gains and enhancing earnings by driving productivity, efficiency and innovation across the business. This includes improving showroom and wholesale door velocity through new revenue initiatives and cost controls. Increasing conversion rates on our e-commerce site is also a priority through ongoing testing and optimization. At the same time, earnings expansion should come from price increases, product mix shifts and manufacturing improvements combined with more efficient ad spending focused on existing mattress shoppers. While near-term industry challenges persist, the foundation is now in place for long-term, profitable growth.”
In Q4 2023, DTC net revenues increased 4.3% driven by slightly higher e-commerce revenue, growth in Purple showroom revenue from the addition of five net new showrooms over the previous 12 months and improvements in stores open greater than 12 months. Wholesale revenue for the fourth quarter was down 2.7%, which the company says was “ahead of industry trends driven by growing consumer adoption of the new product line.”
By channel, versus prior year, direct-to-consumer net revenues declined 10.2%. Within DTC, e-commerce declined 16.4%, driven primarily by the ongoing impact of softening demand. Showroom net revenue increased 15.8% driven largely by the opening of new showrooms in 2023 and the annualization impact of adding 27 net new showrooms in 2022 combined with the positive response to the company’s new higher-priced Luxe product, improving average selling price within the showroom channel.
Wholesale net revenues decreased 11.9% year-over-year driven primarily by the soft demand environment along with the impact related to the new product launch in May 2023, including the industry-standard practice of the sell-in of new floor models to wholesale partners at reduced pricing. “These factors were partially offset by the growth in net new wholesale partners slots in 2023 resulting from the positive response to the new product collection,” it said.
For 2024, the company currently expects full-year revenue to be in the range of $540 million to $560 million, representing an increase in the mid-to-high-single-digit range over 2023 levels, and adjusted EBITDA between $(20) million and $(10) million. The company expects its quarterly revenue and adjusted EBITDA performance to improve sequentially as it progresses through the year with adjusted EBITDA projected to be positive for the second half of 2024.
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