by 2 plants will close in Utah with capacity shifting to its McDonough, Georgia, facility
LEHI, Utah — Bedding resource Purple Innovation is closing two manufacturing plants in Grantsville and Salt Lake City, Utah, and consolidating the operations into its McDonough, Georgia, facility, the company announced on Thursday.
The consolidation, which will increase the capacity of its Georgia plant, is expected to be completed in the first quarter of 2025. The company said it also is reducing a number of positions at the corporate level.
The company said that the consolidation is expected to generate between $15 million and $20 million in EBITDA savings on an annualized run-rate basis starting in 2025. The company also said it expects to experience restructuring costs of $35 million to $45 million — some $26 million to $32 million of which is noncash — starting in the third quarter of 2024 and continuing through the second quarter of 2025. It does not expect the consolidation to impact its full-year guidance targets.
“These moves enable Purple to streamline our operations and to reinvest in technology and marketing to grow the category,” said Rob DeMartini, chief executive officer of Purple Innovation. “This decision was not made lightly. Over the past year, we have driven savings through manufacturing efficiency and supply chain initiatives, and we are confident that the consolidation of our manufacturing footprint is an important step to advance our Grid innovation and build momentum with our ‘Path to Premium Sleep’ strategy, which will set Purple up for positive operating cash flow and market share growth over the long term.”
The company said that it will remain headquartered in Utah, with four showrooms and a new distribution center that it also plans to open in the state. The company also noted that its R&D activities will continue to be based in the Innovation Center that it opened in Draper, Utah, last year.
The news comes about two and a half weeks after the release of its financial results for the second quarter ended June 30. During the quarter it said that net revenues totaled $120.3 million, up 2% from $117.9 million the same period last year, with wholesale revenues rising 7.2% and DTC revenue decreasing 1.8%.
Its gross margin rose to 40.7% compared to 30.1% in the same period last year, and it also reported an adjusted net loss of $13.8 million, or 13 cents per share, down from a net loss of $23.9 million, or 23 cents per diluted share, the same period last year.
It also reported zero in net income compared to a net loss of $40.3 million the same period last year.
For the full first half, it reported $240.3 million in net revenues, up 7% from $224.6 million last year.
It reported a net loss of $50.3 million, or 47 cents per share, compared to a net loss of $66.7 million, or 65 cents per share, the same period last year. Its adjusted net loss for the first half was $31 million, or 29 cents per share, compared to $37.9 million, or 37 cents per share, the same period last year.
