Purple Innovation NASDAQ: PRPL reported first-quarter 2026 results that management said showed “continued progress and greater consistency across our channels,” even as total sales declined year-over-year and gross margin fell below the company’s longer-term target. Executives also detailed an accounting-related wholesale revenue adjustment that lowered reported revenue but did not affect gross profit dollars, EBITDA, or cash flow.
First-quarter results and channel performance
Chief Executive Officer Rob DeMartini said the company entered 2026 building on progress from the fourth quarter, citing growth in the showroom and wholesale channels and sequential improvement in e-commerce trends. For the quarter, Purple’s total sales were down 8%, which DeMartini attributed to lower e-commerce and wholesale sales that more than offset gains in showrooms.
Chief Financial Officer Todd Vogensen reported net revenue of $95.7 million, down 8.1% year-over-year. The decline was driven primarily by softness in e-commerce and a $4.9 million “accounting-related reduction” to wholesale revenue, partially offset by showroom growth. Excluding that accounting impact, Vogensen said net revenue would have been $100.6 million, down 3.4% year-over-year.
By channel, Vogensen said direct-to-consumer (DTC) net revenue was $59.4 million, down 6.2%. Within DTC:
- Showrooms: Revenue rose about 5%, with comparable sales up 7%, marking the third consecutive quarter of positive comp growth.
- E-commerce: Revenue fell 10.6% for the quarter, but Vogensen noted March was flat year-over-year, “the first time in three years that we’ve seen a flat month in our e-commerce business.”
Wholesale revenue decreased about 11% on a reported basis, which Vogensen said primarily reflected the $4.9 million accounting-related reclassification tied to certain commercial payments to a manufacturer affiliated with Mattress Firm. Excluding the impact, wholesale revenue would have been up 1%, driven by growth with Mattress Firm and Costco.
Accounting adjustment and updated revenue guidance
Management emphasized that the wholesale accounting item was a reporting change rather than a change in underlying demand. Vogensen said the reclassification reduced net revenues and cost of sales by the same amount and had “no impact on gross profit dollars, EBITDA, or cash flow.”
As a result, Purple updated full-year revenue guidance to $465 million to $485 million from $500 million to $520 million. DeMartini and Vogensen both said the change was entirely tied to the accounting adjustment, with Vogensen stating it was “purely just the reporting change.” Purple maintained its full-year Adjusted EBITDA guidance of $20 million to $30 million.
On the durability of the adjustment, Vogensen told analysts it will be ongoing, with the biggest impact tied to Royale production by an affiliate of Mattress Firm. He noted the company reduced revenue guidance by about $35 million versus the $5 million impact recorded in the first quarter, and said the adjustment could grow as Royale volume increases later in the year.
Product and partner updates: Royale, Rejuvenate 2.0, and accessories
DeMartini highlighted demand for premium offerings, including Rejuvenate 2.0, and pointed to early momentum from the rollout of the new Purple Royale collection developed with Mattress Firm. He said Purple Royale is in 3,100 slots across Mattress Firm’s 2,200 stores and that initial sell-through was in line with expectations. He also said Mattress Firm provided increased marketing support, calling it “one of the largest co-marketing investments in our partnership to date.”
In showrooms, DeMartini said Rejuvenate 2.0 drove a “very strong mix up,” noting that Rejuvenate 2.0 represented 56% of showroom mattress revenue in the first quarter. He attributed showroom performance to teams focusing on explaining “the why Purple and the which Purple.”
Accessories were another bright spot, according to DeMartini. He said Purple’s expanded pillow assortment at Mattress Firm was performing above plan and driving incremental growth. He also cited:
- Costco: In-store furniture event performed as expected; revenue was “up over double last year’s volume,” with the program expected to pause and return later in the year.
- Sam’s Club: In-store pillow displays were performing well, and Purple is planning additional events based on recent sell-through.
- Walmart: The company sees opportunities for incremental pillow assortment additions with select retail partners, including Walmart.
- QVC: Purple generated “solid performance” from a recent event and sees more opportunities ahead.
- Amazon: DeMartini called Amazon “a standout,” citing strong growth after shifting more assortment to fulfilled-by-Amazon to improve in-stock levels and delivery speed.
Margins, costs, and cash
Gross margin was 36.8% in the quarter. Vogensen attributed the lower rate to two primary factors: a strategic investment in Royale floor models (which ship at roughly 50% of list price) and modest deleverage in manufacturing overhead due to lower production as the company managed inventory more tightly. In response to a question, Vogensen sized the impacts as roughly 200 basis points of drag from floor models and about another 200 basis points from less favorable overhead absorption.
Both DeMartini and Vogensen characterized the margin pressures as timing-related. Vogensen said the floor model and absorption impacts were largely worked through in the first quarter and expects gross margin to return to around 40% by the second half of the year.
On costs and tariffs, DeMartini said Purple is actively managing a dynamic input-cost environment, including tariffs and rising costs such as foam. He said mitigation efforts include diversifying the supplier base, expanding multi-sourcing, and selectively insourcing key components like pillows. DeMartini said these actions contributed to about $2 million of cost savings in the quarter and added that the company expects tariffs to be “a modest tailwind this year,” while foam costs remain a near-term headwind.
Operating expenses were $52 million, down 6.3% from $55.5 million last year, driven by cost savings and prior restructuring actions, partially offset by higher spending related to the evaluation of strategic alternatives, which Vogensen said can vary by quarter. Purple reported an Adjusted Net Loss per share of $0.13 versus $0.11 a year ago, and Adjusted EBITDA of negative $4.8 million, which Vogensen said was generally in line with last year.
On liquidity and working capital, Vogensen said cash and cash equivalents ended the quarter at $25 million, up from $24.3 million at the end of 2025, calling it the company’s “best first quarter cash performance in seven years.” Net inventories were $58.1 million, down 2.7% from year-end.
Trends into the second quarter and CFO transition
Discussing demand trends, DeMartini said January was “fairly healthy,” February was “a little bit choppy,” and March improved across channels. He said the consumer remains “pretty nervous,” and the category “is not robust,” but he pointed to better media buying as a factor in improved e-commerce performance. Later, he cautioned that one flat month does not establish a trend, noting Purple is changing the information used to guide daily media purchases and has engaged an outside agency to help refine execution.
Purple also announced a leadership change in finance. DeMartini said Vogensen will step down as CFO effective May 1 to pursue another opportunity, and the company will appoint Bob G. Lucian as CFO. DeMartini said Lucian brings experience across branded consumer businesses, including serving as CFO of La-Z-Boy.
About Purple Innovation NASDAQ: PRPL
Purple Innovation, Inc is a consumer products company specializing in the design, development and manufacture of comfort technology for the sleep and home furnishings markets. Best known for its proprietary Hyper-Elastic Polymer “Grid” technology, the company engineers mattresses, pillows and cushions that aim to combine pressure relief, support and temperature neutrality. Purple offers an array of sleep products alongside related lifestyle and wellness solutions.
The company's product portfolio includes mattress models in various sizes and thicknesses, adjustable bed frames, pillows, sheets and mattress protectors, as well as seat cushions and pet beds.
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