Q1 2025 Purple Innovation Inc Earnings Call
I would like to welcome everyone to the Purple innovation first quarter 2025 earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If he would like to withdraw your question again press the star one.
I'd now like to turn the conference over to Steve Eternal you may begin.
Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the Purple Innovation First Quarger 2025 Learning School.
Steve Eternal: Thank you for joining purple innovations first quarter 2025 earnings call a copy of our earnings press release is available on the Investor Relations section of website at Www Dot purple Dot com.
Todd Vogensen: Excluding restructuring and related charges during the quarter, our adjusted gross profit was $42 million compared to $41.7 million last year, and our adjusted gross margin rate improved 550 basis points to 40.3%. Our gross margin is supported by continued benefits from sourcing and production efficiencies. as well as successful consolidation of our manufacturing operations completed earlier this quarter. and a product mix shift towards our higher margin DTC channel.
All lines have been pleased on mute to prevent any back more noise. [inaudible]
Steve Eternal: Before we begin I'd like to remind you that certain statements made in this presentation are forward looking statements. These statements looks like purple innovations judgment and analysis as of today.
After the speakers remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I would now like to turn the conference over to Stacy Turnoff. You may begin.
Steve Eternal: Subject to a variety of risks and uncertainties could cause actual results to differ materially from current expectations you should not place undue reliance on these probably looking statements for more information. Please refer to the risk factors outlined in our filings with the SEC.
Rob: Today's presentation will reference non-GAAP financial measures such as adjusted gross margin EBITDA adjusted EBITDA and adjusted earnings per share a reconciliation of these measures to their most comparable GAAP measures can be found in the earnings release available on our website with that I'll turn the call over to Rob It seemed Martini purple innovation Chief Executive Officer.
Todd Vogensen: Now turning to operating expenses. Operating expenses were $55.5 million, down 14.4% versus $64.9 million last year. This was largely driven by headcount reductions from our restructuring efforts and the insourcing of certain functions in marketing and finance.
Speaker Change: Before we begin, I'd like to remind you that certain statements made of this presentation are so worth looking statements. These statements are a flexible innovation, judgment, and analysis as of today, and are subject to a variety of recent uncertainties that could cause actual results to differ materially from current expectations.
Speaker Change: Thank you Stacy good afternoon, everyone and thank you for joining US with me on today's call is our CFO Tom Bogan soon.
Todd Vogensen: Our adjusted net loss for the first quarter was negative $11.9 million, an improvement from adjusted net loss of negative $20.4 million in the prior year. And first quarter adjusted loss per share was negative 11 cents compared to an adjusted loss per share of negative 19 cents in the first quarter last year.
Speaker Change: You should not place undue reliance on these follow-up statements. For more information, please refer to the risk factors outlined in our filings with the FCC.
Speaker Change: I'm pleased to share that we delivered first quarter results in line with our revenue guidance and ahead of our adjusted EBITDA guidance.
Speaker Change: Additionally, today's presentation will reference non-cap financial measures, such as Adjusted Risk Margin, EBITDA, Adjusted EBITDA, and Adjusted Erning for Share. Reconciliation of these measures to their most comparable GAAP measures can be found in the [inaudible]
Speaker Change: Our performance amid continued pressure on the industry includes growth in our showroom channel and ongoing gross margin improvements.
Speaker Change: Our focus on promoting our differentiation along with the durability, we've built into our cost structure.
Todd Vogensen: Adjusted EBITDA for the first quarter was negative $4.7 million, but was a significant improvement from the negative $13.2 million last year, driven primarily by our ongoing improvements in gross margin and well-managed expenses.
Speaker Change: at least available on a website. With that, I'll turn the call over to Rob DeMartini, Purple Innovations Chief Executive Officer.
Speaker Change: Positions us to drive sustainable growth and profitability overtime.
Speaker Change: Thank you, Stacy. Good afternoon everyone and thank you for joining us. With me on today's call is our CFO , Todd Vogensen.
Speaker Change: First quarter revenue of $104 2 million was down 13% compared to last year and was in line with our expectations.
Todd Vogensen: Now turning to the balance sheet. At the end of March, we had cash and cash equivalents at $21.6 million compared with $29 million on December 31st, 2024. Net inventories on March 31st, 2025 were $60.2 million, down 16.5% compared to March 31st, 2025, and up 5.8% compared to December 31st, 2024. Typically, we experience net cash usage in the first quarter of each year as we invest in rebuilding inventory following the holiday season and make certain contractual rebate payments to customers. 2025 with no exception. Due to these normal seasonal factors along with a reduction in first quarter sales, our cash used in operations was $23.1 million compared to $16.8 million last year.
Speaker Change: I'm pleased to share that we delivered first quarter results in line with our revenue guidance and ahead of our adjusted EBITDA guidance.
Speaker Change: Softness in our wholesale and E. Commerce channels was partially offset by continued strength in our showroom channel.
Speaker Change: Our performance amid continued pressure on the industry includes growth in our showroom channel and ongoing gross margin improvements.
Speaker Change: Showrooms grew 7% the fifth consecutive period of revenue growth, while comparable sales were up 11% the second straight quarter of year over year gains despite operating fewer locations, while optimizing our fleet.
Speaker Change: Our focus on promoting our differentiation, along with the durability we've built into our cost structure, positions us to drive sustainable growth and profitability over time.
Speaker Change: The sustained strength in the channel was primarily driven by higher order values.
Speaker Change: First quarter revenue of 104.2 million was down 13% compared to last year and was in line with our expectations.
Speaker Change: <unk> upselling strategies and product bundling reinforcing the strength of our retail store strategy.
Speaker Change: Stoffness in our wholesale and e-commerce channels was partially upset by continued strength in our showroom channel.
Speaker Change: Adjusted EBITDA outperformance was a result of strong foundation, we built with our restructuring efforts and ongoing cost savings initiatives.
Speaker Change: Showrooms grew 7%, the fifth consecutive period of revenue growth, while comparable sales were up 11%, the second straight quarter of year-over-year gains, despite operating fewer locations while optimizing
Speaker Change: For the fourth consecutive quarter adjusted gross margins exceeded 40% an improvement of 550 basis points compared to last year.
Todd Vogensen: We were pleased to exit the corridor with cash of over $20 million yet again. As we move into a more seasonally balanced quarter for cash needs, we will remain focused on managing our cash position with discipline.
Speaker Change: Excluding the potential impact from tariffs, which I'll speak to later on we anticipate gross margin expansion to continue throughout the year supported by our sourcing initiatives production efficiencies and the full integration of our consolidated manufacturing operations.
Speaker Change: This sustained strength in the channel was primarily driven by higher order values, effective upselling strategies, and product bundling, reinforcing the strength of our resource strategy.
Todd Vogensen: In addition, as allowed in our term loan agreement, we entered into an amendment to borrow an incremental $20 million to facilitate the ramp up in one-time rollout costs and inventory production. for our new expanded distribution agreement with Mattress. While also supporting continued investment in innovation and marketing and providing an incremental source of cushion for future operations in this uncertain environment. Building on the momentum from last quarter, we remain focused on strengthening our foundation through continued cost discipline and innovation. Driven by our gel grid technology. The actions we've taken over the past year to streamline operations and reduce fixed costs have positioned us to realize greater operational leverage.
Speaker Change: Adjusted EBITDA outperformance was a result of strong foundation we built with our restructuring efforts and ongoing cost savings initiatives.
Speaker Change: Additionally, disciplined operating expense management contributed to a 160 basis point improvement in profitability in the quarter.
Speaker Change: For the fourth consecutive quarter, adjusted gross margins exceeded 40 percent and improvement of 550 basis points compared to last year.
Speaker Change: Collectively these actions have driven significant advancements in our adjusted EBITDA profitability, which increased to $8 million and 650 basis points compared to last year.
Speaker Change: Excluding the potential impact from tariffs, which I'll speak to later on, we anticipate gross margin expansion to continue throughout the year, supported by our sourcing initiatives, production efficiencies in the full integration of our consolidated manufacturing operations.
Speaker Change: Now I want to highlight a major strategic milestone that will significantly expand our distribution footprint and drive further efficiencies in our manufacturing operations reinforcing our commitment to sustainable profitable growth.
Speaker Change: Additionally, disciplined operating expense management contributed to a 160 basis point improvement in profitability in the quarter.
Todd Vogensen: As a result, we expect incremental upside volume to flow through at a much faster rate. Supporting our path to profitability. Well, we remain cautious given ongoing industry headwinds. We've built our model for scalability, and we expect that any revenue upside will flow through at roughly 35%, providing meaningful earnings potential when the market stabilizes.
Speaker Change: Earlier today, we announced a significant expansion of our mattress firm partnership through a multifaceted agreement with some new group International.
Speaker Change: Collectively, these actions have driven significant advancements in our Adjusted EBITDA profitability, which increased $8 million and 650 basis points compared to last year.
Speaker Change: We're excited to expand our commercial partnership growing our presence from 5000 peripheral macro slots in 2500 mattress firm stores to 12000 slots across their entire store network.
Speaker Change: Now, I want to highlight a major strategic milestone that will significantly expand our distribution footprint and drive further efficiencies in our manufacturing operations, reinforcing our commitment to sustainable, profitable growth.
Speaker Change: This rollout, which we anticipate will begin ramping up in July and finished by year end is expected to drive more than $70 million and incremental net revenue beginning next year.
Todd Vogensen: As Rob mentioned earlier, we are reaffirming our full-year guidance. We continue to expect revenue in the range of $465 to $485 million and adjusted EBITDA in the range of flat to positive $10 million. This includes an anticipated $25 to $30 million in cost savings that we had previously announced relating to our manufacturing consolidation and corporate restructuring, which remains on track. While the second quarter will be pressured by macro concerns and tariff headwinds, we're planning for sequential growth in the second half, driven by the launch of REJUVENATE 2.0 and increased distribution from the mattress firm partnership.
Speaker Change: To support our partnership with mattress firm, we're also expanding our existing strategic supply agreement with Sherwood bedding. Another some new group company, which will have the exclusive right to assemble certain product lines of the purple cells the mattress firm.
Speaker Change: Earlier today we announced a significant expansion of our mattress firm partnership through a multi-faceted agreement with Somnie Group International
Speaker Change: We're excited to expand our commercial partnership, growing our presence from 5,000 purple mattress slots in 1,400 mattress firm stores to 12,000 slots across their entire store network.
Speaker Change: Purple will maintain production of its proprietary grid technology and retain all related intellectual property.
Speaker Change: This rollout which we anticipate will begin ramping up in July and finish by a year end is expected to drive more than $70 million in incremental net revenue beginning next year.
Speaker Change: Mattress firm has been an important and valued partner to purple and this partnership reinforces our stability opens the door to significant new volume and brand exposure and enables us to continue investing behind innovation and marketing.
Todd Vogensen: We plan to return to a positive EBITDA in the second half, driven by ongoing benefits from our restructuring plan and sourcing initiative. As Rob mentioned, we are maintaining our outlook while we plan to see both incremental revenue and EBITDA contribution from our expanded mattress firm relationship in the back half. It's early to provide specific guidance on the impact of the relationship for 2025. and we are still working on our rollout plan. Even as we expect to mitigate at least a portion of the $10 million tariff exposure is currently inactive. receives potential pressure on overall consumer spending.
Speaker Change: To support our partnership with MattressFirm, we're also expanding our existing strategic supply agreement with Sherwood Betting, another Somnay Group company, which will have the exclusive right to assemble certain product lines that purple cells to MattressFirm.
Speaker Change: Additionally, as allowed in our term loan agreement, we entered into an amendment to borrow an incremental $20 million to support our expanded distribution agreement with mattress firm and continued investment in innovation and marketing.
Speaker Change: Purple will maintain production of its proprietary grid technology and retain all related intellectual property.
Speaker Change: Later, Todd will provide further details on the financial impact.
As we outlined last quarter, our strategy remains firmly grounded in three key pillars number one pioneering new technologies to maintain our product leadership.
Speaker Change: Matthews firm has been an important and valued partner to purple and this partnership reinforces our stability, opens the door to significant new volume and brand exposure and enables us to continue investing behind innovation and marketing.
Speaker Change: Number two promoting our differentiation to effectively communicate our unique product benefits across our channels and.
Todd Vogensen: There's much uncertainty around the timing and scope of evolving macroeconomic factors, including the tariff environment, and we will continue to monitor the situation and update you over time. We remain focused on executing against our strategic priorities while driving profitable growth.
Speaker Change: Additionally, as allowed in our term loan agreement, we entered into an amendment to borrow an incremental $20 million to support our expanded distribution agreement with Mattress Farm and continued investment in innovation and marketing.
Speaker Change: And three prioritizing gross margin driven by ongoing operational improvements and strategic cost management.
Speaker Change: First turning to pioneering new technologies, we remain committed to leveraging technology and innovation is the key driver of our competitive advantage.
Later, Todd will provide further details on the financial impact.
Operator: With that, I'll turn the call over to the operator for questions. Thank you.
Speaker Change: As we outlined last quarter, our strategy remains firmly grounded in three key pillars.
Speaker Change: Last week, we launched the new rejuvenate 2.0 mattress line in our showrooms and online and began the rollout in the wholesale channel with select partners.
Number one, pioneering new technologies to maintain our product leadership.
Operator: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.
Speaker Change: Number two, promoting our differentiation to effectively communicate our unique product benefits across our channels.
This marks one of the most significant product launches in our company's history, introducing a new type of grid technology, combining a plush pillow top Jill grid called dream layer on top of our existing gel flex grid.
Speaker Change: and three, prioritizing gross margin driven by ongoing operational improvements in strategic cost management.
Operator: If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.
Speaker Change: This unique combination preserves all of the proven benefits of sleeping on gel layers, while providing enhanced luxurious comfort.
Speaker Change: First, turning to pioneering new technologies, we remain committed to leveraging technology and innovation as the key driver of our competitive advantage.
Bradley Thomas: Again, press star one to join the And our first question comes from the line of Brad Thomas with KeyBank Capital Markets. Your line is open. Hi, good afternoon, and thanks for taking my question.
Speaker Change: While it's too early to assess sales trends initial feedback from both our retail sales associates and our wholesale partners has been strongly positive.
Speaker Change: Last week, we launched the new Rejuvenate 2.0 mattress line in our showrooms and online and began the rollout in the wholesale channel with select partners.
Speaker Change: We've seen a meaningful increase in slot commitments across our wholesale channel with total rejuvenate slot count at non mattress firm retailers now growing by more than 60% year over year.
Rob DeMartini: Rob, I just wanted to kick off with a question about the new mattress firm partnership, expanded mattress firm partnership, I should say, and first of all, congratulations. Sounds like an exciting opportunity for you. As we think about the 70 million number that you highlighted, can you just help us think a little bit more about maybe how you come to that math? Is that a net number that offsets potentially some sales that might have occurred in stores nearby? Or are you coming up with the 70 million number? Brad, thank you for the question. We're using the current and we have about 5,000 slots in about 62% of their doors today.
Speaker Change: This marks one of the most significant product launches in our company's history, introducing a new type of grid technology, combining a plush pillow top gel grid called DreamLayer on top of our existing gel flex grid.
Speaker Change: This momentum represents a significant milestone in our path to premium sleep strategy and reinforces that our innovation is resonating at retail.
Speaker Change: This unique combination preserves all the proven benefits of sleeping on gel layers while providing enhanced, luxurious comfort.
Speaker Change: As rejuvenate two point over reaches more customers. We're excited to see its performance in the market and we're confident that customers will love the elevated experience that delivers.
Speaker Change: Well, it's too early to assess sales trends. Initial feedback from both retail sales associates and our wholesale partners has been strongly positive.
Speaker Change: Second we continue to sharpen our focus on driving sales by leading with our differentiation.
Speaker Change: We've seen a meaningful increase in slot commitments across our wholesale channel with total rejuvenate slot count at non-matter firm retailers now growing by more than 60% year-over-year.
Speaker Change: Purple was built on innovation and our job grid technology sets us apart in a crowded and increasingly commoditized category.
Rob DeMartini: And for the sake of, you know, as we talk through with the SOMNI group folks, we are projecting the same productivity. On the incremental slot. And we think that's going to end up being a fair number, because while there would be some cannibalization, just having more, we are not stocked and trained as a core brand in their system. And we believe that with the investments that we can make, and they can make in establishing us as a core brand, that there'll be slot benefits that come from that. So, it's based on the current business that we do with them, and then projecting that on the full scope.
Speaker Change: Over the years the industry has leaned on discounting to drive demand, but our path forward is to focus on the benefits of our products, especially the sleep and health advantages.
Speaker Change: It's momentum represents a significant milestone in our path to premium sleep strategy and reinforces that our innovation is resonating at retail.
Speaker Change: As Rejuvenate 2.0 reaches more customers, we're excited to see its performance in the market and we're confident that customers will love the elevated experience it delivers.
Speaker Change: We have begun to shift our messaging and focus our investment in marketing on what consumer benefits purple mattresses deliver.
Speaker Change: Across our selling channels, our priority remains to improve conversion and drive higher quality traffic by highlighting what sets <unk> apart.
Speaker Change: Second, we continue to sharpen our focus on driving sales by leading with our differentiation.
Speaker Change: Purple was built on innovation, and our Joe Grid technology sets us apart in a crowded and increasingly commoditized category.
Speaker Change: Our gel grid technology delivers the most impact when experienced firsthand, which is why we continue to see our highest conversion rates in our showrooms and our wholesale partner doors, where customers can feel the difference and associates are equipped to explain the benefits.
Speaker Change: Over the years, the industry has leaned on discounting to drive demand, but our path forward is to focus on the benefits of our products.
Bradley Thomas: That's very helpful, Rob. Thank you.
Rob DeMartini: And then maybe if I can pivot to just talking about the industry and the consumer, wondering if you could just comment a bit more about recent trends and, you know, any more insights into how you're thinking about trends in 2Q here. Yeah, I mean, you know, I'm concerned about the second quarter. And as I laid out, the tariff burden for us is a manageable number. And we will figure out how to deal with it. What I'm more concerned about with is the psyche of the consumer. And I think what I've read about the April consumer Outlook is pretty concerning.
especially the Sleep and Health advantages. Thank you.
Speaker Change: E Commerce continues to lag and conversion, reflecting the challenge of conveying our benefits digitally.
Speaker Change: We have begun to shift our messaging and focus our investment in marketing on what consumer benefits Purple mattresses deliver.
Speaker Change: Actively refining our marketing approach to clearly articulate our products distinctive benefits.
Speaker Change: Across our selling channels, our priority remains to improve conversion and drive higher quality traffic by highlighting what sets purple apart.
Speaker Change: I'll take a moment to provide color about how we're promoting our differentiation in each channel.
Speaker Change: Our Joe Grid technology delivers the most impact when experience first hand, which is why we continue to see our highest conversion rates in our showrooms and our wholesale partner doors, where customers can feel the difference and associates are equipped to explain the benefits.
Speaker Change: Starting with our DTC channel showrooms delivered strong performance significantly outperforming overall industry trends by at least 10 percentage points illustrating the effectiveness of our in store experience, which allows customers to engage directly with our technology and our hands on personalized setting.
Rob DeMartini: Now, is it going to continue indefinitely? I don't think so. But I do think we're going to deal with it. Through the second quarter, I think people are a bit more optimistic about Memorial Day as we are, but I think we still got more uncertainty than certainty, Brad. That makes sense. And we obviously heard a lot of negative things about February with the weather being an impact and that perhaps there was some improvement after the weather got better. Anything more that you can tell us about about the cadence of spending what you've been seeing of late?
Speaker Change: E-commerce continues to lag in conversion, reflecting the challenge of conveying our benefits digitally. We're actively refining our marketing approach to clearly articulate our products' distinctive benefits.
Speaker Change: Our focus at the store level is on customer education, and Upselling, particularly around higher end products like rejuvenate mattresses.
Speaker Change: In addition, consumer financing continues to be a valuable tool in supporting larger purchases with finance orders meaningfully up year over year, and delivering a higher average order value compared to non finance transactions.
Speaker Change: I'll take a moment to provide color about how we're promoting our differentiation in each channel.
Speaker Change: Starting with our DTC channel, showrooms delivered strong performance, significantly outperforming overall industry trends by at least 10 percentage points.
Speaker Change: Turning now to e-commerce.
Speaker Change: Illustrating the effectiveness of our in-store experience, which allows customers to engage directly with our technology in a hands-on personalized setting.
Speaker Change: Our consumer research tells us that we have a strong brand awareness now at 77% a notable achievement for a brand of our size and maturity.
Rob DeMartini: No, I mean, obviously, you know, with the 13% down, I think we're probably on the high side of the category range in the first quarter. We have seen a little bit better volume since April ended, but as you know, April is always a pretty weak mattress month, and it was for us. So, I think the consumer is very cautious right now and looking for some certainty as they plan for the rest of their Spring, and Summer Spending. Very helpful. Thanks, Rob. All right, thank you, Brad.
Speaker Change: That said Theres still groundwork to be done online as many consumers are not yet familiar with the unique benefits of our proprietary Joe grid technology and close to half of them don't know that they can experience our products firsthand and retail stores.
Speaker Change: In addition, Consumer Financing continues to be a valuable tool in supporting larger purchases with finance orders meaningfully up year over year in delivering a higher average order value compared to non-finance transactions.
This highlights a meaningful opportunity is online research is often the first step in the consumer's path to purchase.
Speaker Change: Our focus is on more clearly articulating the differentiation in the digital environment, while also ensuring that customers know where they can experience our technology firsthand.
Turning now to e-commerce.
Speaker Change: Our consumer research tells us that we have a strong brand awareness, now it's 77%.
Bobby Griffin: Our next question comes from the line of Bobby Griffin with Raymond Jeans. Your line is open. Good afternoon, everybody. Thanks for taking my questions.
Speaker Change: A notable achievement for a brand of our size and maturity.
Speaker Change: In the first quarter, we continued to see softness with sales down 8% versus the prior year. Despite a lift in website traffic.
Speaker Change: That said, there's still groundwork to be done online as many consumers are not yet familiar with the unique benefits of our proprietary jail grid technology and close to half of them don't know that they can experience our products firsthand in retail stores.
Rob DeMartini: I guess, Rob, just to start, could you maybe talk a little bit about how the new agreement came to fruition, you know, with Somnigroup? You know, what kind of thinking back during the process, when they're looking at buying mattress firm, there was different supply agreements getting signed, I think Purple's was a little bit later. But maybe now with it being complete, just talk a little bit about how the relationship developed to end up in this expansion. Well, hey, Bobby, all I can do is share from my side, because obviously, you know, there's a number of folks from SOMNY involved.
Speaker Change: Conversion declined pointing to a disconnect between consumer curiosity and product understanding.
Speaker Change: In response, we are actively reevaluating our digital strategy with a focus on three core areas.
Speaker Change: This highlights a meaningful opportunity as online research is often the first step in the consumers' path to purchase.
Speaker Change: Improving conversion and reinforcing the messaging around our grid technology and its unique benefits.
Speaker Change: Our focus is on more clearly articulating the differentiation in the digital environment while also ensuring that customers know where they can experience our technology firsthand.
Speaker Change: Optimizing potential customer target strategies for greater efficiency and impact and elevating omnichannel efforts with an emphasis on increasing awareness of our showroom and wholesale partnership distribution points.
Rob DeMartini: But, you know, Mattress Firm has always been an important customer for us. I think at different times, we've put ourselves in a position to be at odds with each other over either contractual agreements or, or actions or inactions by either party. And when I look at what grows their business, I know that there's a couple things we do particularly well. We drive traffic, we trade up the transaction, and over the last couple of years, as we've done a lot of margin work, we've been a less dilutive, more accretive margin contribution to the retailer. The combination of those three things, if I'm sitting in a retailer's chair, I'm looking for people and brands that are going to drive up my margin and drive up my transaction and get people in the doors.
Speaker Change: In the first quarter, we continued to see softness with sales down 8% versus the prior year despite a list in website traffic.
Speaker Change: The wholesale channel remains pressured with sales down 24% compared to last year, largely due to fewer doors as we optimized our footprint contributing to a substantial margin improvement.
Speaker Change: Conversion to Klein pointing to a disconnect between consumer curiosity and product understanding.
Speaker Change: In response, we're actively reevaluating our digital strategy with a focus on three core areas.
Speaker Change: Additionally, calendar shifts and broad based softness across most partners contributed to an overall channel weakness.
Speaker Change: Improving conversion and reinforcing the messaging around our grid technology and its unique benefits.
Speaker Change: We're encouraged by several key wins and early signs of momentum as we focus on product leadership.
Speaker Change: Optimizing potential customer target strategies for greater efficiency and impact and elevating Omni-Channel efforts with an emphasis on increasing awareness of our showroom and wholesale partnership distribution points.
Speaker Change: As I mentioned earlier, we expect our agreement with mattress firm will meaningfully broaden our retail footprint and elevate our exposure to premium customers nationwide.
Rob DeMartini: And I think those are things Purple does well. And I appreciate that Mattress Firm is putting some faith in us. to be a good contributor to their business and we have to live up to that. Appreciate that. That's helpful.
Speaker Change: The wholesale channel remains pressured with sales down 24% compared to last year largely due to fewer doors as we optimized our footprint contributing to a substantial margin improvement.
Speaker Change: We view this strategic action is a strong vote of confidence from our wholesale partner and the strength of the FERC <unk> brand, reflecting their belief in our product benefits brand strength and long term growth potential.
Rob DeMartini: And then as you look at this now, you have this new kind of pretty big growth potential here in wholesale. Does that change kind of you and the team's view of what the ultimate distribution model is for Purple? When you think about your own stores, I know you're optimizing those company showrooms, but they're performing better, or even kind of the investments you put behind the e-commerce business. No, I think, you know, we've lived at 70-30 DTC. We've lived at 60-40, which is about where we are now. But behind the scenes, we've been ensuring that a 50-50 business is an opportunity for us.
Speaker Change: Additionally, calendarships and broad-based softness across most partners contributed to an overall channel weakness.
Our partnership with Costco continues to perform well with year to date sell through up double digits. We're planning additional promotional events for later in the year and are maintaining year round online availability of our products.
Speaker Change: We're encouraged by several key wins and early signs of momentum as we focus on product leadership.
Speaker Change: As I mentioned earlier, we expect our agreement with mattress firm will meaningfully broaden our retail footprint and elevate our exposure to premium customers nationwide.
We're also expanding our wholesale reach through 60% more rejuvenate slots than our baseline.
Speaker Change: As we rollout the new rejuvenate collection, we expect strong sell through across the wholesale network. We're confident in the performance of this luxury offerings.
Speaker Change: We view this strategic action as a strong vote of confidence from our wholesale partner in the strength of the purple brand, reflecting their belief in our product benefits, brand strength, and long-term growth potential.
Speaker Change: Finally to grow our pillow business, we've broadened our assortment with our wholesale partners to now include dream layer and freeform strengthening our presence in the premium sleep accessories space and serving a wider range of sleep preferences.
Rob DeMartini: I think that is where we'll head. But we're very bullish on our showroom business. I mean, we comped up 11% in the first quarter. That's the second positive comp quarter in a row. They're becoming more profitable. And our average ticket Our average mattress ticket in our showrooms is still almost 2x what it is in wholesale. So, you know, we're very appreciative of the wholesale support that we get and we feel like the responsibility is we've got to lead the consumer to understand this brand can perform at higher prices than where it's been in the past in the category and that's working right now.
Speaker Change: Our partnership with Costco continues to perform well with year-to-date sell-through up double digits.
Speaker Change: We're planning additional promotional events for later in the year and are maintaining year-round online availability of our products.
Speaker Change: We continue to expect to grow our placements and about 2000 of the 3000 doors that carry our harmony pillow.
Speaker Change: We're also expanding our wholesale reach through 60% more rejuvenate slots than our baseline.
Finally, turning to our third strategic pillar prioritizing gross margins, we exceeded our adjusted gross margin target of 40% this quarter, improving 550 basis points, despite lower volumes.
Speaker Change: As we roll out the new Rejuvenate collection, we expect strong self-rule across the whole still network. We're confident in the performance of this luxury offering.
Speaker Change: Finally, to grow our pillow business, we've broadened our assortment with our wholesale partners to now include dream layer and free form, strengthening our presence in the premium sleep accessory space and serving a wider range of sleep preferences.
Speaker Change: Margin gains were driven by improved sourcing continued production efficiencies and the successful consolidation of our manufacturing operations.
Rob DeMartini: So, staying 50-50, I think we're legitimately the only truly omni-brand. Most brands have a maternal channel and then they do, you know, they flirt with the other channels, but we are legitimately across all direct and wholesale channels and we've got to live up to that.
Speaker Change: In April we also began operating at our new Salt Lake City distribution Center, a dedicated facility that strengthens our wholesales servicing capability.
Speaker Change: We continue to expect to grow our placements in about 2,000 of the 3,000 doors that carry our Harmony Pillow.
Speaker Change: Our in house production of our Harmony Pillow line is also ramping up enhancing both cost control and speed to market.
Rob DeMartini: And then just lastly, on on tariffs, understand there's some pricing aspects, is that yet hitting the P&L? So like, should we think of that as to come in 2Q? Or is it more like it's on the vendor side of their balance sheet for now? And that's a 3Q, 4Q type issue if we don't adjust pricing or find alternate No, it'll start impacting 2Q. And when we have that in our projections, what we don't, well, we have them at a macro level in our projections of offsetting some of that. But we're still working through the exact details of how to do that.
Finally, turning to our third strategic pillar, prioritizing gross margins.
Speaker Change: Our gross margin strategy is continuing to evolve in response to the ongoing tariff developments, which brings me to an update on how we expect these changes to impact our business.
Speaker Change: Margin Gaines were driven by improved sourcing, continued production efficiencies, and the successful consolidation of our manufacturing operations.
Speaker Change: We continue to closely monitor the potential impact of recent U S tariff charges.
Speaker Change: Accordingly, all of our mattresses are manufactured in the U S and about 15% of our cost of goods is tied to products stores from overseas.
Speaker Change: In April , we also began operating at our New Salt Lake City Distribution Center, a dedicated facility that strengthens our wholesale service and capability.
Rob DeMartini: But it flows through pretty quickly. I mean, we turn our inventory pretty quickly. Yep, yep.
Speaker Change: This exposure is primarily concentrated in the textile side of our business, which includes sheets and mattress covers but also includes the imported basis and foundations.
Bobby Griffin: Appreciate the details.
Speaker Change: Our in-house production of our Harmony Pillow line is also ramping up, enhancing both cost control and speed to market.
Bobby Griffin: Best of luck here trying to navigate this environment and congrats on the expanded relationship there. Thank you, Bobby.
Speaker Change: Our gross margin strategy is continuing to involve in response to the ongoing tariff developments, which brings me to an update on how we expect these changes to impact our business.
Speaker Change: Based on current tariffs, we estimate the potential annual cost impact to be approximately $10 million.
michael laser: Next question comes from the line of Michael Laser with UBS. Your line is open. Hey, good afternoon.
Speaker Change: While the tariff landscape remains fluid we are 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.
Speaker Change: We continue to closely monitor the potential impact of recent U.S.
Dan Silverstein: This is Dan Silverstein on for Michael. Just one more question on the expanded partnership with Mattress Firm. Is there anything else you can share on the economics of the new partnership, especially in light of Sherwood doing some of the assembly? Just trying to think of how this would impact wholesale margins overall. And then on the additional $70 million of incremental revenues, is the 35% flow-through rate that we talked about last quarter still applicable?
Speaker Change: Importantly, all of our mattresses are manufactured in the U.S. and about 15% of our cost of goods is tied to products, stores from overseas.
Speaker Change: 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.
Speaker Change: This exposure is primarily concentrated in the textile side of our business, which includes sheets and mattress covers, but also includes the import of bases and foundations.
Speaker Change: Looking forward our guidance reflects a balanced view considering some contribution from the expansion of our wholesale distribution later this year, while also incorporating potential headwinds from tariff policies.
Speaker Change: 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.
Speaker Change: While we're working to offset the impact from tariffs, we believe that there could be pressure and overall consumer demand.
Speaker Change: Considering both the tailwind and the headwinds outlined we're reaffirming our full year guidance of revenue in the range of $465 million to $485 million.
Speaker Change: 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.
Speaker Change: And adjusted EBITDA in the range of flat to up $10 million, which includes $25 million to $30 million and expected savings from our manufacturing consolidation initiatives.
Speaker Change: Looking forward, our guidance reflects a balanced view considering some contribution from the expansion of our wholesale distribution later this year, while also incorporating potential headwinds from tariff policies.
Dan Silverstein: Great, thanks. And then just is there anything else like interesting opportunities from a cooperative advertising point of view, you know, that could improve, you know, the productivity in the mattress firm network, now that you're a core brand in the system? Dan, I mean, those are things that we will work out. We do believe that there's efficiency for both of us. And, you know, my first focus is ensuring that we're bringing innovation to the market and that we've got advertising that is engaging the consumer and driving them and to all retailers, not just mattress firm. But we certainly see opportunity from being recognized as a core brand.
Speaker Change: Todd will go into more detail later in the call.
Speaker Change: Finally, as announced previously the boards review of strategic alternatives remains ongoing we don't have any updates to share at this time and will not be commenting further during today's Q&A.
Speaker Change: While we're working to offset the impact from tariffs, we believe that there could be pressure in overall consumer demand.
Speaker Change: Considering both the tailwinds and the headwinds outlined, we're reaffirming our full year guidance of revenue in the range of 465 to 485 million.
Speaker Change: Now I'll turn the call over to Todd to discuss our financial performance in more detail.
Thank you, Rob and good afternoon, everyone.
Speaker Change: and Adjusted EBITDA in the range of flat to up 10 million, which includes 25 to 30 million and expected savings from our manufacturing consolidation initiatives.
Speaker Change: As Rob touched on earlier, we're pleased that we met our revenue guidance and exceeded our adjusted EBITDA outlook and we delivered these accomplishments despite the challenging macroeconomic environment, including persistent deflationary pressures and uncertainty around tariffs.
Dan Silverstein: But I think with that also comes responsibility. Definitely.
Speaker Change: Finally, as announced previously, the Board's review of the Strategic Alternatives remains ongoing. We don't have any updates to share at this time and will not be commenting further during today's Q&A.
Dan Silverstein: Thank you and best of luck. All right. Thank you, Dan.
Speaker Change: Today I'll walk through the key financial metrics for the quarter and highlight the areas, where we saw both progress and headwinds.
Brian Nagel: Our next question comes from the line of Brian Nagel with Oppenheimer. Your line is open. Good afternoon. So I do want to ask questions on the new partnership. Argus expanded partnership.
Speaker Change: Starting with the top line net revenue for the three months ended March 31, 2025 came in at $104 2 million, which was down 13, 2% versus $120 million in the prior year and.
Speaker Change: Now I'll turn the call over to Todd to discuss our financial performance in more detail.
Todd Vogensen: Thank you, Rob. And good afternoon, everyone. As Rob touched on earlier, we're pleased that we met our revenue guidance and exceeded our adjusted EBITDA outlook and that we delivered these accomplishments despite the challenging macroeconomic environment, including persistent escalationary pressures and uncertainty around tariffs.
Rob DeMartini: So first off, is there Well, will Purple have to expand its own manufacturing capacity, so to say, to ramp volumes for this? And then along, will there, should we expect as the relationship starts to build, will there be initial kind of startup costs that you're going to have to endure? Yeah, there's certainly a startup cost like any expansion for us to get those beds and all the accompanying point of sale and materials to the stores. There are startup costs, we do have those fully reflected, or we believe we do. And then, you know, I want to make sure that that we talk about this properly, we maintain 100% of the manufacturing responsibility for all grid material.
Speaker Change: And was primarily the result of softness in our wholesale and e-commerce channels.
Speaker Change: By channel direct to consumer net revenue for the quarter was $63 4 million.
Speaker Change: Within DTC net revenue for showrooms increased seven 4% compared to last year.
Todd Vogensen: Today, I'll walk through the Keith financial metrics for the quarter and highlight the areas where we saw both progress and at ones.
Speaker Change: As Rob mentioned, our showroom channel continues to be a solid performer within the business and for the second consecutive quarter showroom sales grew year over year, Despite a 5% reduction in store count.
Todd Vogensen: Starting with the top line, net revenue for the three-month-cended March 31, 2025 came in at $104.2 million, which was down 13.2% versus 120 million in the prior year.
Speaker Change: E Commerce continued to see softness and was down eight 2% during the first quarter compared to last year driven by softness in the market. In addition to the opportunities for conversion and messaging that Rob mentioned.
Todd Vogensen: and was primarily the result of thoughtfulness in our wholesale and e-commerce channels.
Todd Vogensen: By channel, direct consumer net revenue for the quarter was $63.4 million.
Rob DeMartini: regardless of who we are partnering with to finish the assembly. That's been true and that will stay true. We are not sharing the grid manufacturing formula or the methods. I mean we've got 25 years of experience that is what differentiates us. So we will make the grid and then distribute it to our partners who help us finishing with the assembly and distribution. And we think that opportunity is going to work very well as I said before. Sherwood is well positioned to serve mattress firm well and we want to take advantage of that. Got it.
Speaker Change: We experienced a notable decline in our wholesale segment, where net revenue of $48 million was down 24, 2% versus last year as.
Todd Vogensen: with NDTC, net revenue for showrooms increased 7.4% compared to last year.
Todd Vogensen: As Rob mentions, our showroom channel continues to be a solid performer within the business and for the second consecutive quarter, showroom sales grew year-over-year despite a 5% reduction
Speaker Change: As we were impacted by the wraparound on door count reductions from 2024, and broad based volume declines across our wholesale partners.
Speaker Change: Our reported gross profit for first quarter was $41 million.
Todd Vogensen: Decommerce continued to see softness and was down 8.2% during the first quarter compared to last year driven by softness in the market in addition to the opportunities for conversion and messaging that Rob mentioned.
Speaker Change: Compared to $41 $7 million during the same period last year.
Speaker Change: Reported gross margin rate for the quarter was 39, 4% an improvement of 460 basis points compared to last year.
Rob DeMartini: And then my, I guess the follow up question is there within the within the new partnership? Is there is there some type of exclusivity that mattress firm is asking from Purple? I mean, we already have some differentiated products across different customers. And that practice will do it when it makes good sense for both partners. But I think the heart of this is, what I'd ask you to take away is it's a vote of confidence in what this brand's capable of. It recognizes that we drive traffic and it recognizes that we trade up the transaction, and that's why we were able to secure this in this structure.
Todd Vogensen: We experienced a notable decline in our wholesale segment where net revenue of $40.8 million was down 24.2% versus last year, as we were impacted by the wraparound on-door count reductions from 2024 and broad-based volume declines across our wholesale partners.
Speaker Change: Excluding restructuring and related charges during the quarter.
Speaker Change: Our adjusted gross profit was $42 million compared to $41 7 million last year.
Speaker Change: And our adjusted gross margin rate improved 550 basis points to 43%.
Speaker Change: Our gross margin is supported by continued benefits from sourcing and production efficiencies.
Todd Vogensen: Our reported gross profit for first quarter was $41 million, compared to $41.7 million during the same period last year.
Speaker Change: As well as successful consolidation of our manufacturing operations completed earlier this quarter.
Todd Vogensen: Reported, Gross margin rate for the quarter was 39.4% and improvement of 460 basis points compared to last year.
Speaker Change: And a product mix shift towards our higher margin DTC channels.
Rob DeMartini: And we want to serve all of our wholesale partners with that benefit. And that's what that's what Purple has been good at, and we will continue to be good at.
Speaker Change: Now turning to operating expenses.
Todd Vogensen: Excluding restructuring and related charges during the quarter, our adjusted gross profit was $42 million, compared to $41.7 million last year, and our adjusted gross margin rate improved 550 basis points to 40.3%.
Speaker Change: Operating expenses were $55 $5 million down 14, 4% versus $64 9 million last year.
Rob DeMartini: Okay, then the final question. I don't know if there's a fair way or not.
Speaker Change: This was largely driven by head count reductions from our restructuring efforts and the in sourcing of certain functions in marketing and finance.
Rob DeMartini: But you talked recently about, I guess, exploring strategic alternatives. Does this announcement today, either fit into that or change that? Now it's completely independent of that the board special committee is leading the strategic alternatives process and it will continue and when it's got meaningful updates, we'll share them. But this is about running a profitable business, partnering with our biggest partners to be important to everybody in the system and serving consumers with great product. And so this happened completely independent of that effort.
Todd Vogensen: Our gross margin is supported by continued benefits from sourcing and protection efficiencies.
Speaker Change: Our adjusted net loss for the first quarter was negative $11 $9 million and.
Todd Vogensen: as well as successful consolidation of our manufacturing operations completed earlier this quarter.
Speaker Change: <unk> from adjusted net loss of negative $24 million in the prior year.
Todd Vogensen: and a product mixed shift towards our higher margin DTC channels.
Speaker Change: First quarter adjusted loss per share was negative <unk> 11.
Speaker Change: Compared to an adjusted loss per share of negative <unk> 19 in the first quarter last year.
Todd Vogensen: Now, turning to operating expenses. Operating expenses were $55.5 million, down 14.4% versus 64.9 million last year.
Speaker Change: Adjusted EBITDA for the first quarter was negative $4 $7 million that was a significant improvement from the negative $13 2 million last year, driven primarily by our ongoing improvements in gross margin and well managed expenses.
Rob DeMartini: Appreciate it.
Rob DeMartini: Thank you.
Rob DeMartini: All right, Brian, thank you.
Matt Koranda: Next question comes from the line of Matt Koranda with Roth Capital Partners. Your line is open.
Speaker Change: Now turning to the balance sheet.
Rob DeMartini: Hi guys, it's Joseph on format today. I just wanted to see if you guys could talk about your guidance. It seems unchanged and now incorporates the contribution from mattress firm. Any way to think about how mattress firm contributes to the rest of your 2025? And while assuming that this is ramping in to Q25? The ramp is probably a little bit later than that. And so, you know, we're still, the ink is still wet on the agreements. We're working through some of the details of exactly what's rolling out when and how the volume will play out.
Speaker Change: At the end of March we had cash and cash equivalents of $21 $6 million compared with $29 million on December 31, 2024.
Todd Vogensen: First quarter adjusted loss per share was negative <unk> 11.
Todd Vogensen: Compared to an adjusted loss per share of negative <unk> 19 in the first quarter last year.
Speaker Change: Net inventories on March 31, 2025.
Todd Vogensen: Adjusted EBITDA for the first quarter was negative $4 $7 million that was a significant improvement from the negative $13 $2 million last year, driven primarily by our ongoing improvements in gross margin and well managed expenses.
Speaker Change: Were $60 2 million down 16, 5% compared to March 31 2025.
Speaker Change: And up five 8% compared to December 31, 2024.
Speaker Change: Typically we experienced net cash usage in the first quarter of each year as we invest in rebuilding inventory following the holiday season.
Todd Vogensen: Now turning to the balance sheet.
Todd Vogensen: At the end of March we had cash and cash equivalents of $21 6 million compared with $29 million on December 31 2024.
Speaker Change: And makes certain contractual rebate payments to customers two.
Rob DeMartini: So, it's a little bit early to quantify specifics on 2025 for mattress firm. What we do know is we've got a fair amount of tailwind when we get into the back part of the year from the new agreement. Or the expanded agreement and at the same time, we have some headwinds that are probably more near term in the form of tariffs and just an overall uncertainty in the economy. And so those we view are roughly offsetting factors and the timing may be different.
Speaker Change: 2025 was no exception.
Speaker Change: Due to these normal seasonal factors along with a reduction in first quarter sales our cash used in operations was $23 1 million.
Todd Vogensen: Net inventories on March 31, 2025.
Todd Vogensen: Were $60 2 million down 16, 5% compared to March 31 2025.
Speaker Change: Compared to $16 $8 million last year.
Todd Vogensen: And up five 8% compared to December 31, 2024.
Speaker Change: We were pleased to exit the quarter with cash of over $20 million yet again.
Todd Vogensen: Typically we experienced net cash usage in the first quarter of each year as we invest in rebuilding inventory following the holiday season.
Speaker Change: As we move into a more seasonally balanced quarter for cash needs. We will remain focused on managing our cash position with discipline.
Todd Vogensen: And make certain contractual rebate payments to customers two.
Speaker Change: In addition, as allowed in our term loan agreement, we entered into an amendment to borrow an incremental $20 million to facilitate the ramp up and one time rollout cost and inventory production.
Todd Vogensen: 2025 was no exception.
Todd Vogensen: Due to these normal seasonal factors along with the reduction in first quarter sales our cash used in operations was $23 1 million.
Rob DeMartini: We feel that we're still comfortable with where we're at from a guidance perspective, and I will be able to provide a little bit more detail as we get into next quarter's call. Got it.
Speaker Change: For our new expanded distribution agreement with mattress firm.
Todd Vogensen: Compared to $16 8 million last year.
Speaker Change: While also supporting continued investment in innovation and marketing and providing an incremental source of cushion for future operations in this uncertain environment.
Todd Vogensen: We were pleased to exit the quarter with cash of over $20 million yet again.
Todd Vogensen: As we moved into a more seasonally balanced quarter for cash needs. We will remain focused on managing our cash position with discipline.
Rob DeMartini: And with the expanded partnership, is there any way you guys can just elaborate on the mix of new slots between your premium products and then the lower range products? Any sense for how often the slots should turn in a given year? Yeah, Joe, I think it's a pretty traditional distribution. There's representation. It is detailed in our agreement. But you know, what we really do is want to want to trust mattress firm to help make the best decisions for their business. There will be Essentials, Restore, and the Luxe product available in just about every store. I'm going to leave it to their judgment to decide when to lean into Essentials or Luxe a little bit more based on the way that store trades.
Speaker Change: Building on the momentum from last quarter, we remain focused on strengthening our foundation through continued cost discipline and innovation.
Todd Vogensen: In addition, as allowed in our term loan agreement, we entered into an amendment to borrow an incremental $20 million to facilitate the ramp up and one time rollout cost and inventory production.
Speaker Change: Driven by our gel grid technology.
Speaker Change: The actions, we've taken over the past year to streamline operations and reduce fixed costs have positioned us to realize greater operational leverage as a result, we expect incremental upside volume to flow through at a much faster rate.
Todd Vogensen: For our new expanded distribution agreement with mattress firm.
Todd Vogensen: While also supporting continued investment in innovation and marketing and providing an incremental source of cushion for future operations in this uncertain environment.
Speaker Change: Supporting our path to profitability.
Speaker Change: We remain cautious given ongoing industry headwinds.
Todd Vogensen: Building on the momentum from last quarter, we remained focused on strengthening our foundation through continued cost discipline and innovation.
Speaker Change: We've built our model for scalability, and we expect that any revenue upside will slow through at roughly 35% providing meaningful earnings potential when the market stabilizes.
Rob DeMartini: But you should see broad expansion of our distribution.
Todd Vogensen: Driven by our gel grid technology.
Todd Vogensen: The actions, we've taken over the past year to streamline operations and reduce fixed costs have positioned us to realize greater operational leverage as a result, we expect incremental upside volume to flow through at a much faster rate.
Rob Martini: As Rob mentioned earlier.
Rob DeMartini: Alright, I appreciate you guys. Thank you and congratulations on a good quarter. All right. Thank you, Joe.
Rob Martini: We are reaffirming our full year guidance, we continue to expect revenue in the range of $465 million to $485 million and.
Operator: There are no further questions at this time.
Rob DeMartini: I would like to turn the call back over to Rob DeMartini for closing remarks. Thank you, operator. And thank you, everybody, for joining today's call. We are trying to execute with discipline, navigate the headwinds that we're facing, and build towards a long term profitable growth company. And we appreciate all your support. Thank you.
Rob Martini: <unk> EBITDA in the range of flat to positive $10 million.
Todd Vogensen: Supporting our path to profitability.
Rob Martini: This includes an anticipated $25 million to $30 million in cost savings that we had previously announced relating to our manufacturing consolidation and corporate restructuring which remains on track.
Todd Vogensen: We remain cautious given ongoing industry headwinds.
Todd Vogensen: We've built our model for scalability, and we expect that any revenue upside will slow through at roughly 35% providing meaningful earnings potential when the market stabilizes.
Rob Martini: While the second quarter will be pressured by macro concerns and tariff headwinds.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining, and you may now disconnect.
Rob DeMartini: As Rob mentioned earlier.
Rob DeMartini: We are reaffirming our full year guidance, we continue to expect revenue in the range of $465 million to $485 million and adjusted EBITDA in the range of flat to positive $10 million. This.
Rob Martini: Planning for sequential growth in the second half driven by the launch of rejuvenate to Plano and increased distribution from the mattress firm partnership.
Rob Martini: We plan to return to a positive EBITDA in the second half driven by ongoing benefits from our restructuring plan and sourcing initiatives.
Rob DeMartini: This includes an anticipated $25 million to $30 million in cost savings that we had previously announced relating to our manufacturing consolidation and corporate restructuring which remains on track.
Rob Martini: As Rob mentioned.
Speaker Change: Mentioned, we are maintaining our outlook, while we plan to see both incremental revenue and EBITDA contribution from our expanded mattress firm relationship in the back half.
Rob DeMartini: While the second quarter will be pressured by macro concerns and tariff headwinds.
Speaker Change: It's early to provide specific guidance on the impact of the relationship for 2025.
Rob DeMartini: Planning for sequential growth in the second half driven by the launch of rejuvenate to Plano and increased distribution from the mattress firm partnership.
Speaker Change: We are still working on our rollout plans.
Speaker Change: Even as we expect to mitigate at least a portion of the $10 million tariff exposure is currently enacted received potential pressure on overall consumer spending.
We plan to return to a positive EBITDA in the second half driven by ongoing benefits from our restructuring plan and sourcing initiatives.
Rob DeMartini: As Rob mentioned, we are maintaining our outlook, while we plan to see both incremental revenue and EBITDA contribution from our expanded mattress firm relationship in the back half.
Speaker Change: There is much uncertainty around the timing and scope of evolving macroeconomic factors, including the tariff environment.
Speaker Change: And we will continue to monitor the situation and update you over time.
It's early to provide specific guidance on the impact of the relationship for 2025.
Speaker Change: We remain focused on executing against our strategic priorities, while driving profitable growth.
Rob DeMartini: And we are still working on our rollout plans.
Speaker Change: With that I'll turn the call over to the operator for questions.
Rob DeMartini: Even as we expect to mitigate at least a portion of the $10 million tariff exposure is currently enacted receive potential pressure on overall consumer spending.
Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.
Rob DeMartini: There is much uncertainty around the timing and scope of evolving macroeconomic factors, including the tariff environment.
Speaker Change: If you would like to withdraw your question simply press Star. One again, if you are called upon to ask your question in a listening via speaker phone or device. Please pick up your handset to ensure that your phone is not on mute and asking a question again, Brett pharr wants to join the queue.
Rob DeMartini: And we will continue to monitor the situation and update you over time.
Rob DeMartini: We remain focused on executing against our strategic priorities, while driving profitable growth.
Rob DeMartini: With that I will turn the call over to the operator for questions.
Speaker Change: Okay.
Speaker Change: And our first question comes from the line of Brad Thomas with Keybanc capital markets. Your line is open.
Speaker Change: Thank you we will now begin the question and answer session. If you have a down and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand in China Q.
Brad Thomas: Hi, good afternoon, and thanks for taking my question.
Brad Thomas: Rob I just wanted to kick off with a question about the new mattress firm partnership.
Speaker Change: If you would like to withdraw your question simply press Star. One again, if you are called upon to ask a question in a listening via speaker phony old device. Please pick up your handset to ensure that your phone is not on mute and asking a question again breasts are wanted to join the queue.
Brad Thomas: Expanded mattress firm partnership I should say and first of all congratulations sounds like an exciting opportunity for you.
Speaker Change: As we think about the $70 million number that you highlighted can you just help us think a little bit more about maybe how you come to that math is that a net number that offset potentially some sales that might have occurred.
Speaker Change: Okay.
Speaker Change: And our first question comes from the line of Brad Thomas with Keybanc capital markets. Your line is open.
Brad Thomas: In stores nearby.
Speaker Change: Hi, good afternoon, and thanks for taking my question.
Brad Thomas: Are you coming up with the $70 million number.
Speaker Change: Rob I just wanted to kick off with a question about the new mattress firm partnership.
Brad Thomas: Well, Brad Thank you for the question.
Brad Thomas: We're using the current and we have.
Speaker Change: Expanded mattress firm partnership I should say and first of all congratulations sounds like an exciting opportunity for you.
Brad Thomas: <unk> 5000 slots and about 62% of their doors today.
Brad Thomas: And for the sake of.
Speaker Change: As we think about the 70 million number that you highlighted can you just help us think a little bit more about maybe how you come to that math is that a net number that offset potentially some sales that might have occurred.
Brad Thomas: As we talked through with this omni group folks we are projecting the same productivity.
Brad Thomas: On the incremental slots.
Brad Thomas: And we think thats going to end up being a fair number because while there would be some cannibalization just having more we are not stocked and trained as a core brand in their system and we believe that with the investments that we can make and they can make an established establishing us as a.
Speaker Change: In stores nearby.
Speaker Change: Are you coming up with the $70 million number.
Brad Thomas: Brad Thank you for the question.
Speaker Change: We're using the current I mean, we have.
Speaker Change: <unk> 5000 slots and about 62% of their doors today.
Speaker Change: And for the sake of.
Brad Thomas: Core brand that there'll be slot benefits that come from that.
Speaker Change: As we talked through with this omni group folks we are projecting the same productivity.
Brad Thomas: It's based on the current business that we do with them and then projecting that on the full scope.
Speaker Change: On the incremental slots.
Unknown Person: That's very helpful. Rob Thank you.
Speaker Change: And we think thats going to end up being a fair number because while there would be some cannibalization just having more we are not stopped and trained as a core brand in their system and we believe that with the investments that we can make and they can make an established establishing us as a.
Speaker Change: And then maybe if I can pivot to just talking about.
Speaker Change: The industry and the consumer wondering if you could just comment a bit more about recent trends and.
Speaker Change: Any more insights into how youre thinking about trends into queue here.
Speaker Change: Yes.
Speaker Change: Core brand there'll be slot benefits that come from that so it's based on the current business that we do with them and then projecting that on the full scope.
Speaker Change: I am concerned about the second quarter and as I laid out the tariff burden for us is a manageable number.
Speaker Change: We will figure out how to deal with it what I'm more concerned about what is the psyche of the consumer.
That's very helpful. Rob Thank you.
Speaker Change: And I think what I've read about the April consumer.
Speaker Change: And then maybe if I can pivot to just talking about.
Speaker Change: The industry and the consumer I'm wondering if you could just comment a bit more about recent trends and.
Speaker Change: Outlook is pretty concerning now is it going to continue indefinitely I don't think so but I do think we're going to deal with it.
Speaker Change: Any more insights into how youre thinking about trends into queue here.
Speaker Change: Yeah.
Speaker Change: Through the second quarter I think people are a bit more optimistic about memorial day, as we are but I think we still got more uncertainty than certainty Brad.
Speaker Change: Yes.
Speaker Change: Concerned about the second quarter and as I laid out the tariff burden for us is a manageable number.
Brad Thomas: That makes sense and we obviously heard a lot of negative things about February with the weather being an impact perhaps there was some improvement after the weather got better anything more that you can.
Speaker Change: We will figure out how to deal with it what I'm more concerned about what is the psyche of the consumer.
What I've read about the April consumer.
Speaker Change: Tell us about the cadence of spending to what you've been seeing of late.
Speaker Change: The outlook is pretty concerning now is it going to continue indefinitely I don't think so but I do think we're going to deal with it.
Speaker Change: No I mean, obviously with the 13% down I think we're probably on the high side of the category range in the first quarter.
Brad Thomas: Through the second quarter I think people are a bit more optimistic about memorial day, as we are but I think we still get more uncertainty than certainty Brad.
Speaker Change: We have seen a little bit better volume since April ended that as you know April is always a pretty weak.
Brad Thomas: That makes sense and we obviously heard a lot of negative things about February with the weather being an impact in that perhaps there was some improvement after the weather got better anything more that you can tell us about the cadence of spending and what <unk> been seeing of late.
Speaker Change: Interest month, and it was for us So I think the consumer is very key.
Speaker Change: Cautious right now and looking for some certainty as they plan for the rest of their.
Speaker Change: Spring and summer spending.
Unknown Person: Very helpful. Thanks, Rob.
Speaker Change: No I mean, obviously with the 13% down I think we're probably on the high side of the category range in the first quarter.
Speaker Change: Alright, Thank you Brett.
Speaker Change: Our next question comes from the line of Bobby Griffin with Raymond James Your line is open.
Speaker Change: We have seen a little bit better volume since April ended that as you know April is always a pretty weak mattress month and it was for us. So I think the consumer is very cautious right now and looking for some certainty as they plan for the rest of their <unk>.
Bobby Griffin: Good afternoon, everybody. Thanks for taking my questions.
Speaker Change: I guess, Rob just to start could you maybe talk a little bit about how the new agreement came to fruition with omni group.
Speaker Change: What kind of thinking back during the process. When they are looking at by mattress firm. There was different supply agreements can be a sign of I think purpose. It was a little bit later, but maybe now with the deemed complete just talk a little bit of a how the relationship developed to end up in this expansion.
Speaker Change: And some are spending.
Speaker Change: Very helpful. Thanks, Rob.
Speaker Change: Alright, Thank you Brett.
Speaker Change: Our next question comes from the line of Bobby Griffin with Raymond James Your line is open.
Bobby Griffin: Well, Hey, Bobby all I can do is share from my side, because obviously theres a number of folks from selling the involved but yes mattress firm has always been an important customer for us I think at different times we've.
Bobby Griffin: Good afternoon, everybody. Thanks for taking my questions I guess.
Bobby Griffin: I guess, Rob just to start could you maybe talk a little bit about how the new agreement came to fruition with omni group.
Bobby Griffin: Put ourselves in a position to be at odds with each other.
Bobby Griffin: Kind of thinking back during the process when they're looking at by mattress firm. There was different supply agreements can you sign I think purpose. It was a little bit later, but maybe now with the deemed complete just talk a little bit of a how the relationship developed to end up in this expansion.
Bobby Griffin: Over either contractual agreements or where actions or inactions by either party and.
Bobby Griffin: When I look at what.
Bobby Griffin: Grows their business I know that Theres, a couple of things, we do particularly well we drive traffic, we trade up the transaction and over the last couple of years as we've done a lot of margin work we have been.
Speaker Change: Well, Hey, Bobby all I can do is share from my side, because obviously theres a number of folks from selling the involved but Matt.
Speaker Change: Mattress firm has always been an important customer for us I think at different times.
Bobby Griffin: Less dilutive more accretive margin contribution to the retailer the combination of those three things if I'm sitting in a retailer's chair Im looking for people and brands that are going to drive up my margin and drive up my transaction and get people in the doors and I think those are things <unk> does well.
Speaker Change: Put ourselves in a position to be at odds with each other over either contractual agreements or or actions or inactions by either party and.
Speaker Change: When I look at what.
Speaker Change: I appreciate that Matt.
Speaker Change: Grows their business I know that Theres, a couple of things, we do particularly well we drive traffic, we trade up the transaction and.
Speaker Change: Mattress firm is putting some faith in us to be a good contributor to their business and we have to live up to that.
Speaker Change: I appreciate that that's helpful and then.
Speaker Change: Over the last couple of years as we've done a lot of margin work we've been.
Speaker Change: As you look at this now you have this new kind of pretty big growth potential here in wholesale does that change kind of you and the team's view of what the alternate distribution model is for purple. When you think about your own stores I know, you're optimizing those companies railroads, but the performing better or even kind of investments you put behind the E Commerce business.
Speaker Change: Less dilutive more accretive margin contribution to the retailer the combination of those three things if I'm sitting in a retailer's chair I'm looking for people and brands that are going to drive up my margin and drive up my transaction and get people in the doors and I think those are thanks for bolt as well and I appreciate that.
Speaker Change: No I think yes, we've lived it.
Speaker Change: Mattress firm is putting some faith in us to be a good contributor to their business and we have to live up to that.
Speaker Change: 70, 30, DTC, we've lifted 60, 40, which is about where we are now but behind the scenes we've been ensuring that a 50 50 business is an opportunity for us I think that is where well ahead, but we're very bullish on our showroom business I mean, we comped up 11% in the first.
Speaker Change: I appreciate that that's helpful. And then as you look at this now you have this new kind of pretty big growth potential here in wholesale does that change kind of view and the team's view of what the alternate distribution model is for purple. When you think about your own stores. I know you are optimizing those companies airlines, where the performing better or even kind of investments you put behind that.
Quarter, that's the second positive comp quarter in a row, they are becoming more profitable and our average ticket.
Speaker Change: E Commerce business.
Speaker Change: No I think yeah. We've lived at 70 30, DTC. We've lifted 60, 40, which is about where we are now but behind the scenes we've been ensuring that a 50 50 business is an opportunity for us.
Speaker Change: Our average mattress ticket in our showrooms is still almost <unk> what it is in wholesale.
Speaker Change: So.
Speaker Change: We're very.
Speaker Change: Appreciative of the wholesale support that we get and we feel like the responsibility as we've got a lead the consumer to understand this brand can perform it.
Speaker Change: That is where well ahead, but we're very bullish on our showroom business I mean, we comped up 11% in the first quarter. That's the second positive comp quarter in a row, they are becoming more profitable.
Speaker Change: At higher prices than where it's been in the past in the category and that's working right. Now so staying 50 50, I think we are legitimately the only truly omni brand most brands have a maternal channel and then they do.
Speaker Change: And our average ticket.
Speaker Change: Our average mattress ticket in our showrooms is still almost <unk> what it is in wholesale.
Speaker Change: They flirt with the other channels, but we are legitimately across all direct and wholesale channels and we've got to live up to that.
No.
Speaker Change: We're very.
Speaker Change: Appreciative of the wholesale support that we get and we feel like the responsibility as we've got a lead the consumer to understand this brand can perform it.
Speaker Change: And then just lastly on tariffs I understand there is some pricing aspect is that yet hitting the P&L. So like should we think of that has to come in <unk> or is it more like if on the vendor side of their balance sheet for now and that's a <unk> type issue, if we don't adjust pricing or find alternative sourcing.
Speaker Change: At higher prices than where it's been in the past in the category and that's working right. Now so staying 50 50, I think we are legitimately the only truly omni brand most brands have a maternal channel and then they do.
Speaker Change: It will start impacting <unk> and when we have that in our projections, what we don't.
Speaker Change: We have them at a macro level on our projections of offsetting some of that but we're still working through the exact details of it had to do that but it flows through pretty quickly I mean, we turn our inventory pretty quickly.
Speaker Change: They flirt with the other channels, but we are legitimately across all direct and wholesale channels and we've got to live up to that.
Speaker Change: And then just lastly on tariffs I understand there is some pricing aspects is that yet hitting the P&L. So like should we think of that has to come in <unk> or is it more like its on the vendor side of their balance sheet for now and that's a <unk> type issue, if we don't adjust pricing or find alternate sourcing.
Speaker Change: Yep Yep I appreciate the details and best of luck here trying to navigate this environment and congrats on the expanded relationship there.
Speaker Change: Thank you Bobby.
Michael Lasser: Next question comes from the line of Michael Lasser with UBS. Your line is open.
Speaker Change: It'll start impacting <unk> in animal we have that in our projections, what we don't.
Speaker Change: Hey, Good afternoon. This is Dan Silverstein on for Michael.
Speaker Change: We have them at a macro level on our projections of offsetting some of that but we're still working through the exact details of it had to do that but it flows through pretty quickly I mean, we turn our inventory pretty quickly.
Dan Silverstein: Just one more question on the expanded partnership with mattress firm.
Speaker Change: Is there anything else you can share on the economics of the new partnership, especially in light of of Sherwood doing some of the assembly just trying to think of how this would impact our wholesale margins overall and then on the additional 70 million of incremental revenues.
Speaker Change: Yep Yep appreciate the details.
Speaker Change: Best of luck here trying to navigate this environment and congrats on the expanded relationship there.
Bobby Griffin: Thank you Bobby.
Michael Lasser: Next question comes from the line of Michael Lasser with UBS. Your line is open.
Speaker Change: Is the 35% flow through rate that we talked about last quarter still applicable.
Dan Silverstein: Hey, Good afternoon. This is Dan Silverstein on for Michael.
Speaker Change: And I suppose it's applicable at a macro level I don't want to go into individual customer margins, but it's good business for both of US and I think Thats why this deal that put together the way it did.
Dan Silverstein: Just one more question on the expanded partnership with mattress firm.
Dan Silverstein: Is there anything else you can share on the economics of the new partnership, especially in light of of Sherwood doing some of the assembly just trying to think of how this would impact our wholesale margins overall.
Speaker Change: The idea came from us trying to take.
Speaker Change: The cost out of the system and the Sherwood manufacturing footprint serves mattress firm very well and we wanted to take advantage of that so it's good business for us it's good business for them the way we've modeled it and now we Gotta go live up to it.
Dan Silverstein: On the additional 70 million of incremental revenues.
Dan Silverstein: Is the 35% flow through rate that we talked about last quarter still applicable.
Speaker Change: Great. Thanks, and then just is there anything else like interesting opportunities from a cooperative advertising point of view.
Dan Silverstein: I mean, it's simple it's applicable in a macro level I don't want to go into individual customer margins, but it's good business for both of US and I think Thats why this deal that put together the way. It did I mean, the idea came from us trying to take.
Speaker Change: That could improve the productivity and the mattress firm network now that you are a core brand in the system.
Dan Silverstein: The cost out of the system and the Sherwood manufacturing footprint serves mattress firm very well and we wanted to take advantage of that so it's good business for us it's good business for them the way we've modeled it and now we Gotta go live up to it.
Speaker Change: Dan I mean, those are things that we will work out we do believe that there is efficiency for both of US and my first focus is ensuring that we're bringing innovation to the market and that we've got advertising that is engaging the consumer and driving them to all retailers not just mattress firm, but we certainly.
Speaker Change: Great. Thanks, and then just is there anything else like interesting opportunities from a cooperative advertising point of view.
Speaker Change: See opportunity from being recognized as a core brand, but I think with that also comes responsibility.
Speaker Change: That could improve the productivity and the mattress firm network now that you are a core brand in our system.
Speaker Change: Definitely thank you and best of luck.
Dan Silverstein: Alright, Thank you Dan.
Speaker Change: Dan I mean, those are things that we will work out we do believe that there is efficiency for both of US and my first focus is ensuring that we're bringing innovation to the market and that we've got advertising that is engaging the consumer and driving them into all retailers not just mattress firm, but we certainly.
Our next question comes from the line of Brian <unk> with Oppenheimer. Your line is open.
Brian <unk>: Hi, good afternoon.
Hey, Brian just wanted to ask questions on the on the on the new partnership.
Brian <unk>: This expanded partnership so.
Brian <unk>: First of all is there.
Speaker Change: We see opportunity from being recognized as a core brand, but I think with that also comes responsibility.
Brian <unk>: Purple have too.
Brian <unk>: <unk> had its own manufacturing capacity, so to say that two to two.
Brian <unk>: To ramp volumes for this.
Speaker Change: Good afternoon, and thank you and best of luck.
Brian <unk>: And then along the.
Speaker Change: Should we expect as the relationship starts to build will there be additional kind of startup costs that youre going to have to endure.
Dan Silverstein: Alright, Thank you Dan.
Speaker Change: Our next question comes from the line of Brian Nagel with Oppenheimer. Your line is open.
Speaker Change: Yes, there are certainly a startup costs like any expansion for us to get those.
Brian Nagel: Hi, good afternoon.
Speaker Change: Hey, Brian.
Brian Nagel: Last question is on the on the new partnership.
Speaker Change: Beds and all of the accompanying point of sale and materials to the stores. There are startup costs. We do have those fully reflected or we believe we do.
Brian Nagel: This expanded partnership so.
Brian Nagel: First off is there.
Brian Nagel: Purple half to expand its own manufacturing capacity to sort of say that too.
Speaker Change: And then I want.
Speaker Change: To make sure that we talk about this properly we maintain 100% of the manufacturing responsibility for all grid material.
Brian Nagel: To ramp volumes for this.
Brian Nagel: And then along.
Speaker Change: Should we expect as the relationship starts to build will there be additional kind of startup costs that youre going to have to endure.
Speaker Change: Regardless of who we are partnering with to finish the assembly that's been true and that will stay true we are not sharing the grid manufacturing formula or the methods. I mean, we've got 25 years of experience that is what differentiates us. So we will make the grid and then distributed to our partners who.
Speaker Change: Yes, there certainly is startup costs like any expansion for us to get those beds and all of the accompanying point of sale and materials to the stores. There are startup costs. We do have those fully reflected or we believe we do.
Speaker Change: Help us, finishing with the assembly and distribution.
Speaker Change: And then I want to make sure that we talk about this properly we maintain 100% of the manufacturing responsibility for all grid material.
Speaker Change: And we think that opportunity is going to work very well as I said before Sherwood is well positioned to serve mattress firm well and we want to take advantage of that.
Speaker Change: Regardless of who we are partnering with to finish the assembly that's been true and that will stay true we are not sharing the grid manufacturing formula or the methods. I mean, we've got 25 years of experience that is what differentiates us. So we will make the grid and then distributed to our partners who.
Speaker Change: Got it.
Speaker Change: And then my follow up question is there within that within the new partnership reserve or is there some type of exclusivity.
Speaker Change: Mattress firm was asking.
Speaker Change: Purple.
Speaker Change: Yes, I mean, we already have some differentiated products across different customers in that.
Speaker Change: Help us, finishing with the assembly and distribution.
Speaker Change: This will do it when it makes good sense for both partners.
Speaker Change: And we think that opportunity is going to work very well as I said before Sherwood is well positioned to serve mattress firm well and we want to take advantage of that.
Speaker Change: But I think the heart of this is.
Speaker Change: What I would ask you to take away is it's a vote of confidence in what this brand is capable of.
Speaker Change: Got it and then my follow up question is there.
Speaker Change: It recognizes that we drive traffic and it recognizes that we trade up the transaction and that's why we were able to secure this in this structure and we want to serve all of our wholesale partners with that benefit.
Speaker Change: Within that within the new partnership is there is there some type of exclusivity.
Speaker Change: That mattress firm is asking.
Speaker Change: Purple.
Speaker Change: That's what <unk> has been good at and we will continue to be good at.
Speaker Change: I mean, we already have some differentiated products across different customers and that practice will do it when it makes good sense for both partners.
Speaker Change: Okay, and then just one final question.
Speaker Change: I don't know I don't know if theres a fair when it happened you know you talked recently about.
Speaker Change: But I think the heart of this is.
Speaker Change: I guess exploring strategic alternatives. So does this the announcement today either fit into that or change that.
Speaker Change: What I would ask you to take away is it's a vote of confidence in what this brand is capable of.
Speaker Change: No its completely independent of that the board Special Committee is leading the strategic alternatives process and it will continue and when its got meaningful updates we'll share them, but this is about running a profitable business.
Speaker Change: It recognizes that we drive traffic and it recognizes that we trade up the transaction and that's why we were able to secure this in this structure and we want to serve all of our wholesale partners with that benefit and Thats, what thats, what <unk> has been good at and we will continue to be good at.
Speaker Change: Partnering with our biggest partners to.
Speaker Change: The important to everybody in our system and serving consumers with great products and so this happened completely independent of that effort.
Speaker Change: Okay, and then just one final question.
Speaker Change: I don't know if this is a fair one happened you talked recently about.
Speaker Change: I guess exploring strategic alternatives does this the announcement today either fit into that or change that.
Speaker Change: I appreciate it thank you.
Speaker Change: Alright, Brian Thank you.
Speaker Change: Next question comes from the line of Matt Koranda with Roth Capital Partners. Your line is open.
Speaker Change: No its completely independent of that the board Special Committee is leading the strategic alternatives process and it will continue and when its got meaningful updates we'll share them, but this is about running a profitable business.
Speaker Change: Hi, guys. This is Joseph on for Matt today.
Speaker Change: Just wanted to see if you guys could talk about your guidance. It seems unchanged and now incorporates the contribution from mattress firm.
Speaker Change: Partnering with our biggest partners too.
Speaker Change: The important to everybody in our system and serving consumers with great products and so this happened completely independent of that effort.
Speaker Change: Way to think about how mattress firm contributes to the rest of the year 2025, and while assuming that this is ramping in <unk> 25.
Speaker Change: I appreciate it thank you.
Brian Nagel: Alright, Brian Thank you.
Speaker Change: The ramp is probably a little bit later than that and so.
Brian Nagel: Next question comes from the line of Matt Koranda with Roth Capital Partners. Your line is open.
Speaker Change: We're still the ink is still wet on the agreements were working through some of the details of exactly what's rolling out when and how the volume will play out so it's a little bit early to quantify specifics on 2025 per mattress firm.
Brian Nagel: Hi, guys. This is Joseph on for Matt today just.
Brian Nagel: Just wanted to see if you guys could talk about your guidance it.
Brian Nagel: It seems unchanged and now incorporates contribution from mattress firm.
Brian Nagel: Any way to think about how mattress firm contributes to the rest of the year 2025.
Speaker Change: What we do know is we've got a fair amount of tailwind when we get into the back part of the year.
Brian Nagel: Well assuming that this is ramping in <unk> 25.
Speaker Change: From the new agreement for the expanded agreement and at the same time, we have some headwinds that are probably more near term in the form of tariffs and just an overall.
Brian Nagel: The ramp is probably a little bit later than that and so.
Brian Nagel: We're still the ink is still wet on the agreements we are working through some of the details of exactly what's rolling out when and how the volume will play out so it's a little bit early to quantify specifics on 2025 from mattress firm.
Speaker Change: Uncertain uncertainty in the economy and so those we view are roughly offsetting.
It factors in.
Speaker Change: Although the timing may be different.
Brian Nagel: What we do know is we've got a fair amount of tailwind when we get into the back part of the year.
Yeah.
Speaker Change: Hi.
Speaker Change: We feel that we're still comfortable with where we're at from a guidance perspective.
Brian Nagel: From the new agreement for the expanded agreement and at the same time, we have some headwinds that are probably more near term in the form of tariffs and just an overall.
Speaker Change: We will be able to provide a little bit more detail as we get into next quarter's call.
Speaker Change: Got it and with the expanded partnership is there any way you guys can just elaborate on the mix of new slot between your premium products and then the orange products any sense for how often the slots that certain given <unk> given you.
Brian Nagel: Uncertain uncertainty in the economy and so those we view are roughly offsetting.
Brian Nagel: The factors in that.
Brian Nagel: So the timing may be different.
Speaker Change: Yes, Joe I think it's a pretty traditional.
Brian Nagel: Yes.
Brian Nagel: We feel that we're still comfortable with where we're at from a guidance perspective.
Speaker Change: Distribution there is representation. It is detailed in our agreement, but what we really do as one trust mattress firm to help make the best decisions for their business there will be essentially restore and deluxe product available in just about every store I'm going to leave it to their judgment.
We will be able to provide a little bit more detail as we get into next quarter's call.
Brian Nagel: Got it and we're seeing expanded partnership is there any way you guys can just elaborate on the mix of new slots between your premium products and the orange products any sense for how often the slots.
Speaker Change: Decide when that lean into essentials or looks a little bit more based on the way that store traits.
Brian Nagel: Given in a given year.
Speaker Change: You should see expansion of our distribution.
Joe: Yes, Joe I think it's a pretty traditional.
Speaker Change: Distribution there is representation. It is detailed in our agreement, but what we really do as one trust mattress firm to help make the best decisions for their business there will be essentials restore and deluxe product available in just about every store I'm going to leave it to their judgment.
Speaker Change: Alright, I appreciate it guys. Thank you and congratulations on a good quarter.
Alright, Thank you Jos.
Rob Martini: There are no further question at this time I would like to turn the call back over to Rob <unk> for closing remarks.
Rob Martini: Thank you operator, and thank you everybody for joining today's call. We are trying to execute with discipline navigate the headwinds that we're facing and build towards our long term profitable growth company and we appreciate all your support thank you.
Speaker Change: Decide when that lean into essentials or looks a little bit more based on the way that store traits, but you should see broad expansion of our distribution.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining and you may now disconnect.
Speaker Change: Alright, I appreciate it guys. Thank you and congratulations on a good quarter.
Thank you Jos.
Speaker Change: There are no further question at this time I would like to turn the call back over to Rob you, Mike <unk> for closing remarks.
Speaker Change: Thank you operator, and thank you everybody for joining today's call. We are trying to execute with discipline navigate the headwinds that we're facing and build towards our long term profitable growth company and we appreciate all your support thank you.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining and you may now disconnect.
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