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]