LEHI, Utah – Direct-to-consumer sleep company Purple Innovation reported net sales of $173.9 million for the fourth quarter ended Dec. 31, a 39.9% increase over net sales of $124.3 million in the same quarter last year.
The company posted a net loss of $2.1 million in the quarter, an 83% improvement from the $12.7 million loss in the same quarter last year. Operating income in the quarter increased to $7.5 million, more than doubling operating income of $2.8 million in the comparable period last year.
The increase in net revenue was driven primarily by an increase of 57% in the company’s direct-to-consumer channel, led by strong mattress sales and higher demand for pillows, sheets and seat cushions.
For the full year, net revenue increased 51.4% to $648.5 million, compared to $428.4 million in 2019. Direct-to-consumer revenue increased 83% and wholesale revenue increased slightly, reflecting COVID-19 related retail partner store closures.
Purple posted annual net income for 2020 of $10.9 million compared to a net loss of $12.4 million in last year.
Gross margin for the full year 2020 was 47% compared to 44.1% in the prior year. The 290 basis point increase in gross margin year-over-year was primarily attributable to the higher proportion of the direct-to-consumer channel revenue, which carries higher gross margins. Direct-to-consumer revenues comprised approximately 75% of net revenue for the year, compared with approximately 62% in 2019. This mix shift offset difficult gross margin comparisons resulting from higher materials and freight costs and initial costs of opening the company’s new manufacturing and warehouse facility in Georgia.
As of Dec. 31, the company had cash and cash equivalents of $123 million compared to $33.5 million as of Dec. 31, 2019. The increase was driven by $81.3 million generated by cash flow from operations and $48.4 million from the exercise of warrants and options. This was partially offset by capital expenditures of $27.9 million primarily related to manufacturing capacity expansion including the company’s new 525,000-square-foot facility in Georgia, as well as two additional Max Machines added to the Utah facility earlier in 2020.
“We concluded an amazing year of profitable growth for Purple with a strong fourth quarter performance,” said Joe Megibow, CEO. “Despite the many challenges in 2020, our teams leaned-in and executed successfully, including this holiday season, identifying and capitalizing on market opportunities while at the same time investing in future growth. With our coveted and innovative products, internal manufacturing capabilities, and omnichannel distribution strategy combined with effective marketing and promotional programs, we have doubled our share of the U.S. premium mattress market over the past two years. Fiscal 2021 is off to a solid start and we believe we are well positioned to build on our recent accomplishments and intend to continue investing in capacity expansion, innovation and company showrooms to further expand our market share for years to come.”