Dive Brief:
- A softness in both its wholesale and e-commerce channels led to Purple’s Q1 net revenue falling 13.2% year over year to $104.2 million, according to a press release.
- The brand’s wholesale business fell 24% while e-commerce dropped by 8%. Purple’s gross margin was 39.4%, an improvement of 460 basis points compared to 2024.
- Net loss for the quarter was $19.1 million compared to $50.2 million last year. The company had an operating loss of $14.5 million, an improvement from $23.1 million for the same quarter last year.
Dive Insight:
While soft demand in Purple’s wholesale business was in part to blame for falling revenue in the quarter, the company announced a partnership to deepen its presence in that channel.
The company announced Tuesday that it is more than doubling its product footprint at Somnigroup International’s Mattress Firm stores, increasing its presence from 5,000 mattress slots to a minimum of 12,000 slots, per a news release. The additional slots are expected in stores by late 2025 and 2026. Purple said the agreement also expands a partnership with Tempur Sherwood, a subsidiary of Tempur Sealy, to give exclusive rights to assemble some products Purple sells to Mattress Firm.
While Purple is keeping a close eye on potential disruption caused by tariff-related trade policies, CEO Rob DeMartini stressed that the company’s product exposure is limited. All mattresses are manufactured in the U.S, he said, with only about 15% of its cost of goods tied to products sourced overseas.
“Based on current tariffs, we estimate the potential annual cost impact to be approximately $10 million,” DeMartini said on a call with analysts. “While the tariff landscape remains fluid, we’re actively evaluating sourcing alternatives and pricing strategies on a case-by-case basis, which we believe will mitigate at least a portion of the expected cost increases. Our vertically integrated model and strong vendor relationships give us the flexibility to adapt quickly, and we are confident in our ability to mitigate these impacts.”
Potential trade disruptions come at a time when Purple is evaluating its financial options. The company’s board of directors initiated a review of strategic alternatives for the business, which could include a possible sale, merger or other financial transaction.