In a presentation at the ICR Conference on Monday, Purple CEO Rob DeMartini provided an update on the company's performance since the launch of its new line of premium mattresses last year. According to DeMartini, the company has faced challenges in transitioning from its previous reputation as a provider of cheaper mattresses to a more expensive, premium brand.

‍
One of the main obstacles has been consumer resistance to purchasing expensive mattresses online, as opposed to in-store. This has resulted in a decline in sales and a decrease in profit margins for the company. DeMartini also acknowledged that the product transition was more expensive than anticipated, resulting in a loss of at least 3 margin points due to execution alone.

‍
Despite these challenges, DeMartini remains optimistic about the company's future. He noted that Purple was able to gain 1,500 mattress slots nationally, indicating that retailers and partners recognize the need for innovation even in tough market conditions.

‍
The home goods category as a whole has faced declining sales, with the U.S. Commerce Department reporting a 7.5% decrease in November and a nearly 12% decrease in October. This has also had an impact on Purple's sales, with a 2% decline in the most recent quarter due to soft consumer demand. However, DeMartini believes that profitability is within reach and could be achieved this year.

‍
DeMartini also addressed the company's wholesale opportunities, noting that the recent acquisition of Mattress Firm by Tempur Sealy could pose a challenge. Mattress Firm makes up about a third of Purple's wholesale doors, and the brand is present in almost half of the retailer's locations. DeMartini acknowledged that Mattress Firm is a tough customer, but believes that Purple's differentiated product, the gel-flex grid, will continue to set them apart.

‍
In terms of Purple's own physical retail strategy, DeMartini admitted that it has been the "toughest part" of the company's model. The company plans to slow down its store opening activity until it can ensure profitability in its existing store fleet. DeMartini also mentioned that a third of the company's stores are currently facing challenges, but they are working to identify the root cause and improve their performance.

‍
In terms of marketing, DeMartini announced that the company will be returning to its roots with a modernized version of its popular "egg drop" ad campaign. He acknowledged that the company's previous marketing strategy, which aimed to mature the brand, has not been as effective as hoped. The return to the irreverent and edgy style of the egg drop campaign is a nod to the company's fun and unique brand identity in a category that is not typically associated with humor.

‍
Overall, DeMartini remains confident in the future of Purple and its ability to overcome the challenges it has faced in the past year. The company's focus on innovation and differentiation, along with a return to its successful marketing strategy, will be key factors in its success moving forward.

‍
Sources: https://www.retaildive.com/news/purple-stores-toughest-part-dtc-retail/704008/