Purple’s recently announced Q4 2022 earnings decreased over 22%, which brings new light to the news that Purple’s largest shareholder, Coliseum Capital, is seeking to reverse the financial course of Purple by nominating five new directors for its seven-member board.
Purple’s fourth-quarter 2022 net revenue decreased to $145.1 million, compared to $186.4 million in the fourth quarter of 2021. This decrease was primarily due to “changing demand for home-related products, inflationary pressure on discretionary consumer spending and an intentional reduction in advertising spend,” which was down 77.7% compared with a year ago, according to the company.
However, Q4 revenue in 2021 increased 39.9% to $173.9 million, as compared to $124.3 million, which shows Purple is certainly struggling.
And here’s more evidence: Versus prior year, direct-to-consumer net revenues declined 34.5%. That’s huge. And within DTC, e-commerce declined 43.4%, which is less than its decline in advertising spend. The company says this underscores its significant improvement in advertising spend efficiency.
In contrast, showroom net revenue increased 41.3%, driven largely by the addition of 27 net new showrooms over the past 12 months. These declines in the DTC channel were partially offset by an increase in wholesale net revenue of 0.3%, driven in part by the September 2022 Intellibed acquisition.
It’s too early to sound the alarm on Purple, but its Q4 results are not what the company expected, according to a release, and they’re going to need to do some serious work to get those numbers back up.