Purple Innovation announced results for the third quarter, and net revenue declined by 15.3% to $118.6 million. This is compared to $140.0 million in the third quarter of 2023.
“While our third-quarter revenue was challenged, we are encouraged by both our year-to-date performance modestly exceeding the broader industry and the sustained improvements in our profitability,” says CEO Rob DeMartini.
In August, Purple initiated a restructuring plan to strategically realign its operational focus to achieve significant operational efficiencies. This plan includes the closure of its two Utah manufacturing facilities to consolidate mattress production to its Georgia plant, as well as a headcount reduction at its Utah headquarters.
As a result, the company has a $32.7 million total restructuring, impairment and other related charges in the third quarter 2024. They said they expect to record additional restructuring and other related charges in the amount of $9.9 million through the second quarter of 2025.
“The restructuring plan we announced earlier this quarter is on track to deliver meaningful cost savings in the new year as we improve our operational efficiencies and positions us to capitalize on tailwinds when the market improves,” DeMartini adds. “Looking forward, we remain confident in our Path to Premium Sleep strategy’s ability to deliver long-term value and we look forward to building on this momentum into 2025.”
Purple says the decrease in revenue was primarily driven by industrywide demand softness for home-related products, a reduction in advertising spend toward more profitable marketing and the lapping of its successful launch of new premium mattresses in 2023.
By channel, DTC net revenues also decreased 11.7%, and wholesale net revenues decreased 20.1%. Within DTC, e-commerce net revenues decreased 15.7%, while showroom net revenues were approximately flat. In addition to the factors above, the decline in wholesale net revenues reflected the exit of certain customers.
Gross margin for the third quarter of 2024 decreased to 29.7%, down 410 basis points compared to 33.8% in the prior year, negatively impacted by the $12.9 million of restructuring-related charges offset in part by improved production efficiencies.
“The increase in production efficiencies was primarily due to supply chain initiatives and manufacturing efficiencies,” the company says in a release. “We expect the restructuring plan will further streamline our operations and provide increased gross profits. Despite deleveraging from lower sales, adjusted gross margin, which excludes restructuring-related charges during the quarter and launch costs in the prior-year period, grew to 40.5%, an increase of 340 basis points compared to adjusted gross margin last year.”
