PRPL Q4 Loss Narrower Than Estimates, Sales Rise on Wholesale Strength

Purple Innovation, Inc. PRPL reported fourth-quarter 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. Also, both metrics increased year over year.

The company delivered a stronger fourth quarter, marking a key turning point in its turnaround efforts. The improvement was driven by better execution across wholesale and showroom channels, growing traction in its premium product portfolio and the continued benefits of cost-saving initiatives. Management highlighted that the progress reflects stronger internal execution rather than a broader market recovery, positioning the company on a firmer footing entering 2026.

PURPLE INNOVATION, INC. Price, Consensus and EPS Surprise

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More on Purple’s Q4 Results

PRPL posted an adjusted loss of 2 cents per share in the fourth quarter, which is narrower than the Zacks Consensus Estimate for an adjusted loss of 8 cents. Also, the bottom line was narrower than the adjusted loss of 11 cents in the year-earlier quarter.

Total net sales of $140.7 million increased 9.1% year over year and beat the Zacks Consensus Estimate of $122 million. Growth was largely fueled by the strong performance in the wholesale channel, supported by a full quarter contribution from expanded placements with Mattress Firm and continued solid momentum with Costco, though this was partly offset by weaker e-commerce sales.

On a channel basis, direct-to-consumer net revenues for the quarter were $71.9 million, marking a 9.9% decline from the prior-year period. Within the DTC segment, showroom revenues rose 4.5%, delivering growth for the second straight quarter, while comparable sales increased 8.8%, supported by the continued strong performance of Rejuvenate 2.0.

Meanwhile, e-commerce revenues remained under pressure, declining 15.3%. In contrast, wholesale revenues grew 39.8%, primarily driven by the company’s expanded presence with Mattress Firm and Costco.

Insights Into Purple’s Margins & Costs

Adjusted gross profit increased 1.9% year over year to $59 million, whereas the adjusted gross margin contracted 300 bps to 41.9% in the quarter under review.

Adjusted operating expenses of $55.8 million decreased 9.8% from $61.9 million in the prior-year quarter. The reduction was primarily driven by benefits from restructuring measures and additional cost-saving initiatives. As a percentage of sales, this metric was 39.7%, down 830 basis points from the year-ago quarter.

Adjusted EBITDA for the fourth quarter increased to $8.8 million from $2.9 million in the prior-year period, representing a surge of approximately 203%, driven primarily by revenue growth and disciplined cost management. The adjusted EBITDA margin increased 410 basis points year over year to 6.3%.

PRPL Stock Past 3-Month Performance

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PRPL’s Financial Health

This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $24.3 million. Net inventories stood at $59.7 million as of Dec. 31, 2025, up 5% year over year. Total shareholders’ deficit was $29.7 million. Net cash used in operating activities was 33.8 million in 2025.

Purple’s 2026 Guidance

The company provided guidance for the first quarter and 2026. For the first quarter, total revenues are expected to be $100-$105 million, while adjusted EBITDA is projected between a loss of $7 million and a loss of $4 million.

For the year, management expects revenues of $500-$520 million, with the adjusted EBITDA anticipated between $20 million and $30 million. The revenue outlook is expected to be supported by continued strength in Rejuvenate 2.0, along with expanded distribution through Mattress Firm and Costco.

The company expects further improvement in EBITDA, driven by ongoing operational efficiencies and restructuring initiatives that are expected to benefit both gross margin and operating expenses. These efforts are likely to enhance profitability and cash generation, reflecting the full impacts of cost actions, product innovation and broader distribution reach.

Shares of the company have declined 8.2% in the past three months against the industry’s growth of 0.6%.

Stocks to Consider

We have highlighted three better-ranked stocks, namely Hershey Company HSY, Kenvue Inc. KVUE and Interparfums, Inc. IPAR.

Hershey manufactures pantry items like baking ingredients, toppings and beverages; gum and mint refreshment products; and snack bites and mixes, as well as spreads. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hershey’s current financial-year earnings and revenues implies growth of 30.1% and 4.8%, respectively, from the year-ago actuals. HSY delivered a trailing four-quarter average earnings surprise of 17.2%.

Kenvue is a pure-play consumer health company. It presently has a Zacks Rank of 2 (Buy).

KVUE delivered a trailing four-quarter earnings surprise of 9.8%, on average. The consensus estimate for Kenvue’s current financial-year sales and earnings indicates growth of 2.9% and 1.9%, respectively, from the year-ago period’s reported figures.

Interparfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products, currently carrying a Zacks Rank #2. IPAR has a trailing four-quarter earnings surprise of 7.6%, on average.

The Zacks Consensus Estimate for IPAR’s current financial-year sales and EPS calls for declines of 0.1% and 8%, respectively, from the year-ago reported numbers.

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This article originally published on Zacks Investment Research (zacks.com).

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