Direct-to-consumer mattress maker Purple reported significant revenue gains, as well as the appointment of a new CEO, during its fourth-quarter earnings call on March 1.
Purple reported a net revenue gain of 7.2 percent to $186.4 million over the fourth quarter of 2020. And compared to 2019, the mattress and bedding company improved its revenue 50.0 percent.
Wholesale revenue increased 35.9 percent over 2020 and 48.7 percent over 2019, while direct-to-consumer (DTC) revenue decreased 4.0 percent compared to 2020 but increased 50.7 percent over 2019. Gross margins dipped for the quarter, to 34.7 percent compared to 47.2 percent in 2020 and 47.7 percent in 2019.
The company’s operating expenses as a percent of net revenue were 51.4 percent compared to 42.9 percent in 2020 and 45.4 percent in 2019. Operating loss was $31.1 million compared to operating income of $7.5 million in 2020 and operating income of $2.8 million 2019.
Purple’s net loss was $21.8 million compared to a net loss of $73.5 million in 2020 and a net loss of $26.2 million in 2019. Adjusted net loss was $23.9 million, or $0.35 per diluted share, as compared to adjusted net income of $5.0 million, or $0.07 per diluted share, in 2020 and adjusted net income of $1.2 million, or $0.02 per diluted share, in 2019.
EBITDA was $20.0 million compared to $79.1 million in 2020 and $22.8 million in 2019, reflecting primarily the impact from the change in fair value of warrant liabilities. Adjusted EBITDA was $23.4 million compared to $12.2 million in 2020 and $5.8 million in 2019.
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Looking at 2021 total-year earnings, net revenue increased 12.0 percent to $726.2 million, compared to 2020 and increased 69.5 percent compared to 2019. Wholesale revenue improved 54.5 percent over 2020 and 2019. DTC revenue decreased 2.3 percent compared to 2020 but increased 78.8 percent over 2019. Gross margin was 40.6 percent compared to 47.0 percent in 2020 and 44.1 percent in 2019.
Operating expenses as a percent of net revenue were 43.8 percent compared to 36.1 percent in 2020 and 40.3 percent in 2019. Operating loss was $23.4 million compared to operating income of $71.2 million in 2020 and operating income of $16.2 million 2019.
Net income was $3.9 million compared to a net loss of $229.8 million in 2020 and a net loss of $30.9 million in 2019. Adjusted net loss was $13.1 million, or $0.19 per diluted share, as compared to adjusted net income of $49.5 million, or $0.78 per diluted share, in 2020 and adjusted net income of $15.9 million, or $0.29 per diluted share, in 2019.
EBITDA was $14.2 million compared to $260.9 million in 2020 and $21.6 million in 2019, reflecting primarily the impact from the change in fair value of warrant liabilities. Adjusted EBITDA was $11.0 million compared to $88.1 million in 2020 and $33.4 million in 2019.
Purple said it views the comparison to the 2019 period to be more meaningful than the comparable 2020 period due to the outsized consumer demand during that year.
During the call, the company also introduced new CEO Rob DeMartini, who took the helm as acting CEO in December. DeMartini served as president and CEO of New Balance from 2007 to 2019. During his 12-year tenure, New Balance increased its annual sales to over $4 billion and achieved one of the highest growth rates in the athletic footwear and apparel industry. Prior to joining New Balance, DeMartini worked at Procter & Gamble for 20 years, beginning in its food and beverage division and including management roles with the Gillette Company, North American Snacks, and Millstone Coffee. He most recently served as president and CEO of U.S.A. Cycling.
“We are very pleased to have Rob as our permanent CEO,” said Paul Zepf, chairmen of the Purple board of directors. “Our search process was exhaustive, and Rob’s experience, leadership, and focus on execution made him the obvious choice to lead Purple to its next phase of success. His demonstrated leadership in developing our go forward execution-oriented strategy over the past couple of months allows the company to move forward quickly.”
Net Sales: Purple’s quarterly net revenue increased 7.2 percent to $186.4 million in the fourth quarter compared to 2020 and increased 50.0 percent compared to 2019. Looking at yearly net revenue, the company saw an increase of 12.0 percent to $726.2 million over 2020 and an increase of 69.5 percent compared to 2019.
CEO’s Take: DeMartini said the company plans to build on its growth to create a stronger operation that will carry the business into long-term success.
“Following several years of hyper growth and increased investments to support current and future expansion, we are now focusing on right-sizing our operations, improving our execution and refining our strategies to drive profitable growth in the current market environment,” he said. “This work is already underway, and we are making good progress, but we are still in the early stages of building the framework for strong operational maturity and accountability.”