Financial Data and Key Metrics Changes - The company's second quarter revenue reached $105 million, representing a 12.6% decrease from the prior year but a slight increase compared to the previous quarter [5][26] - Adjusted EBITDA improved by $1.8 million and 120 basis points year-over-year, indicating strong profitability improvements [6] - Gross margin for the second quarter was 35.9%, a decline of 480 basis points compared to last year, attributed to tariff-related costs and ramp-up costs for new product launches [28][21] Business Line Data and Key Metrics Changes - Direct-to-consumer (DTC) net revenue for the quarter was $58.9 million, with showroom revenue decreasing by 13.3% due to supply constraints from the Rejuvenate 2.0 launch [27] - E-commerce revenue saw an 11.5% decline during the second quarter, reflecting ongoing softness in that channel [27] - Wholesale revenue was down 13.4% year-over-year, totaling $46.2 million, but showed signs of recovery as the company prepares for significant expansion with Mattress Firm [27][18] Market Data and Key Metrics Changes - The company is experiencing mid-single-digit revenue growth in the current quarter compared to the same period last year, driven by the success of the Rejuvenate 2.0 launch and the Mattress Firm expansion [8][43] - The expansion of the Mattress Firm partnership is expected to significantly increase the company's distribution footprint, with a target of approximately 12,000 slots by mid-August [19][64] Company Strategy and Development Direction - The company is focused on a "path to premium sleep" strategy, emphasizing innovation, product differentiation, and gross margin improvement [10][21] - The recent launch of the Rejuvenate 2.0 mattress collection incorporates new technology aimed at enhancing customer comfort and is expected to drive higher average selling prices [10][12] - The marketing strategy is evolving to focus on brand messaging that highlights the unique benefits of the company's products, moving away from traditional discounting tactics [13][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, anticipating a return to positive adjusted EBITDA driven by new product launches and improved operational efficiencies [7][31] - The company is reaffirming its full-year revenue guidance of $465 million to $485 million, despite a cautious consumer environment [23][31] - Management noted that tariff impacts are being actively managed, with expectations of reduced cost exposure in 2025 compared to previous estimates [22] Other Important Information - The company is currently engaged in a review of strategic alternatives to maximize shareholder value, including potential mergers or sales [25] - Cash and cash equivalents at the end of the quarter were $34.2 million, up from $29 million at the end of the previous year [30] Q&A Session Summary Question: Can you discuss the cadence of sales in the quarter and expectations for acceleration in the second half? - Management noted that April was the slowest month, but sales improved throughout the quarter, with expectations for stronger performance in the second half due to catching up on demand and the Mattress Firm expansion [34][36] Question: How much of the gross margin pressure is one-time in nature? - Management indicated that while some gross margin pressure was due to tariffs and ramp-up costs, they expect to see gradual improvement in gross margin as these costs are mitigated [37][72] Question: What are the expectations for the additional Mattress Firm distribution? - The distribution is expected to generate significant revenue in the back half of the year, with a premium luxe line anticipated to launch early next year [64][65] Question: How is the fulfillment capacity looking going forward? - Management confirmed that fulfillment capacity is improving, with expectations to catch up on demand by mid-August [53][54] Question: What are the priorities for cash generation moving into 2026? - The company plans to focus on expanding its store footprint and investing in internal capital projects to generate the best returns [58][59]