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Purple Innovation's Q2 2025: Key Contradictions on Mattress Firm Impact, Tariffs, and Gross Margins
Generated by AI AgentEarnings Decrypt
Tuesday, Jul 29, 2025 11:52 pm ET1min read
Aime SummaryMattress Firm partnership revenue impact, tariff impact on gross margin, sales performance and demand trends, and gross margin expectations are the key contradictions discussed in Purple Innovation's latest 2025Q2 earnings call.
Revenue and Profitability Performance:
- reported revenue of $105 million for Q2, a 12.6% decrease year-over-year, but with a slight increase compared to Q1.
- The revenue decline was partially offset by demand exceeding supply for Rejuvenate 2.0, especially in showrooms, and the early expansion of Mattress Firm.
- The company also delivered strong profitability improvements with adjusted EBITDA increasing by $1.8 million and 120 basis points year-over-year.
Gross Margin and Tariff Mitigation:
- The gross margin for Q2 was 36%, a decrease from the previous four quarters, which all exceeded 40%.
- This decline was primarily attributed to incremental tariffs and costs associated with ramping up the Mattress Firm rollout and Rejuvenate 2.0 launch.
- The company has implemented tariff mitigation strategies and expects to exit 2025 with a gross margin rate above 40%.
Innovation and Product Success:
- The Rejuvenate 2.0 mattress collection launch surpassed expectations, with over 1,300 units sold at an average sales price of $6,000.
- This success is driven by the introduction of the DreamLayer gel grid technology and a strong marketing campaign emphasizing unique sleep benefits.
Expansion into Wholesale and Retail Partnerships:
- The strategic expansion into Mattress Firm led to the addition of 12,000 slots by mid-August, more than doubling the company's previous footprint.
- This partnership is expected to drive significant sales growth, with plans for an exclusive luxury mattress collection launch early next year.
- Additionally, Purple's engagement with Costco's promotional event is expanding from 170 to 450 clubs, broadening the brand's reach to a highly engaged customer base.
Revenue and Profitability Performance:
- reported revenue of $105 million for Q2, a 12.6% decrease year-over-year, but with a slight increase compared to Q1.
- The revenue decline was partially offset by demand exceeding supply for Rejuvenate 2.0, especially in showrooms, and the early expansion of Mattress Firm.
- The company also delivered strong profitability improvements with adjusted EBITDA increasing by $1.8 million and 120 basis points year-over-year.
Gross Margin and Tariff Mitigation:
- The gross margin for Q2 was 36%, a decrease from the previous four quarters, which all exceeded 40%.
- This decline was primarily attributed to incremental tariffs and costs associated with ramping up the Mattress Firm rollout and Rejuvenate 2.0 launch.
- The company has implemented tariff mitigation strategies and expects to exit 2025 with a gross margin rate above 40%.
Innovation and Product Success:
- The Rejuvenate 2.0 mattress collection launch surpassed expectations, with over 1,300 units sold at an average sales price of $6,000.
- This success is driven by the introduction of the DreamLayer gel grid technology and a strong marketing campaign emphasizing unique sleep benefits.
Expansion into Wholesale and Retail Partnerships:
- The strategic expansion into Mattress Firm led to the addition of 12,000 slots by mid-August, more than doubling the company's previous footprint.
- This partnership is expected to drive significant sales growth, with plans for an exclusive luxury mattress collection launch early next year.
- Additionally, Purple's engagement with Costco's promotional event is expanding from 170 to 450 clubs, broadening the brand's reach to a highly engaged customer base.
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