Financial Data and Key Metrics Changes - The fourth quarter net revenue was $129 million, down 11.6% from $145.9 million in the prior year, but showed sequential improvement from the third quarter [24][25] - Gross margin reached 42.9%, an improvement of 970 basis points compared to the previous year, with adjusted gross margin at 44.9%, up 810 basis points [27][19] - Adjusted EBITDA for the fourth quarter was $2.9 million, an improvement from a negative $9.8 million last year, indicating successful restructuring initiatives [29][5] - Full year net revenue was $487.9 million, down 4.4% compared to $510.5 million in the prior year, impacted by industry softness [30] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) net revenue for the quarter was $79.8 million, down 2.9% year-over-year, with showroom revenue increasing by 4.2% [25][30] - E-commerce revenue decreased by 5.3% for the quarter, while wholesale revenue was $49.2 million, down 23% compared to the previous year [26][30] - Showroom profitability improved with four quarters of sequential revenue growth and full-year four-wall profitability for the first time since 2021 [8][9] Market Data and Key Metrics Changes - The company noted challenges in consumer demand and increased industry consolidation, impacting overall market conditions [7][22] - The partnership with Costco has exceeded expectations, contributing positively to revenue growth [10][22] Company Strategy and Development Direction - The company is focused on a path to premium sleep strategy, emphasizing new technology, product differentiation, and prioritizing gross margins [10][11] - The launch of the new Rejuvenate 2.0 mattress line is a significant step in maintaining competitive advantage and expanding market presence [12][10] - The company aims to enhance operational efficiency through manufacturing consolidation and cost-saving initiatives [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, expecting total sales between $465 million and $485 million, with adjusted EBITDA flat to up $10 million [21][35] - The company is closely monitoring macroeconomic conditions and consumer behavior, noting a softening in demand at the start of 2025 [69][70] - Management remains confident in the company's ability to navigate challenges and capitalize on market opportunities [34][21] Other Important Information - The company has initiated a review of strategic alternatives to maximize shareholder value, establishing a special committee for this purpose [37][38] - Tariff exposure is limited, with potential impacts estimated between $2 million and $5 million, allowing for manageable adjustments in supply chain [22][85] Q&A Session Summary Question: Can you clarify the cost savings for 2025? - The cost savings are estimated at $25 million to $30 million, with $7 million to $10 million related to cost of sales and the remainder from operating expenses [41][42] Question: How will the REJUVENATE product launch affect revenue seasonality? - The REJUVENATE line will launch on April 15, with a phased rollout expected to take several months for wholesale partners [44][46] Question: What is the current state of consumer demand? - Management noted a softening in demand, with consumers appearing hesitant in early 2025 [69][70] Question: What is the outlook for gross margins? - Gross margins are expected to continue improving due to manufacturing consolidation and sourcing efficiencies [75][76] Question: What is the status of the relationship with Mattress Firm? - The company is committed to growing a profitable business with Mattress Firm and anticipates discussions regarding contract extensions soon [82][84]