Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| These improving trends also demonstrate that the work we’ve done educating our partners on tangible benefits of Purple’s proprietary grid technology is translating into stronger consumer demand |
| So we’re selling both premium and Luxe mattresses better than we were before |
| Our third quarter revenue of $140 million was up 18.8% to last quarter, marking our second consecutive quarter of sequential improvement and our largest quarter-over-quarter gain we’ve achieved in 12 quarters |
| Momentum in this channel continues to build with September being the best month year-to-date, highlighted by 60% of our stores comping positive, which is encouraging given the industry softness |
| Therefore, as we get further out from this launch phase, we’re confident that the combination of growth, gross margin expansion and expense leverage will drive sustained positive adjusted EBITDA and positive free cash flow |
| We’re encouraged with the sequential momentum we’re seeing in the top line |
| We got the best product in the market |
| This heightened interest in the brand validates our position as a truly differentiated competitor in the premium space and is indication that our new messaging is resonating with consumers even as the industry dynamics remain challenging |
| At the same time, we’re seeing good response to our new adjustable basis, thanks to our ability to directly deliver our sleep messaging and sell consumers on the total purple ecosystem |
| Our new Luxe mattress line has continued to become a larger part of the volume in our showrooms, helping drive average selling price and four-wall margins higher, and this trend is now emerging in many of our wholesale doors with sales of the new higher-tier offerings steadily improving |
| As Rob said, we are pleased to have demonstrated continued sequential top line growth, especially given the headwinds that the industry continues to face |
| We are encouraged by the positive revenue trends and we’re focused on driving near-term bottom line improvement across the business |
| So, we do feel like we are up and we continue to be up over a year ago, and that’s an encouraging sight |
| We are confident that along with the fixed cost leverage that we will continue to realize and higher sales volumes, these actions will result in a sequentially improving bottom line going forward |
| Additionally, there are opportunities to improve sell-through with each of our distribution channels, irrespective of a positive inflection in industry demand |
| The channel experienced a significant sequential improvement, with revenue up 15% compared to the second quarter |
| As we fine-tune our strategies, we’re confident that the actions that drove our sequential increase in top line performance this quarter will further accelerate results in the months and quarters ahead |
| The demand in wholesale is actually quite strong |
| As I mentioned, we’re seeing growing penetration of our highest-tiered products in our showrooms where our knowledgeable staff can highlight the benefit of our Luxe line and customers can feel the true luxury experience that our Rejuvenate mattresses provide |
| With price points ranging from $5,500 to $7,500, this performance, combined with reduced discounting and improved attachment rates with our new base program has helped drive our average selling prices in the channel higher by approximately 12% compared to the first 5 months of ‘23 prior to the mid-May launch |
| In addition to benefiting from the diversification of our procurement partners, which was implemented earlier in 2023, there are other actions underway that will enhance gross margins in the coming quarters |
| In an effort to ensure we’re driving profitable growth next year, we have several initiatives in place to enhance margins on top of the fixed cost leverage we’ll realize on higher sales |
| This includes more advanced training of our retail partner sales associates, so they’re well versed in educating consumers on the sleep benefits of our differentiated technology, driving more traffic into our showrooms and improving conversion on our website, particularly for higher-end beds |
| I’m pleased that we were able to build on Q2’s stabilized revenue and delivered the largest quarter-on-quarter improvement in the e-commerce channel since the pandemic fuel second quarter of 2022 – excuse me, 2020 more than 3 years ago |
| Our new product and marketing strategies are positively impacting this channel even as our price points move higher and industry transactions shift more back towards brick-and-mortar |
| While this decision along with higher-than-anticipated product cost is deepening our adjusted EBITDA loss for the year, we believe it best positions the company to build on its current top line run rate, gain further market share and achieve positive adjusted EBITDA in the back half of ‘24 |
| And so all of that will lead to profitability that should improve sequentially as we go across the course of the year and put us in a strong position |
| There is still work to be done on this front, but I’m confident that the steps we’re taking will produce better results in the near and long term |
| I said 60 in the script, it’s actually 50% of the stores comped positively in the quarter, and September was the strongest month of those 3 months in the quarter |
| Importantly, our average daily sales has been steadily improving since the launch began, underscoring the strong performance of the new product collection |
| Statement |
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| With considered purchases for both mattresses and higher ticket discretionary items in general, remaining under pressure, the near-term operating environment looks to be more challenging than we’d anticipated |
| The combination of these items equated to approximately 330 basis points of margin pressure, which we expect to abate as we move into 2024 |
| Adjusted EBITDA was negative $16.3 million versus $11.8 million a year ago |
| Given the current state of the mattress industry, along with our performance year-to-date, we’re moderating our outlook for the balance of 2023 |
| In addition to the product transition costs, we incurred approximately 420 basis points of headwinds that are more structural in nature, including 130 basis points from a channel mix shift in revenue to wholesale and marketplace, which carry a lower average selling price than our traditional DTC channel sales, 40 basis points from the lapping of Intellibed royalty benefits last year prior to the acquisition of Intellibed and the remaining gross margin headwinds primarily relate to the lapping of manufacturing efficiencies from last year when we had a higher amount of inventory production |
| Based on weaker industry trends and our results year-to-date, we’re moderating our outlook for the remainder of 2023 |
| However, our adjusted EBITDA has underperformed our expectations |
| Year-over-year, our revenue was down slightly to last year at a time when the bedding industry is estimated to be down in the high single or low double-digit range, confirming what our wholesale customers have been telling us that Purple is beginning to take market share |
| In total, the comps for the quarter were down 4%, again, not a good number, but relative to what we’re hearing about the category’s overall performance |
| The transition-related items represent costs directly connected to the new product transition, including airfreight for certain new product inputs, direct labor cost increases associated with new product production and lost revenue on the sell-in and replacement of floor model mattresses at our wholesale partners |
| And obviously, it seems to be a very challenging environment here for all |
| However, there are still a few areas of our strategy where improvement is necessary and several significant industry-wide headwinds remain in the near term |
| While several metrics are moving in the right direction, led by traffic, conversion is still lagging |
| And then now we are projecting that slower growth all the way through Q4 |
| We have taken some on our pillow business already this year and quite frankly, saw no negative volume implications |
| And that clearly, we just have not seen that happen |
| In addition, we will be recording these liabilities as a reduction to revenue in each future period, which will have a non-cash impact of reducing revenue by approximately 175 to 225 basis points going forward |
| Obviously, we can get there in the short run, but that’s not good for the long-term growth of this brand |
| While we narrowed our full year revenue range to $10 million from $30 million, we are maintaining our $10 million range for adjusted EBITDA due to the variability in transition costs related to the product launches, which are impacting our gross margins this year |
| Can you discuss why you think that might be happening? Is this a miss on the marketing message, or I mean, it’s not just the backdrop of a tough macro? Rob DeMartini No, it’s – Jeremy, it’s not |
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