Earnings call transcript Q4 2022

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Operator

Good afternoon, ladies and gentlemen. Welcome to Purple Innovation Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, Cody McAlester of ICR. Please go ahead.

Cody McAlester

Purple quarter joining, earnings for you Innovation's XXXX fourth call. Thank

release of Purple's on our copy is website earnings www.purple.com. of A section press available Relations the at Investor

company's will remind statements. These materially statements. statements from Accordingly, may on reliance of reflect business. and based certain like today, are judgment forward-looking you a Innovation's current factors only these would this presentation on expectations not to statements I affecting should number differ we place analysis make Purple and in forward-looking results the that you of as actual undue forward-looking

furnished For forward-looking of be as associated made SEC more included future statements, that quarter fourth any statements to webcast, otherwise. well release, any risks to with or conference Form our referenced events this X-K, We and alter you filings obligation call and do to as in in was today our a new information, SEC undertake uncertainties because of thorough not update disclaimer. earnings discussion in we the XXXX statements regarding the the or which disclaimer on to forward-looking refer whether the with the forward-looking

be to is EBITDA, available measures of within the adjusted measures non-GAAP on include as release, EBITDA, financial website. such found measures can adjusted our non-GAAP these Today's will per share. presentation comparable most adjusted financial GAAP reference and income reconciliation net financial earnings A to which the earnings

Officer. to DeMartini, With will that, Purple Innovation's call I Chief Executive the Rob turn over

Rob DeMartini

Purple's everyone. Chief today And the Bennett Thank Nussbaum, call afternoon, good on Officer. me Cody. you, With Financial is

and of throughout be the be the that certainly fully I What in full anticipated. to market I didn't a work XXXX around first knew difficult January XXXX. When deal the there on would operating anticipate business in was was done I to reflect I year than as Purple my initially CEO, good return company I was of joined challenging conditions profitability. turn As more to it we

the headway consumer volume the betting face of it decades estimated XX% led to and business of spending down our it was that as XX%. positioned the on in While industry pressure the the efficiency annual even we and captured as headwinds. foundation backdrop to has had the to expected high to more many of XXXX of the growth XXXX, the been what strengthening industry challenging that give in cited unit and even improved significant decline strategic inflation shift with demand company we initiatives and Against towards services in for towards worst be U.S. organization market back executed has COVID-related results put believe experiences the gains some the by in would history this improving made our and deliver continued the

we the time, Looking structure align is showroom expenses This half back lowered back to demand. during meaningfully decision advertising, our spend XX% XXXX of XXXX, on and we These compared included nearly same down down to XXXX sacrificing and of eliminated bringing At time operational with without from profitability growth the this difficult XX% year with allowed inefficient rightsized necessary the our Net approximately headcount actions the ago. increase to two productivity. expensive reduce us levels. but headcount. advertising cost current

Officer. Chief stage to Jeff product the company's our busy filling Purple prepare profitable We as in team next been innovation of ever joined Hutchings has Innovation for expertise added reinvigorating our first and May leadership team new Jeff our to the growth. the pipeline. department

that consistently are new and to products ensure process are deploying innovation continuous authentic. a implementing is innovative he truly Additionally, we

improvements, progress production with in helping the our time, line offset facilities, in helped he operational Eric has rebalancing pressures. delivered cost while demand. has improvement has demand with inflationary action, joined the Since between our June. material safety in Haynor, Officer, significant team along projections. cost service. productivity, Eric continuous our Chief two position made to in that and also with Operating drive This improvements has also and sustainable current and significant helped supply He balancing our customer structural maintain plant raw a

of across Krausz brand elevated consumers identify has to the our of process strategy. quarter the Marketing brand XXXX been subsequently to second Officer coming our joined November premium instrumental Keira channels. in reach convert positioning is our our and in team in leading early of as ways She most to to support and in happen that Chief path all lead the the repositioning our will launch efficient

Our mid-May. in new debut brand positioning will

also as position, and a most to expand tasked the recently continue with since Keira in solidify Purple. where while we brand fleet Stores joined our into beacons showrooms complete Owned been of Sephora, XXXX channels of as as we Scott the Jeff, highly elevating company's direct Head Chief wholesale balance senior served January with that's channels. Kerby us leadership team of Canada Scott he XXXX. has at our productive Scott appointed premium to Retail. And Scott our for assembled helped of have continuing strong Eric, new and been from

with position Intellibed. in better to of step a took acquisition the category Purple our we Finally, premium

up complementary of line, the $X,XXX excellent provided Purple's natural our licensing segment expertise, mattresses barriers in schedule and compared immediately offerings portfolio several financial market. development In innovation accelerated this the a potential, product and to product Purple's extension by Intellibed's mattress the and of made of attractive for us years legacy offering opening and placed higher fit manufacturing the priced shared eliminating to Purple. Intellibed addition product highly profile technology, full an

great sale our materials, number call. later Las Jeff of work We significantly point which generated both year, of of coming more commitments slots innovation the terms and partners speak that Hutchings this accelerating retail our to floor engine, the to out at I’ll with presence The addition deal increased combined among in came on of wholesale increase a Vegas excitement on of January. our in Intellibed with market show of the

Despite the by unfolded. encouraged the mattress for challenges significant industry the ongoing XXXX were way

stabilize past we the sales saw after and the margins and in the course bottoming year, of first quarter. Over billed

our not what we a take financial taken can performance is New hope is where steps the know to and Year. and it yet of We the back necessary challenged. even believe start environment including the from have macro the the today’s current and line tough be XXXX, we’ve want incremental in top away remains up in While you’ll to line half we it, to that if successfully operate achieve growth the environment business bottom set call

year brand, to reestablish accelerating long-term current positioned four This category strong commitment its the innovation, accomplished our that this demonstrated has elevating fundamental our trajectory distribution I’m remains durability outlook strategic achieving us As has confident a the resilience leadership our that weather our and environment for the excitement be team, unchanged. this repeatedly channels, our and once growth the to through a to we confident and an will work past and operational initiatives year. headwinds three remain market We developing success subside. history, excellence

detail provide and additional lifestyle XX focus as – new that with we elevated our ahead partners substantial we brand. addition more premium Purple of will Q&A. areas product I’ll tailwinds position the in establish branding In new that, to the expansion our as begin the those new launches, in challenger our within believe wholesale to cover

over more turn who for the review I’ll detail to share Bennett, now XXXX. it and the But outlook will financials Bennett? in

Bennett Nussbaum

Thank you, Rob.

products, factors prior ended the to months DTC, direct-to-consumer $XXX.X revenues by period. ecommerce consumer spending year channel, three the declined market inflationary in XX.X%. pressure decrease Within due changing and revenue patterns. including million, home by the our to on year-over-year net of XX.X% For advertising intentional for By XXXX, consumer reduction $XXX.X XX.X%, primarily December discretionary to spend. prior was versus related million number compared demand XX, of conditions declined compounded and consumption was a a year, changes decrease The net in driven

revenue net by driven overall revenue DTC driven the XX XX acquisition. of by in months. offset net in past was part X.X%, addition increased decline new by partially Showroom the an The over increase XX.X% of channel largely Intellibed the in wholesale showrooms net the

profit the XXXX proportion increase same channel primarily compared $XX.X during comprised DTC a quarter XX.X% a can of quarter, partially lower approximately from an ago. in the offset higher margin Wholesale last the revenues initiatives Gross for environment increased at be year versus a quarter XX% revenues during quarter XX% million cost million of in XXXX year. carries gross prior of margin with over the of were attributed in versus wholesale XX% promotional revenue fourth to in margin the net quarter fourth than approximately by net and same gross channel The revenue reduction XXXX. gross dollars the the $XX.X period year year, with in the compared this to the implemented which

and in Operating a leverage marketing significant quarter fourth XX.X% This or advertising intentional $XX million to the of resulted or the reductions an in reduction in in million sales $XX.X driven XXXX. expense compared spend, expenses Even year. quarter. decrease expense revenue, was by declined with lower million prior XX% of of million with which largely drove $XX.X to our the compared $XX.X

expenses operating of from As the quarter XXXX. fourth X.X XX.X% to in percent improved a points percentage revenue, XX.X% of

$XX.X basis, compared adjusted do certain year. year million income change adjusted in deferred $X.XX per the million loss to a quarter $XX excludes the to our compared and gains the improved effective which performance, for $X.XX $X.X loss loss tax we the XX.X% tax net receivable not from net last ago or year million loss Adjusted change been XX.X% of non-cash $XX.X million rate $XX.X an and adjusted in per current $XX.X assets. net items $XX.X Net including an period. estimated from period. million the ongoing income income, was in Operating or of items ago in for share of period. ago consider share with year our operational On million the agreement year of to in was the evaluation other in compared million has Net reflect with valuation our adjusted tax a

and $XX quarter losses breakeven drove our to gains with to our other essentially factors compared of full release on loss million today’s fourth detailed loss was of sheet. the fourth release Adjusted XXXX. in of was million same year, fourth a our many of the which the compared last annual certain in for same move the that balance as available the earnings a With EBITDA and in quarter EBITDA, non-cash I’m our earnings items $XX.X to performance in results year. the quarter $XXX.X certain million excludes going with and quarter

and for was $XX.X will also currently the at execute with we The extinguished senior month, million our Last be proceeds business transaction primary zero at and we XX.X% messaging in our financial product product XXXX our $XX.X and trade XXXX that completed believe reduced As we had the XXXX December the a revolver September re-imagine to equivalents of Purple and unveiled we million of with show public at Net and new In XX, million December and Las as XX, and resulted company. million Market early of representing changes cash, in $XX.X it. brand XX, XXXX has which cash XX.X% our a million brand XXXX. purpose million million credit restricted totaled primary of December XXXX loan There flexibility offering borrowings this we to $XX.X XX, December transformative we provide to January. compared respectively. in compared $XX million, we wholesale number Vegas of against our announced $XX.X presence. cash $XX.X decreases inventories existing term $XX for at the our that with lineup, exciting that brand at strategy net February, of XX,

to Turning now outlook. our

to that January. completed line was in ahead, Vegas received our development in growth included which that positioned as Market the are XXXX the the of We the the at work in years well confident profitable company product teams new Las drive the

we account, net adjusted recognize encouraged of macroeconomic the limited internal the $XXX to challenging expecting range we are revenue million we remains Taking with by all visibility. this accomplishments, near-term between are environment in and million into EBITDA $XX million. XXXX $XXX be to While million $XX our with

which challenging quarter the the unfolds, XXXX our year clearing of some the is continued retailers new our inventories have top of performance. pressure this, in are initial On XXXX. the into their ahead the how extra mattress of quarter, from of taking terms models of trends market one sell-in adding start second In to

stronger sequentially new For presence by the throughout May, second the and expect marketing of of full-year first up revenues product to $XXX to QX approximately similar second the year the from be are growth with Driven XXXX, million. adjusted the reach channel year-over-year we projecting quarter, net approximately one revenue throughout half to and improve and $X.X to returning in million we quarter nicely quarterly our launch in a new to EBITDA results negative before our targets. programs wholesale quarter

following in shares purposes our is the modeling our sale For the February XXX fully diluted count million. offering, approximately now million equity of XX.X share

close a filing which our complete over the of their the provides certain the of after Finally, in evaluation extension needed is effectiveness SEC, today, XXb-XX environment. filed for for the This with a our XX-day to of XX-K. delay order service providers we control

XX-K March file expect We on before our or to XXst.

turn Now I'll it to Rob. back

Rob DeMartini

Thank Bennett. you,

blocks to will current our will and profitability. building as challenging, the remain confident environment to revenue fundamental path operating range long continue While initiatives our am I for the we that strategic four act expect

addition detailing believe in a today key of initiatives, to year. we these will beginning the In ongoing areas by of half to that accelerate the close growth back want few focus I

Starting been provided with an better engineering of Since us we've integrate the the time, premium to our also lineup set with – luxury product working needed changes meet late the beat across the lineup, entree distribution margin our the better Intellibed to product market. Intellibed into end immediate specifications XXXX acquisition product that channels. existing our margin to while in

Legacy is products products has under sold through and Purple be of The been collection our Purple NewDay our into our newly collection priced prices full Mattress along tiers. most our represents Purple Plus e-commerce channel. and These with three been Essentials Purple Mattresses, The engineered comprised This for at engineered Purple product organized $X,XXX. line $X,XXX. accessible with will primarily have

completely firmness our available Our in first the Restore ranging new grid-based Restore, that all mattresses from six grid of The Purple for Purple offerings premium $X,XXX that Premier represents hybrid Restore collection our two a broaden we plus mid-range and Mattresses to distinct our be technology. coil re-engineered $X,XXX. new will offerings Plus with believe are will appeal offerings,

premium Our both direct-to-consumer available wholesale collection our will channels. and be in

coil experience to We’ll Intellibed enhanced intentionally And relief has our foam deeper gel finally, line rebranded collection. designed our our collection mattresses with product Lux available grid to and Lux the and from through ranging primarily channel Plus system. standpoint, sleeping is This along of and layers Initial very Rejuvenate, a the mattresses within From Rejuvenate highest-end with $X,XXX. top sit feature Purple be plus will through delivered wholesale incorporate the mattress, Premier. $X,XXX through enhanced These the showrooms positive Rejuvenate pressure three so partners testing our far. been responsive superior our wholesale channel. our

first the our our for believe of launch selling is about the is on-hand through orders, temporarily it mattresses and models impacting engine their legacy excited for retailers we’re product Bennett down prepare in by To working inventories our new pressure While replenishing are this reinvigoration lineup which us sales. positions May, our in of outlined. some without innovation growth later year, new it results on as putting quarter

difficult While offering the our year, this will partners start for make to our enhanced adding from response been confidence that upcoming has to wholesale a to the positive, very the our the launch the will play the trajectory broader our near-term. understanding demand the economic recovery part accelerate in also a that will of progresses environment consumer with year shaping in as the

our relevant the create differentiated develop want to brand a brand address. that for Purple instrumental has premium and distinct segments single care brand, multi-channel helping to support the messaging sleep. highly consumer and an positioning as been life-enhancing now for position Turning our ownable, brand strategy, To consumer can in we

several in our ways. refining in marketing We’re strategy XXXX

re-imagining appealing we’re and the more be to premium begin, brand Purple the to set. bolder customer To

historically tailored space, great we’ve marketing has set premium consumer success While had our evolved. target campaigns as our has product with expanded to DTC the consumer, our into

articulates messaging You to in a the can technology. that shift consumer us with higher-end of our messaging see in expect with our address differentiated a benefits unmistakable brand better gel XXXX

competitors experience. materials, sleep Purple differentiated with While attempt themselves hallmarks brand that a of differentiate truly the technology revolutionary provides common to of is one the many

innovation target in premium Along alternative values focused advantage XXXX mattress We’ll our a memory foam with on ourselves messaging our and use driving shift tactically, demographic higher segment. and as true the the also XXXX. we’re to position to this in ticket

bundle our We will and enhance adjust revenue. messaging bases drive our enhancers approach and with mattress and bedding premium pricing with our mattress add-on pillows to like increased

shared positive average through our Another sale assets Vegas XXXX lineup new product feedback higher wholesale trade confirmed inbound far exceeded enhanced Las hundreds the resulted in higher with response key placement partnerships. new will product with point market has of and for strategy sale shop more up and our aspect interest and on overwhelmingly combined shops of selling our margins. The is commitments incentive of we strengthening goal and drive XX%. new of Wholesale very and increased of our the results. structure brand. the how was several with prices following At positive Dozens the direction have

current add same remain of perform about At ended successful years the XXXX. our time, XX to we showrooms the last XX showroom to We continue environment. We two with on showrooms stores positive over very added in the channel XXXX. future challenged expanding the we’ve remain focused more in operating and in XX net plan XXXX to our new

truly for our In closing, for thank I’d company. work year through their to a like hard our transformational employees

we’ve I continued enabled company coming and to through you forward of trajectory difficult in made challenging very never change dedication short the our time and our this period success the While so easy, is progress in proud for of with much industry. period look has year. a stabilize us of time during change in such your a the XXXX, I’m to

to the our call the that everyone questions, I’d operator year of off as quarter outlook. take results like fourth it hand discuss our purpose full to as to XXXX remind to is I As financial well today’s and

we that into topics. you we your Q&A, As ask the limit head to these questions

now ready begin take to we’re questions. Operator, to

Operator

Thank Thomas your question. you. you. Capital. with is [Operator with question Brad first our Instructions] KeyBanc from Please proceed And Thank

Brad Thomas

tested Rob, afternoon. about, Thanks was about that for more new and had could good you I talk and and stores Hi, bit question. the had little to taking store little what where you these Purple seeing be products lift of get see more prototype wanted about bit wondering, with performance the other signs any out new I in branding kind rollout pilot to of Thanks. my continue the had assortment. products Intellibed the some may adding a they a you talk the when may of seeing a been the if

Rob DeMartini

you. question. a Thank Brad. It’s good

So new and we to approximately Purple because XX the and hustled Lux the the in with we on we how the base, put customers our customer for into frame across to of group, market, brought fourth we different of did the simply Intellibed that. pace quarter a mattresses them logo product

stores very we to achieve encouraging take Vegas, trade is of every great said, So had fairness, story, some not branding demonstrate the and easy only we would a our were accretive to up pretty no case, results results. we will when the were frankly, went results. evidence in work? able not very Intellibed’s marketing, a a that on logo, but idea, them product, quite the little to customer The to to they they in Las with where were was with majority cases XX have show we And able sell, concept of that Purple exception pretty in the able distribution, but of retailer, it to

in Lux expecting Purple question, sell retailers Intellibed to get XXX the the worth new a We stores throughout the Did a that for year to proposition makes throughout along placement average good think about that that, the are that to that very probably the year. of can line. $X,XXX a And your incremental XXX retail price, across stores it, we’re maybe $X,XXX month get slots Brad? with incremental or

Brad Thomas

talk of as we the little a the year, Rob. you just rollout should bit Definitely about you lot milestones timing just think a think very there’s And here can for helpful, undertake that timing of about more the some we to of about? this

Rob DeMartini

to destocking we own the are May wholesale in ship new a We’ll Yes, channels. line our now. retailers will, we’ll on begin hard have right April to the during conversion and XX

with many product early their a so there’ll So conceptually, in-store. synchronize that’ll and because plans. some that that online wholesale doors, be summer and across the bit got moving some be later but little be on there’ll you’ve have in We’ll that parts will internal based X,XXX

So channels of May about July. think XXth conversion and June, May, conversion owned in transition in a partner channels of our hard

Brad Thomas

A things exciting going lot Very of to luck on helpful, and Rob. you. good

Rob DeMartini

Thank you, Brad.

Operator

Thank question. from Jeremy you. And proceed our Craig-Hallum. Please next your question with with is Hamblin

Jeremy Hamblin

as and And to some relates should those on Thanks. understood sure that hard launch. May of our wanted to points it follow-up XX where just I make be expectations

million do to the it course three those a EBITDA over quarters, million for your if million. are I the $XX looks like $XXX revenues QX implied So QX to $XXX of adjusted million math, to about with $XX quarter

in in or you’re of you terms into of color Should expecting results second that versus because maybe revenue looking And at million still what meaningful how there’s evidence the of softness type can a QX back QX that? and we be it quarter super the half again, of back some in helpful. plus the can of to kind where tangible sounds year, you’re any $XXX year math, going In be that like a like of expecting be we uptick. half then about the thinking about you’re in it on thinking would terms share

Rob DeMartini

Jeremy. Thank you, Okay.

So, obviously QX than softer is expected. we

not is strong. destocking, but also it some is stale of as very is well that not our And the product of the Some performing as category. clearly category

So to the we by that that QX. the you $XXX $XXX us for has QX a planning lower number driven started we gave produced year has that that than a the combination of is

that. in So reflected is that

in quarter As Bennett a outlined, typical we XXXX. expect to queue, QX normal in be with pretty

an launch don’t the a but don’t start definitely from uphill way, math. that like I XX. And you and planning there the really guys so It, year we until there given can May that is do then

that you guys you back and We are of planning for challenge when a half. for very the expecting strong this realize creates model

Jeremy Hamblin

And through, just on the more. bit Okay. talk me little confidence a that,

you increase, color you exceeding just maybe to So, that slots presumably XX%. your you're placements of said little I a kind are product going more on of the that then bit far ASP expecting think, goal are And change expecting?

Rob DeMartini

the will the change mostly total Purple mix business Yes, be across by driven Lux.

out, premier ever a add won't prices are Our that we're pulling business modestly than so so the sharper really little to the ASP.

So business. the four from Purple the ASP you come is there think – blend will three the year-on-year, Lux growth about But components. if really well,

talked growth worth we slots we slot what maturity. wholesale the a a than know the put showroom into store we sharply worth thinking So, bit we've got probably haircut and have them those we each healthy side, on incremental also got the about, are that a in we've But pretty nice, have. that slot less growth is we and last

and are old that two than haven't even yet. XX years stores that XX got annualized less You

year. growth contribute through So will that the

then because but we're And – I on the to back XX number the to that underinvested XX% launch. the year, in up softness we get is marketing QX for sure the also contributed trying to make powder save about because XX% right, the half on the I want

that's volume although if that. it Keira increased to growth but delivered didn't But building line, those in new of the we're spend, So in build are the on of and of slots, expecting, lot second be put the that, that that half. the quality is annualization, a we we wholesale the marketing, block for it don't of but we better, marketing combination on didn't and in get heavily repeat will start and components May expect

Jeremy Hamblin

that's that, or the clarifying just you the spend, for, are that the in year total for planning marketing And increase XX% that's…

Rob DeMartini

That That's is correct. correct.

Jeremy Hamblin

Okay.

Rob DeMartini

yet last this XX% Yes. and by by of highest far the On our our was and it year top the spend QX far on spend up lowest is year year. is that, Jeremy, spend

Jeremy Hamblin

year-to-date total the You the year? are saying for or

Rob DeMartini

but of that Year-to-date, number about No, year-to-date probably in spending quarter it me, have ago. XX% total don't was I what the in is of front year year.

Jeremy Hamblin

it. Got

Okay, guys exciting. Best wishes.

Rob DeMartini

Thank you, Jeremy.

Operator

you. Thank

from Bobby is Raymond your James. proceed question. Please question with next with Our Griffin

Bobby Griffin

Rob have for any of lot estimated part there. the afternoon helping is you from the Do here of of kind launch, retailers exciting support of product my the clearly moving and try questions. an where just have of whether Good Thanks out the a launch type stuff parts what of you taking underlying a everybody. to with you team, of year? EBITDA can the getting this drag get of the that it's profitability we in, feeling kind are business the

Bennett Nussbaum

you about you When – construct? more tell me Bobby EBITDA the – do you mean in drag mean more it, say mean product

Bobby Griffin

as Well, I absorbing to mean something biggest company, as to costs here. the you onetime of some product there launching, big is launch. going the of guess, that I you absorbing history launch are Retailers, clearly some are are that's be kind given the

figure there better that underlying of costs get way business? that kind feeling here of of is the to any are? kind what we like Or product dollar where the curious, of of can the into around a just any So is launch profitability where back

Bennett Nussbaum

answer It's that that. floor samples wholesale cost. customary industry trying at a to way in I'm go figure this in half practice out good normal Yes, to their

is there that a that price to share figure I in but front doors, that X,XXX that. and of resetting with out you. don't So, we have me, can

in dollars even resell maybe inventory another in format. And we a some in have cases, up and mark in and couple to clear pick cases, then built rare down of

you up We'll now. don't and have So there good one you. I cost a to get that. with for follow-up roll is a tied right definitely

Bobby Griffin

going can of Okay. a I guess and know – that's the there. have can you [indiscernible] into price average the figure, SKU back do restroom – we for kind door do we for X,XXX doors the you in

Rob DeMartini

to going pre-launch about X.X go will beds we're and Yes, X.X up from door X.X. to per that move about

Bobby Griffin

we just the too. basis gross guess from mix, margin previously talked just just in Okay, up itself, in is change XX% environment the know that XX.X% And the wholesale the that's quarter decline all the the fourth to sequential went points? on promotional then we helpful. I a more XXX in I is about quarter, that reported

Rob DeMartini

Yes, it couple That of as cost we when into us points, would we we going QX, of the and it Channel knew mix us a points. a big promotional. I steps. be wrapped said couple more cost mean, those are two probably

Bobby Griffin

period your then in took And about you out product further get see a think I industry think Do helpful. – lastly It's I it has Rob, to the from going you mean, the here of you product being got to really me, year-to-date the on do understand down? there itself what's your new step Okay. comments stabilized? demand. kind for Or

Rob DeMartini

feels and now, it underperforming I'm think because on quarter. do think, but product I did of that of on I got kind market that's to January. soft that us right category, as after now, week all weaker feel QX brand pinning is It part our stale week is not the the the

Bobby Griffin

to towards the view? industry here the comparison then And Okay. your start the March, end for I get, in correct, of is guess, that easier

Rob DeMartini

I hear, had yet, any Bobby. haven't I So, comparisons easy

Bobby Griffin

You of and I to that. both seeing hopefully look forward some

Rob DeMartini

initiative the I go in product clearly positive we are believe health let me say marketing our expansion, in confident say to re-energize the showrooms more fresh the work of e-commerce. of let that's it category. on wholesale grow to though, behind and this Well, in it regardless more, we going and

Bobby Griffin

best Okay, of enough. and this with details the I launch. here fair appreciate luck big

Rob DeMartini

you, Bobby. All Thank right.

Operator

Thank you.

Our next Please Securities. Wedbush with your question. with Seth question proceed is Basham from

Seth Basham

than probably the understand my Obviously your bit sure I a too product, components the revenue making destocking can't and but lot considering hit the to And that's is question first much sales of a retailers guidance afternoon. for hold quarter. of your are first two less good imagine of they weeks. Thanks a I

you're of sales year-over-year the industry? product driven bit that expecting for majority underperformance little of your the the So is growth pressure vast decline the in from and of a by the

Rob DeMartini

those It's out I the Seth, definitely think that's of is but I it. without no the that's a do I majority perform it, meaningful because contribution about question fair. not we've but it's piece. brand there components, the contributing. refreshed think There's product years of underperformance, then for better. I three also got think plus been think got probably is to category And being three we've smallest

Seth Basham

it. Got

Understand… Okay.

Rob DeMartini

us in ago put, QX were investment spending make marketing the you won't also levels invest that, to us saving to didn't at stronger, May. see add to going any I'm until up because Sorry, year we

Seth Basham

Got it.

partners question, you're sense gaining that slots from second And your are losing those retail Okay. any in who the slots?

Rob DeMartini

folks to it when No, pretty from. much would of us do that on I temper. we they're in comes you, were very tell the they what number Vegas, were comes really going were from don't where think I it communicate I did, we firm not not; They asked get.

an idea the gives players, it And the other to alternative retailer We're but put the position to – not pushing really come to would directly them it's brand off that present we're premium in temper. so an from floor. trying next

Seth Basham

rate Got materially those it. new higher? it on And my relative products last is to the the product margin question pure of prior merchandise line, is your line,

Rob DeMartini

is. definitely Lux

materially They're not The retailer. bit better others and bit are a cases higher. little in little a sharper the most for

We back the prices – did – do the were we're off got growing were it the to to making we've they're were were the and the products competitive. We prices. very look we be engineering retailer to profitability. not It needed at to our good isn't So margins get margins. offering We not margin hard by units.

So, we restore margin big line, in the line. the a in tech up rejuvenate unit obviously we don't in do get

Seth Basham

you Understood. and so luck. good much All right, thank

Rob DeMartini

Seth. All right, thanks,

Operator

Thank you.

your from with Our proceed question. next ROTH question Please is with Koranda Matt MKM.

Matt Koranda

afternoon. guys, Hey good

this try different me a attack from to Let angle. just

coming versus of ALB is launch? to from back the XX% get units of you're How much in the year the potentially low the needs new So to going high the from [ph] of growth be to half improvement teens growth. kind that

Rob DeMartini

how annualizing line. in disconnecting definitely because Lux and it I and units? growth is half the back mixed is then the mean are growth in the unit the launch Matt, from you

Matt Koranda

majority units assume… But the is should what Okay. we of

Rob DeMartini

Yes, the the rest the of of majority even premium their on its of a units, line mean the I units price. because slower than basis is unit Lux

Matt Koranda

Okay.

Rob DeMartini

go But ahead. we're annualizing –

Matt Koranda

No, go finish ahead. ahead Rob, no, Go sorry, the…

Rob DeMartini

annualizing only Part business? four that I of XXXX. it months it is in there Intellibed believe of were

Matt Koranda

unit marketing? about and about how gross maybe could talk gross that going some you utilization think flowing should into be about we be sounds the reinvesting just into dollars facilities. half How back then margin you like better And how probably improvement? through to factors thinking the given that growth, margin just Okay, back those And great. mostly the it progression is

Rob DeMartini

has Yes. get downsizing efficiency and in business We Eric this through brought, XXXX. mean, helping unit is and the that back to the very growth of work put we that the I because of half that also some of that we've plants. the sensitive the done volume to contribute will mix then is

Matt Koranda

guys. you. off-line Okay. take rest Great. I'll Thank the

Rob DeMartini

Matt. Thanks

Operator

you. Thank

Please your Keith is with Our proceed with next Securities. Hughes question. Truist question from

Keith Hughes

you. Thank

to different launch readout new changing new kind Is advertising or are co-op of you the the salesperson on historically at has incentives? your going it what be Purple With than of historical products? been line, the

Rob DeMartini

I'm sorry of Will you Yes, that give I'm I again? half it. sorry. missed question me

Keith Hughes

Yes. Sure.

the changing advertising With retail different it new the it's of historically? with the co-op your Is retailers payment, agreement some of that? are incentive or you things the products, than floor been launch like

Rob DeMartini

not changed case the of Lux but for. the the backend those it what for call where we margin the at as it the we've helps We've I margins. how we've a sharpened cases get if most the into sharpened Purple is the retailers dramatically sell some sell front a rich It's, much No, are as they line are then in we this or wholesale know drag margin of historical used business. look have where at the of because was that line vendor what don't I'd Lux. contributes any on think can't that those Purple backend. and try to they very gets bit In Yes, they at sales I this what language cases have all. that restore industry, for, end sharpened to front the buy changed in basically margin, the there

Keith Hughes

thank very much. Okay, you

Rob DeMartini

you. Thank

Operator

Atul with Maheswari Our is from question. next question with UBS. proceed Please your

Atul Maheswari

Good for advance, I to Thanks question. a lot apologize also question. half Rob, I'm a in have going evening. but back my taking

clearly growth assumed industry lot you guidance? But for stuff slots. what going and in on what's of that the launches like incremental have a product the with So embedded exciting in the the half back

Rob DeMartini

but the growth. growth assumed what not have we share plan, didn't. tell me industry and We've that, if can do We the in industry, I'll you assumed

Atul Maheswari

All right.

Rob DeMartini

decay also include we didn't we further we either. will – also, didn't say I improve

Atul Maheswari

high then you basis – wrong? Please think margin, points, Got follow if Jack is quarter. up I And hundred not on my promotions I'm correct gross from few I'm fourth promotions it. the me in mentioned the a there if

Jack Roddy

that's No, correct.

Atul Maheswari

you to is increased you expect could promotions new even quality as condition these that XXXX But beds? higher your what for this the and launch have to that the all risk related customer offers promotions assumed for what

Jack Roddy

levels little read have year do we've levels that. We improvements a right wholesale some planned in see in modest in cases there. and of a clearly. I'm the discount decrease already discount destocking that in of so three assumed channels. now It's to hard make improvement in to in we began noise saying in because all most Yes, some But that's the have sure across promotion,

Atul Maheswari

good Thank Awesome. you with Right. much luck very this year. and

Rob DeMartini

you, Atul. Thank

Operator

you. Thank

Nagle Our Please Bank question question. your with proceed next is from Curtis America. with of

Curtis Nagle

Thanks evening. it. taking Good for

slotting I to, wanted a guess perspective. Just clarify going on from what's

by done? Yes, per doors? that door bit you just said maybe that's a X,XXX or that a is little going will is more. all up And X.X X.X Or portion? what you're look think like I ultimately right? that across So that – when Is so,

Rob DeMartini

doors blended of end to the across maybe Lux in X.X was being put average into we're I our significant majority X.X, up a giving you there. doors. mean, it'll I going to Well, we've rates, somewhere But not and but got X,XXX

Curtis Nagle

Increase?

Rob DeMartini

yes. Increase,

Curtis Nagle

it. Got

just And the that that? point when Okay. I What are I funding stores, in, putting is retailers think. Are guess the the guys the you cost you're of per then door? about any funding on

Rob DeMartini

on planned flavors cautious and will we're be where we of discriminating There's very that reasonable how in we making that different brand kind put to and sure have the and few sure return. for, the get depending breadth a we a Curtis of in being make investment we

Curtis Nagle

Okay. we then this what just expect for And year? should CapEx

Bennett Nussbaum

Total CapEx?

Curtis Nagle

Yes.

Bennett Nussbaum

CapEx. about $XX We’ll get million in total

Curtis Nagle

Okay. Thank you.

Operator

further no questions teleconference. at This this are There today's time. concludes

time. You may lines your at for participation. Thank this you your disconnect

Purple Innovation (PRPL) 16 Mar 232022 Q4 Earnings call transcript