At the ICR Conference in Orlando, Florida, Rob DeMartini, CEO of Purple Innovation, shared his views on the potential $4 billion acquisition of Mattress Firm by Tempur Sealy International. The deal, which the Federal Trade Commission (FTC) is trying to block in court, remains under scrutiny. DeMartini stated that his main concern is not about Purple's position, but rather the potential disadvantages the acquisition could bring, especially in terms of its impact on consumers.
Photo: Purple.
DeMartini emphasised that while Purple does not seek any advantage from the acquisition, he is cautious about the outcome, given that Mattress Firm accounts for a significant portion of Purple's sales. With over 1,100 stores out of Purple's 3,400 wholesale doors, DeMartini expressed the importance of the company's partnership with Mattress Firm, noting that they had an agreement to make no changes to their business arrangement for at least 18 months. Despite these reassurances, he voiced concerns about the future impact, stating, 'I just don't want to be disadvantaged'.
DeMartini also highlighted his belief that the merger may not benefit the consumer, as claimed by Tempur Sealy. The argument that prices could drop due to the merger is something he finds difficult to accept, as he doesn't see how it would lead to lower prices in the market.
In his discussion at the conference, DeMartini provided updates on Purple's financial performance, revealing that the company had revised its 2024 net revenue forecast to between $486 million and $488 million, down from the previous estimate of $490 million to $510 million. He also revised the expected adjusted EBITDA loss, forecasting a loss of $21 million, which is slightly worse than the earlier forecast of a $20 million to $10 million loss.
Despite these challenges, DeMartini pointed out that Purple made a profit in the fourth quarter of 2024 for the first time in three years. The company, he said, had been realigning its cost structure following the overexpansion during the COVID-19 pandemic. Purple is also consolidating its manufacturing footprint into a single facility in Georgia, which DeMartini believes will streamline operations and improve efficiency.
DeMartini highlighted the company's growing presence in its 59 branded showrooms, which account for about 60% of Purple's sales. The showroom channel, although initially struggling, has shown new signs of success. He noted that transactions in these showrooms are significantly higher than those in partner stores or on the Purple website, showcasing the potential of this retail model.
Looking ahead, Purple plans to roll out its products to 150 Costco stores and introduce a new product line under the Rejuvenate brand at the upcoming Las Vegas Market. DeMartini expressed optimism about this line's potential to expand into more partner stores, noting that this kind of growth is the most beneficial for the company.
Source: www.furnituretoday.com