Financial Data and Key Metrics Changes - First quarter revenue was $104.2 million, down 13% year-over-year, aligning with expectations [6][24] - Adjusted EBITDA improved by $8 million, a 650 basis point increase compared to last year [8][27] - Adjusted gross margins exceeded 40% for the fourth consecutive quarter, improving by 550 basis points year-over-year [7][20] Business Line Data and Key Metrics Changes - Showroom revenue grew by 7%, marking the fifth consecutive period of growth, with comparable sales up 11% [6][25] - Direct-to-consumer (DTC) net revenue was $63.4 million, with showroom sales increasing by 7.4% [24][25] - E-commerce sales declined by 8.2%, reflecting challenges in conversion and messaging [17][25] - Wholesale segment revenue decreased by 24.2% to $40.8 million due to reduced door counts and overall volume declines [25] Market Data and Key Metrics Changes - The company reported a gross profit of $41 million, with a gross margin rate of 39.4%, an improvement of 460 basis points year-over-year [25] - Cash and cash equivalents at the end of the quarter were $21.6 million, down from $29 million at the end of the previous year [28] Company Strategy and Development Direction - The company announced a significant expansion of its partnership with Mattress Firm, increasing distribution slots from 5,000 to 12,000, expected to generate over $70 million in incremental net revenue [9][10] - The strategic focus remains on three pillars: pioneering new technologies, promoting differentiation, and prioritizing gross margin through operational improvements [10][20] - The launch of the new Rejuvenate 2.0 mattress line is seen as a key product innovation [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about consumer sentiment and macroeconomic conditions impacting the second quarter [39][40] - The company reaffirmed its full-year revenue guidance of $465 million to $485 million, with adjusted EBITDA expected to be flat to up $10 million [23][31] - Ongoing tariff impacts are anticipated, with a potential annual cost impact of approximately $10 million [22][32] Other Important Information - The company is actively reevaluating its digital strategy to improve e-commerce conversion rates [17][14] - The partnership with Sherwood Bedding will enhance manufacturing capabilities while maintaining proprietary technology [10][65] Q&A Session Summary Question: Can you elaborate on the $70 million from the Mattress Firm partnership? - The number is based on current productivity projections for the additional slots, considering some potential cannibalization [35][37] Question: What are the trends in the second quarter? - Concerns were raised about consumer sentiment, with expectations of cautious spending [39][41] Question: How did the new agreement with Omni Group come about? - The relationship developed over time, focusing on driving traffic and improving margins for Mattress Firm [46][48] Question: Will the new partnership change the distribution model? - The company aims for a balanced distribution model, maintaining strong showroom performance while expanding wholesale [50][51] Question: How will tariffs impact the P&L? - Tariffs will start impacting in the second quarter, with adjustments being made to mitigate costs [53][54] Question: What is the expected contribution from Mattress Firm for the rest of 2025? - The ramp-up is expected to be later in the year, with some offsetting headwinds from tariffs and economic uncertainty [75][76]

Financial Data and Key Metrics Changes - First quarter revenue was $104.2 million, down 13% year-over-year, aligning with expectations [5][23] - Adjusted EBITDA improved by $8 million, with a margin increase of 650 basis points compared to last year [6][26] - Adjusted gross margins exceeded 40% for the fourth consecutive quarter, improving by 550 basis points year-over-year [6][25] Business Line Data and Key Metrics Changes - Showroom channel revenue grew by 7%, marking the fifth consecutive period of growth, with comparable sales up 11% [5][24] - Direct-to-consumer (DTC) net revenue was $63.4 million, with showroom sales increasing by 7.4% [23][24] - E-commerce sales declined by 8.2%, reflecting challenges in conversion and messaging [15][24] - Wholesale segment revenue decreased by 24.2% to $40.8 million due to reduced door counts and overall volume declines [24] Market Data and Key Metrics Changes - The overall consumer sentiment remains cautious, impacting spending patterns [38][41] - Brand awareness reached 77%, indicating strong recognition but highlighting the need for better communication of product benefits [14] Company Strategy and Development Direction - The company announced a significant expansion of its partnership with Mattress Firm, increasing distribution slots from 5,000 to 12,000, expected to generate over $70 million in incremental revenue [7][9] - The strategy focuses on three pillars: pioneering new technologies, promoting differentiation, and prioritizing gross margin through operational improvements [9][10] - The launch of the new Rejuvenate 2.0 mattress line aims to enhance product offerings and drive sales [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the consumer psyche and macroeconomic uncertainties affecting the second quarter [38][39] - The company reaffirmed its full-year revenue guidance of $465 million to $485 million, anticipating some headwinds from tariffs [21][30] - Management remains focused on executing strategic priorities while navigating industry challenges [31] Other Important Information - The company entered into an amendment to borrow an additional $20 million to support the expanded distribution agreement and ongoing investments [9][28] - The impact of tariffs is being closely monitored, with an estimated annual cost impact of approximately $10 million [20] Q&A Session Summary Question: Can you elaborate on the $70 million from the Mattress Firm partnership? - The number is based on current productivity and projected incremental slots, considering some cannibalization but expecting overall growth [34][36] Question: What are the trends in the second quarter? - There are concerns about consumer sentiment, with cautious spending observed [38][41] Question: How did the new agreement with Omni Group come about? - The relationship developed due to mutual benefits in driving traffic and improving margins for Mattress Firm [46][48] Question: Will tariffs impact the P&L? - Tariffs will start impacting in the second quarter, and the company is working on strategies to mitigate these costs [54] Question: Is there exclusivity in the new partnership with Mattress Firm? - There is no exclusivity; the focus is on serving all wholesale partners effectively [69] Question: How does the expanded partnership affect guidance for 2025? - The ramp-up from the partnership is still being finalized, but there are expected tailwinds in the latter part of the year [76][77]

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]