Item 1. Business
Item 1. Business
Introduction
Our mission is to deliver the greatest sleep ever invented.
We began as a digitally-native vertical brand founded on comfort product
innovation with premium offerings, and have since expanded into brick & mortar stores as a true omni-channel brand. We offer a variety
of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets and more. Our products are
the result of decades of innovation and investment in proprietary and patented comfort technologies and the development of our own manufacturing
processes. Our proprietary Hyper-Elastic Polymer gel technology underpins many of our comfort products and provides a range of benefits
that differentiate our products from our competitors. Specially engineered to relieve pressure, maintain an ideal body temperature, and
provide instantly adaptive support, Purple’s patented technology has been tested rigorously within medical and consumer applications
for over 30 years. Originally designed for use in hospital beds and wheelchairs, we adapted this unique pressure-relieving material for
our mattresses, pillows and other cushion products.
We market and sell our products
via our direct-to-consumer channel, which includes Purple.com (our direct-to-consumer e-commerce), Purple showrooms, our customer contact
center and online marketplaces (collectively “DTC”), and our wholesale channel through retail brick-and-mortar and online
wholesale partners.
Our core competencies in design,
development and manufacturing are the foundation of our business. We have integrated our operations to include research and development,
marketing and manufacturing. As a result, we have the ability to rapidly test, learn, adapt and scale our product offerings. In order
to solve complex manufacturing challenges such as large-format injection molding of our Hyper-Elastic Polymer cushioning material, we
designed and produced our own manufacturing equipment including our proprietary and patented molding machinery. These fully customized
machines are unique to Purple and, we believe, can handle both our size and scale requirements. We believe our combination of patents
and intellectual property, proprietary and patented manufacturing equipment, production processes and decades of acquired knowledge create
an advantage over our competitors who rely on commoditized materials, such as foam.
In addition to developing
differentiated products and technologies, we have built a brand that we believe has high customer engagement and avid brand advocates.
We have an experienced marketing team, providing efficient customer acquisition and brand demand development. Our marketing strategy enables
us to market our full product suite to customers, generate frequent interactions online and drive traffic to all channels offering our
products.
Our knowledge of and engagement with consumers across digital and brick
and mortar retail channels is advantageous and increasing. To complement our DTC efforts, we have developed multiple wholesale relationships
with best-in-class retailers in the furniture, mattress specialty, and home décor spaces. Our goal is to provide opportunities
for each customer to learn, shop, and buy in the way that works for them. We believe our differentiated products (including differences
across price, comfort, benefit, marketing strategies, manufacturing capabilities, branding and technology) position us to drive long-term
growth. For the year ended December 31, 2024, our DTC sales accounted for 58.1% of our net revenues, as compared to 58.1% for 2023 and
57.7% for 2022, and wholesale sales accounted for 41.9% of net revenues, as compared to 41.9% for 2023 and 42.3% for 2022.
As of December 31, 2024 we
operate 58 Purple showrooms across the United States as compared to 60 Purple showrooms at the end of 2023 and 55 Purple showrooms at
the end of 2022. We continue to strategically open new showrooms and anticipate continued expansion of our showrooms in the future.
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Industry and Competition
Our
portfolio of products is driven by our commitment to innovating real comfort solutions that meaningfully help people sleep, feel and
live better. Whether it’s getting a better night’s rest or elevating everyday life, we design and manufacture innovative,
differentiated products that put our customers’ comfort first.
Sleep Products
The sleep products category
encompasses a variety of products including mattresses, pillows, bases, foundations, sheets, mattress protectors, blankets and duvets.
Meaningful innovation in sleep products has remained stagnant and limited over the last 150 years. Coil spring mattresses and memory foam,
two of the primary materials underpinning mattress technology today, were invented in the 1860s and 1990s. Latex, water and air mattresses
followed, emerging in the latter part of the 20 th century. The sleep product industry has generally remained complacent until
the introduction of our proprietary Hyper-Elastic Polymer material, which we believe represents a meaningful innovation in pressure relief,
temperature neutrality, responsiveness, durability and limited motion transfer. We believe that our proprietary technology solves problems
that regular mattresses create and has proven that material innovations can have a positive impact on sleep.
Beginning in 2015, the market
for sleep products underwent a fundamental transformation with the rise of e-commerce-based brands and direct-to-consumer distribution.
This market change disrupted the traditional category dynamics and drove the majority of category growth (versus traditional mattress
companies) for several years. Recently, the U.S. sleep product industry has experienced significant consolidation as manufacturers have
acquired both direct-to-consumer companies and brick and mortar retailers to expand profitability through vertical integration and extend
their reach to the consumer to capture more market share. Amidst this changing category dynamic, Purple’s product differentiation
and manufacturing capabilities paired with our strategic mix of showrooms, e-commerce and third-party retailers, has allowed us to gain
share and be a leader in the sleep products category.
In 2022, we acquired Advanced
Comfort Technologies, Inc., dba Intellibed (“Intellibed”), a premium sleep and health wellness company that was a pre-existing
licensee of the founders of some of our technologies. This acquisition resulted in us owning the sole right to use all of our Hyper-Elastic
Polymer technologies in our beds. In addition, the acquisition allowed us to immediately expand into the luxury mattress segment. As a
result, Purple launched two collections in the second quarter of 2023, giving us three collection offerings: Essentials (including the
Purple Flex, The Purple Mattress, and The Purple Plus), Restore (including Restore, RestorePlus, and RestorePremier) and Rejuvenate (including
Rejuvenate, RejuvenatePlus and RejuvenatePremier). We are re-launching the Rejuvenate collection (Rejuvenate 2.0) in the second quarter
of 2025 with a newly innovated grid technology.
In general, direct-to-consumer mattress companies offer convenience,
flexible shipping and returns, and low prices, while leveraging third-party manufacturing and distribution. Materials used by online mattress
retailers include layers of foam cushioning that are assembled, compressed and folded into a box for distribution. This market is highly
fragmented, commoditized and competitive, with customer purchase decisions based primarily on price. Prior to Purple, there has been little
recent success disrupting the premium market, where the majority of category revenue and profit is realized. Competitors in the premium
market include Tempur Sealy and Sleep Number.
While e-commerce home goods purchases have increased over the past
five years, traditional brick-and-mortar retailers command a significant part of the market for mattress products. This part of the retail
market is also highly fragmented and competitive. The leading brick-and-mortar specialty mattress retailer in the United States is Mattress
Firm and the leading furniture store is Ashley Furniture. These national retailers compete with both regional and local retailers as well
as furniture and department stores. Purple has also expanded into many of these regional and local furniture retailers.
Across these channels, some
key factors that impact competition in our industry are comfort feel, product features, reliable logistics and manufacturing capabilities,
marketing efficacy and efficiency, brand differentiation, expertise of sales associates, customer care, pace of innovation and product
roadmap, price of products and services, financial stability and ability to invest in innovation.
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What Makes Purple Different?
We believe we have a particular
set of competitive strengths that differentiate and position us for continued success:
●
History of innovation that produced new comfort technology— We are a company built on innovation and licensing, with more than 30 years of expertise in comfort innovation. Purple is founded upon decades of history-developing innovative comfort solutions, including the invention of our proprietary and patented Hyper-Elastic Polymer technology. Our breakthrough mattress represents what we believe to be the first substantive innovation in the sleep product industry since the introduction of memory foam in 1992. We believe that the unique properties of our technology have resulted in several improvements to existing sleep products that are not addressed by foam, spring or air mattresses.
●
Pressure Relief— Our Hyper-Elastic Polymer technology is designed around the science of column buckling which enables our mattresses to be both firm and soft. This offers support across the body’s larger surface areas, such as the back, while providing pressure relief at local areas or points of pressure, such as the hips and shoulders. We believe Purple’s founders were the first to leverage this technology in mattresses after their success in licensing their proprietary Hyper-Elastic Polymer technology to medical manufacturers for use in wheelchairs, critical care beds and hospital beds. The resulting feel is often described as buoyant and responsive.
●
Temperature Neutral— The Hyper-Elastic Polymer material itself is temperature neutral, with the surface comprised mostly of air, made from thousands of open-air channels. The channels allow for high airflow and dissipation of heat and vapor. This is the opposite of foam beds, which absorb heat from the body and then radiate the heat back, constantly increasing the temperature. Our technology allows for continual sleeping without waking up hot.
●
Responsive— Unlike memory foam, which compresses, gets hard and then takes time to recoil, our Hyper-Elastic Polymer technology is instantly responsive to the body as it moves. It will immediately flex to support the sleeper’s position and spring back into place as the sleeper readjusts during the night.
●
Durable— Hyper-Elastic Polymer material is a highly durable gel that we believe is more durable than most foams. The Hyper-Elastic Polymer technology also has numerous applications beyond mattress products including seat cushions and pillows. Hyper-Elastic Polymer technology is only one of numerous innovations we have developed to produce a range of unique and effective comfort products across the sleep, seat cushion and other categories.
●
Proprietary technologies and manufacturing expertise provide a significant competitive advantage— We believe the combination of patent protection, proprietary manufacturing equipment and decades of accumulated knowledge creates a competitive advantage through barriers to imitation. We have hundreds of granted or pending patents and hundreds of patent filings that cover current and future products as well as proprietary manufacturing equipment we have designed and fabricated. In addition to intellectual property protection of key products and manufacturing capabilities, our team has in depth experience and unique insights derived from inventing and refining proprietary comfort technologies, machines and products. Our patented and proprietary molding processes and machines allow for large-format injection molding of gels efficiently and at scale.
●
Growing a brand with a passionate following— Our brand mirrors our passion for uncompromising performance, quality
and durability, and our dedication to improving lives by delivering better sleep and better comfort. We believe our brand awareness rivals
category leaders. Our brand has extended beyond awareness of individual products and we have successfully marketed our full suite of products
to customers using our omni-channel strategy. We believe our customer satisfaction metrics are amongst the best in the industry, and that
our customers’ high satisfaction with our product has continued to drive “word of mouth” recommendations, one of the
most persuasive ways consumers learn about our products.
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●
Balanced, omni-channel
distribution strategy — We have sought opportunities to expand
brand awareness in brick-and-mortar retailers where our beds can be displayed. Our goal is to support the customer wherever and however
they want to learn, try, and buy. Whether in wholesale, Purple showrooms or our e-commerce channel, we are a leader in the sleep
products market. Our flexible return policies and aggressive expansion into wholesale locations (commonly referred to as “doors”)
and our own showrooms allow for more of our targeted customers to feel and experience our products throughout the purchase process.
In our wholesale channel, we sell most of our products through select national and regional retailers as well as a variety of independent
retail partners throughout the United States. As a result, we believe we will drive accelerated growth in the sleep products industry.
●
Vertical integration enables
nimble design, development and execution — We design and develop our products in-house
and we have extensive research and development capabilities led by a team of engineers, industrial
designers and marketing specialists. The ability to develop and test products in this manner enables
us to not only prototype and deploy new ideas, but also design and develop corresponding manufacturing
equipment and processes. In addition, we continuously refine our production methods to improve product
quality and enhance efficiency. The resulting real-time feedback cycle is a key differentiator compared
to other competitors that outsource many of these functions and lack an integrated approach. In August
2023, we opened an innovation center near our headquarters in Utah to support and accelerate our
ongoing research and development.
Growth Strategies
●
Focus on pioneering new technologies to maintain our competitive advantage. Our strategy focuses on offering a differentiated product that provides unique benefits and higher customer satisfaction, all fueled by our proprietary flexible gel technology. Advancements and innovation in our grid technology has led to a new grid technology marking a significant advancement in our product lineup. Our new DreamLayer grid, stacked with our original grid, creates a unique combination that continues to differentiate us in the market while driving superior comfort and support for an even more premium sleep experience. This upgrade will result in a refresh of our current Rejuvenate line. The new Rejuvenate 2.0 collection launches in the second quarter 2025 through our direct-to-consumer channels, followed by a full wholesale roll-out expected to be complete by the third quarter 2025. In addition, we significantly expanded our distribution of pillows by launching our renowned DreamLayer and Freeform pillows into our wholesale channel.
●
Drive sales by promoting our product differentiation. We started as a brand built on differentiation. In recent years, the category has relied extensively on discount messaging to attract customers, with less focus on product benefits. Our goal is to refocus our messaging to lead with our product differentiation. We intend to effectively articulate the unique qualities of sleeping on our gel grid layer to be more effective and reach more consumers. In our selling channels, we expect refocusing our messaging on promoting our differentiation will drive more and better quality traffic while improving conversion both online and in stores, and increase our share of retailer sales in our wholesale channel.
●
Prioritize gross margin improvements. We expect continued gross margin gains to come from driving cost savings through plant consolidation efficiency gains, supplier diversification efforts, and improved scrap and yield results from continuous improvements efforts. We are also ramping up in-house pillow production, changing vendors for key mattress components like coils and mattress covers and improving our delivery program to drive cost improvements and better deliveries. These savings will enable us to reinvest in innovation and marketing to drive growth.
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Our Products
Our current product portfolio is as follows:
●
Mattresses— Our mattresses utilize the unique benefits of our patented Gelflex Grid technology creating a one-of-a-kind sleep solution that regulates body temperature, allowing you to sleep cooler through the night and soft enough to cradle pressure points while also providing support through localized buckling columns. The columns in our Gelflex Grid mattresses instantly adapt to your body to cradle your hips and shoulders while supporting your spine’s natural alignment for uniquely buoyant, supportive comfort. Our Gelflex Grid products are manufactured with non-toxic ingredients that are third-party tested and free from carcinogenic chemicals. Our patented Gelflex Grid technology is used in all Purple mattresses. We back up the quality and durability of our mattress with a 100-night trial and a 10-year warranty. With our premium mattress collections, the Restore Collection and the Rejuvenate Collection, launched in 2023, we now have three collections that come in a variety of feels and price points to appeal to a wide range of consumers with high satisfaction and delivering best sleep.
●
Pillows— We currently sell eight pillow models, all designed to deliver various sleep preferences and needs. The Purple Harmony™ Pillow, the Purple Freeform™ Pillow, the Purple DreamLayer™ Pillow, the Purple Harmony Anywhere™ Pillow, the Purple Pillow®, the Purple Twin Cloud® Pillow, the Purple Cloud® Pillow and the Kids Pillow®. The Purple Harmony Pillow is the world’s first pillow with a full wrap of honeycomb Gelflex® Grid surrounding a soft, responsive latex core for blissfully cool comfort and responsive airy support. The newly launched Purple Freeform Pillow features the honeycomb Gelflex Grid with an all-new MicroFlex™ Moon Foam fill interior for luxurious, moldable comfort. It is our first fully adjustable pillow as the MicroFlex Moon Foam and optional neck roll chambers can be adjusted for personalized height, firmness and support. The newly launched Purple DreamLayer Pillow uses an all-new version of the Gelflex Grid combined with MicroAir Foam for a dreamy, melt-in comfort that provides contour-hugging support without the heat and delay of a traditional memory foam. The Purple Harmony Anywhere Pillow has all of the advantages and feel of the Purple Harmony Pillow in a portable, take-anywhere travel size. The Purple Pillow is designed entirely of Gelflex Grid for a firmer, no-fluff, ergonomic support with ultimate cooling and adjustable height layers. The Purple Twin Cloud Pillow is a hypoallergenic down-alternative that features our patented cover construction and two chambers of silky, down-like fibers for an extra fluffy, cloud-like comfort with two optional firmness settings. The Purple Cloud Pillow features the same fill as the Purple Twin Cloud Pillow, but a simpler, single chamber design for classic, cloud-like comfort. The Kids Purple Pillow is made entirely of Gelflex Grid, similar to the Purple Pillow, but is smaller and softer for smaller sleepers. We believe our pillows are unique and there is a sleep solution for every type of sleeper to get the best sleep of their life, with no other products in the market like them in appearance, design, functionality or comfort. We also back up the quality and durability of our pillows with a 100-night trial and a one-year warranty .
●
Sheets— Made from stretchy and breathable bamboo-based Viscose, our Purple SoftStretch sheets are designed to maximize the functionality of our mattresses and pillows. We developed our own technology to enable customers to experience the full performance potential of our unique Gelflex Grid mattress (or any other mattress). Our sheet sets include pillowcases that also maximize the unique functionality of our pillows and come in both standard and deep pocket sizes.
●
Waterproof Mattress Protector— Like our sheets, our new Purple Waterproof Mattress Protector mattress is designed to optimize the functionality of our Gelflex Grid in our mattress. Our premium mattress protector is stretchy, breathable and waterproof. It is also stain-resistant and machine-washable, making it easy to clean. All features help keep your mattress looking and feeling like-new.
●
Bases— Our full line-up of smart adjustable bases has been designed to pair
with our premium mattresses for the ideal Purple sleep system experience. The Purple Adjustable Base, the Purple Premium Smart Base, and
the Purple Premium Plus Smart base have a wide range of functions, such as adjustable head and foot positions, zero-gravity preset
for a near weightless feel, a “sitting” preset, under-bed lighting, adjustable legs and a wireless remote with in-app control.
Our platform bed assortment includes the Purple Bed Foundation and the Purple Metal Platform. The Purple Bed Foundation has the look of
a stylish upholstered bed frame and is easy to ship and assemble, with no tools required. Our Purple Metal Platform, with its low-profile
design, features a sturdy steel frame and extra slats to ensure silent, shake-free support for the lifetime of your mattress.
●
Seat Cushions— The evolution of our portfolio of seat cushions has resulted from decades of in-house manufacturing experience including development of proprietary machines and trade secrets, extending the benefits of our Gelflex Grid technology. Purple currently sells four types of seat cushions and one back cushion, all in varying sizes and shapes to meet the needs of our customers.
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Technology
Technology is key to our unique
position within the sleep products industry. The introduction of our proprietary Hyper-Elastic Polymer material was the first major innovation
in the consumer mattress category in decades. Mattresses from our competitors are typically manufactured using one or more layers of springs,
standard polyurethane foam, memory foam, air chambers or latex foam and are undifferentiated from competitors within their product type.
Proprietary Technologies
The Purple innovation team,
through their scientific journey to get to the root causes of pressure sores, designed the Hyper-Elastic Polymer material and other
patented and proprietary comfort technologies in order to improve the lives of “every body.” Each different cushioning product
line requires unique molding techniques.
Our Hyper-Elastic Polymer material
is durable, elastic and can stretch up to 15 times its original size and return without losing its shape. It sleeps and sits temperature-neutral
and has good ventilation to inhibit moisture build-up.
Our Hyper-Elastic Polymer
material is both soft and supportive. While the columns in this structure provide support where it is needed, they also buckle where it
is needed to reduce pressure by allowing shoulders and hips to sink into the cushion with reduced force pushing back on those areas of
the body unlike other cushion technologies. The soft and flexible columns also return to their original position as forces lessen and
are capable of immediately providing support.
Proprietary Machinery
Internally designed, developed
and built, our patented and proprietary molding machines are able to mold our Hyper-Elastic Polymer material into large-format king-sized
mattresses at scale. We have modified other molding machines to manufacture additional products containing Hyper-Elastic Polymer material.
We also acquired in the Intellibed acquisition the patented manufacturing machine and process that had been licensed by our founders,
preventing others from obtaining access to that technology. The process of molding our Hyper-Elastic Polymer material using our molding
machinery is proprietary, patent-protected and complex, requiring specific knowledge and expertise to successfully execute manufacturing.
We have in-house engineering and fabrication capabilities enabling us to design, manufacture, install and maintain new equipment as well
as optimize the performance and efficiency of our existing machinery based on real-time insights gained from our vertically integrated
operations.
Marketing
We have developed a brand
that resonates with consumers. Our marketing efforts are focused on building awareness of the Purple brand and illustrating the unique
way our products deliver better sleep and comfort. We leverage data-driven marketing across all communication channels to engage, acquire,
and retain customers. We also amplify the voices of our evangelical product owners, whose word-of-mouth recommendations are one of our
most powerful (and ownable) marketing vehicles. Deep engagement with current customers enables us to increase additional product sales
across our portfolio of offerings. The success we have achieved through our marketing campaigns has been key to rapidly building our branding
and awareness. We launched our elevated brand positioning in 2023 with the launch of our new products and we believe our premium
brand position will allow us to increase our market share of the premium mattress category going forward.
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Our Sales Channels
We sell our products via our DTC channel, which includes Purple.com
(our direct-to-consumer e-commerce), Purple showrooms, our customer contact center and online marketplaces, and our wholesale channel
through retail brick-and-mortar and online wholesale partners.
Direct-to-Consumer Channel
Our e-commerce distribution
channel is a critical hub for consumer education and consumer engagement, as well as conversion. We have benefited from the rapid growth
of the direct-to-consumer channel in the sleep product industry in addition to our differentiated product offering and unique marketing
campaigns. We sell directly to consumers through our website, our customer contact center and online marketplaces. With our website and
customer contact center, we help customers easily engage in relevant content, research our solutions, transact online or via our customer
contact center, or find the nearest retailer. We believe our online experience expands our brand and connections with consumers, enabling
deeper awareness, engagement and brand loyalty. We believe our 100-night trial, 10-year warranty, attractive financing options, strong
customer testimonials and excellent service provide confidence to consumers buying a mattress.
We operate 58 Purple showrooms
across the United States where consumers can experience our brand, learn and engage with our technology and purchase our products. Over
time, we plan to strategically expand our showroom footprint across the United States.
Wholesale Channel
We sell our assortment of products through brick-and-mortar and online
wholesale partners. We began selling mattresses and other sleep products through our largest wholesale partner, Mattress Firm, in November
2017 and have continued to expand the number of wholesale partners where our mattresses and other sleep products are sold. We now sell
mattresses through Ashley Furniture, Big Sandy, City Furniture, Costco, Denver Mattress, HOM Furniture, Living Spaces, Mathis Brothers,
Mattress Firm, Mattress Warehouse and Raymour & Flanigan, among others. We typically have four to five mattress models on the floor.
Sales associates have been trained and we believe are effective in educating consumers regarding our unique benefits as well as shifting
the mix upward to our more premium and higher-margin mattresses. We expect to continue to grow our placements with wholesale partners
to give our customers the opportunity to feel the difference of our Hyper-Elastic Polymer technology for themselves.
Operations
Factories, Supply Chain and Manufacturing
In August 2024, we initiated
a restructuring plan to strategically realign our operational focus to achieve operations efficiencies that are expected to improve
profitability and provide for reinvesting in technology and marketing initiatives (the “Restructuring Plan”). The Restructuring
Plan is comprised of the permanent closure of both Utah manufacturing facilities to consolidate mattress production in our Georgia plant.
Closure of the two Utah manufacturing facilities is planned to be completed in the second quarter of 2025. Our manufacturing facility in McDonough, Georgia
provides 844,000 square feet of manufacturing and distribution space where we manufacture our proprietary Hyper-Elastic Polymer cushioning
used in our mattress, pillow and seat cushion products. We also have recently opened a 198,000 square foot distribution facility in Salt
Lake City, Utah, that in addition to the McDonough facility, will assemble, package and ship our products. We continually strive to improve
our manufacturing processes and create efficiencies in production through new equipment and process designs and resources. We also manage
our production labor and capacity utilization to promote efficient use of our manufacturing facilities. We believe our McDonough factory
provides ample room to accommodate our future growth and expansion plans for the near term.
We have a number of contract
manufacturers who assemble mattresses and have established a network of third-party logistics providers to help with order fulfillment
across the United States. These arrangements help to minimize delivery times and provide white glove service in addition to parcel services.
We outsource and resell other
products, including adjustable bases, platform bases, sheets, mattress protectors, blankets and duvets. These products unique to Purple
are either designed in-house or in partnership.
We have relationships with
multiple suppliers for our outsourced products and components. These suppliers may be interchanged in order to maintain quality, cost
and delivery expectations.
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Environmental and Governmental Regulation
We are subject to numerous
federal, state, local and foreign consumer protection, retail, environmental, health, safety, import/export, marketing, e-commerce, privacy,
and other laws and regulations applicable to the sleep product industry. As a manufacturer of mattresses and related products, we handle
regulated substances, which subject us to various environmental laws. For example, we are subject to the Toxic Substances Control Act,
the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive
Environmental Response, Compensation and Liability Act, and related state and local statutes and regulations. Our mattress products are
subject to fire-retardant standards developed by the State of California, U.S. Consumer Product Safety Commission and other jurisdictions
where we sell these products.
We
have made and will continue to make capital and other expenditures necessary to help us comply with these laws and regulations. These
expenditures have been immaterial to our financial results. We have not suffered a material adverse effect from non-compliance with federal,
state, local or foreign legislation, but there can be no assurance that material costs or liabilities will not be incurred in connection
with such legislation in the future.
Research and Development
Our research and development
teams are focused primarily on developing new comfort technologies and products. In 2023, we launched our three new premium mattress collections
including our new line of luxury mattresses. We have an extensive history of innovation that is core to our culture and key to our continued
success. Our inventions have culminated over years of persistent research and development. We intend to continue to develop and introduce
new comfort technologies and products. Our vertical integration is a key differentiator that enhances the effectiveness of our research
and development capabilities. By gaining real-time feedback, we can integrate these insights into our manufacturing process, digital marketing,
products and equipment. In order to facilitate further innovation and development, we opened a 61,000 square foot facility in August 2023
located in Draper, Utah that serves as our innovation center.
Intellectual Property
We rely on patent and trademark
protection laws to protect our intellectual property and maintain our competitive position in the marketplace. We hold various domestic
and foreign patents, patent applications, trademarks and trademark applications regarding certain elements of the design, manufacturing
and function of our products. We also maintain protections over proprietary trade secrets. Our intellectual property portfolio is integral
to our continued success in this industry, particularly with respect to our Hyper-Elastic Polymer material as well as our molding processes
and machines.
We own or have the exclusive right to use hundreds of granted or pending
patents and hundreds of patent filings on inventions and designs pertaining to our machines, processes, mattresses, pillows, seat cushions,
packaging techniques and other related existing and future products. Our issued United States patents that are significant to our operations
are expected to expire at various dates up to 2042.
We have several trademarks
registered with the U.S. Patent and Trademark Office (USPTO). Applications are pending for registration of additional trademarks and some
of these listed trademarks for additional classes of goods both in the United States and internationally. Our Purple, No Pressure, Gelflex,
the color purple, and Hyper-Elastic Polymer trademarks are also registered and have applications pending for various classes of goods
in numerous foreign jurisdictions, some of which include Australia, Canada, China, Europe, United Kingdom, Japan and Korea. We also have
several common law trademarks.
Many of the common law marks
have registrations pending with the USPTO and other international jurisdictions. Solely for convenience, we may refer to our trademarks
in this Annual Report without the ™ or ® symbol, but such references are not intended
to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks.
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In addition, we maintain copyrights,
many registered, to past and present versions of purple.com, onpurple.com, equapressure.com, wondergel.com, marketing content, blogs,
logos, graphics, videos and other marketing and promotional materials promoting our products.
While we may own or have the
exclusive rights in this intellectual property it is our responsibility to maintain that exclusivity through intellectual property enforcement
efforts when an infringement occurs. We continue to enforce those intellectual property rights and will continue to do so to maintain
our success in this industry.
We protect and enforce our
intellectual property rights, including through litigation as necessary.
Human Capital
At Purple, our primary focus
is fostering the professional development of our employees through collaboration of engaged teams and helping them feel connected to Purple’s
success. We try to achieve this through maintaining a safe and high-functioning work environment that cultivates an authentic
company culture. Our people initiatives are strategically crafted to enhance the professional growth and overall satisfaction of our employees,
with the overarching goal of making Purple the best place they’ve ever worked.
As of March 7, 2025, we had
approximately 1,200 employees engaged in manufacturing, research and development, general corporate functions, wholesale, e-commerce,
and Purple showrooms.
In
2025, Purple’s human resources team is focusing on four pillars that drive our people strategy: (i) acquire, retain, and develop
great people; (ii) improve organizational performance; (iii) deliver competitive and meaningful pay and benefits; and (iv) celebrate our
people.
Acquire, retain,
and develop great people
We
attempt to strategically acquire, keep and cultivate a talented, motivated, and high-caliber workforce. We believe this will
be achieved by selectively recruiting outstanding talent, tailoring development plans for employees, implementing an accelerated leadership
development program for promising individuals, and building cross-functional career maps.
Improve organizational
performance
We
attempt to drive efficiency, effectiveness, and business success through strategic people initiatives. We will continue to invest
in new technology to enhance communication channels and optimize our human resource information system, enabling self-service functionalities
for managers and employees. In alignment with our core values, we will place emphasis on creating shared experiences that will facilitate
genuine connections and foster strong relationships within our workforce.
Deliver competitive
and meaningful pay and benefits
We
attempt to provide compensation packages that are both competitive and meaningful, encompassing salary and benefits that align to market
standards. We will continue to provide relevant employee perks that connect our employees with our Company’s mission and actively
contribute to nurturing employee engagement.
Celebrate our people
We
attempt to continue to focus on maintaining a culture of recognition where we actively acknowledge and honor the achievements, contributions,
and milestones of our people. Through thoughtful and authentic celebration, we not only create a culture of gratitude, but we will also
foster a sense of belonging and motivation, ultimately strengthening our team cohesion and morale.
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Available Information
Our website address is www.purple.com.
We make available, free of charge on our Investor Relations website, investors.purple.com, all of our reports filed with or furnished
to the Securities and Exchange Commission (“SEC”). The SEC also maintains an Internet website that contains reports and other
information regarding issuers that file electronically with the SEC located at http://www.sec.gov.
We also use our Investor Relations
website, investors.purple.com, as a channel of distribution of additional Purple information that may be deemed material. Accordingly,
investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts.
The contents of our website shall not be deemed to be incorporated herein by reference.
Information About Our Executive Officers
As of the date of this report,
our executive officers are as follows:
Name
Age
Title
Robert T. DeMartini
63
Director, Chief Executive Officer
Todd E. Vogensen
56
Chief Financial Officer and Treasurer
Tricia S. McDermott-Spikes
53
Chief Legal Officer and Secretary
Eric S. Haynor
61
Chief Operating Officer
Jeffrey L. Hutchings
58
Chief Innovation Officer
Jeffery S. Kerby
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Chief of Owned Retail Officer
John J. Roddy IV
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Chief People Officer
Executive Officers
Robert T. DeMartini has
served as Chief Executive Officer since January 2022. Prior to joining the Company, Mr. DeMartini, served as president and chief
executive officer of USA Cycling, Inc., the official U.S. Olympic & Paralympic Committee governing body for all disciplines of competitive
cycling in the United States, from 2019 until 2021. He previously served as president and chief executive officer of New Balance Athletic
Shoes (U.K.) Ltd., from 2018 to 2019 and as president and chief executive officer of New Balance Athletics, Inc. from 2007 to 2018, each
a business unit of New Balance, Inc. a leading manufacturer and retailer of athletic footwear, apparel and accessories. From 1982 through
2007 Mr. DeMartini held various leadership positions with Procter & Gamble, The Gillette Company, and Tyson Foods, Inc. He also currently
serves on the board of directors of Welch’s Foods and Q30 Innovations/Q30 Sports Canada, and formerly served on the board of directors
of Advanced Functional Fabrics of America, The American Apparel & Footwear Association, and Aloha. Mr. DeMartini received a Bachelor
of Science degree in Finance from San Diego State University.
Todd
E. Vogensen has served as Chief Financial Officer since October 2023. Prior to joining the Company, Mr. Vogensen served as executive
vice president and chief financial officer of Party City Holdings Inc. from February 2020 to August 2023. In January 2013, Party
City Holdings Inc. filed a voluntary petition for reorganization relief pursuant to Chapter 11 of the U.S. Bankruptcy Code. Previously, Mr. Vogensen
served as executive vice president—chief financial officer at Chico’s FAS, Inc. from June 2015 to January 2020. He joined
Chico’s FAS in October 2009, and served in roles of increasing responsibility, including senior vice president – finance,
and vice president – investor relations. Previously, Mr. Vogensen served in executive finance roles at Michaels
Stores, Inc., Gap, Inc., Hewlett Packard Company and PricewaterhouseCoopers LLP. Mr. Vogensen received a Bachelor of Science
degree in Accounting from Arizona State University.
Tricia
S. McDermott-Spikes joined Purple in October 2023 and serves as Chief Legal Officer and Corporate Secretary responsible for strategic
oversight of the legal organization, corporate governance, compliance intellectual property, licensing, litigation, insurance and government
affairs. Ms. McDermott-Spikes is a skilled executive, attorney and business leader who brings more than 25 years of expertise in
global retail and manufacturing environments. Prior to joining the Company, from February 2021 to October 2023, Ms. McDermott-Spikes served
as the chief legal & risk officer and secretary at Shoe Show, Inc. Previously, from December 2011 to February 2021, Ms. McDermott-Spikes
was with Perry Ellis International, Inc., where she served in roles of increasing responsibility and last served as general counsel and
secretary from November 2017 to February 2021. Ms. McDermott-Spikes is active in her community, having previously served on the boards
of Teach for America (Miami-Dade), Family Promise of Palm Beach County, the Association of Corporate Counsel (Charlotte), and the U.S.
Patent & Trademark Office, Trademark Public Advisory Committee as an appointee of the U.S. Secretary of State. Ms. McDermott-Spikes
continues her service on the Board of Trustees of the Blumenthal Performing Arts Center in Charlotte, NC, as chair of the Talent, Development
& Retention Committee and member of the Governance Committee. Ms. McDermott-Spikes received a Bachelor of Arts degree in English
and a Juris Doctor degree from Rutgers University along with a certificate in Accelerated Management from Yale University School of Management.
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Eric S. Haynor has
served as the Chief Operating Officer of the Company since June 2022. Prior to joining the company, Mr. Haynor spent most of his career
with Ecolab, a supplier of cleaning, sanitizing and maintenance products and services for the institutional, hospitality, healthcare and
industrial markets, in a variety of end-to-end supply chain roles. From August 2019 until he joined the Company in June 2022 he served
as senior vice president, industrial supply chain at Ecolab providing strategic direction for eight industrial business units. Prior to
that, he held the role of vice president, global equipment operations and strategy from June 2015 to August 2019 at Ecolab. From August
2009 to June 2015, Mr. Haynor led Ecolab’s EMEA supply chain operations and from April 2005 to August 2009 he led Ecolab’s
Asia Pacific supply chain operations. His early career was spent in a variety of developmental supply chain roles. Mr. Haynor is a graduate
of Michigan State University and holds a Bachelor of Science degree in Mechanical Engineering.
Jeffrey L. Hutchings
has served as the Chief Innovation Officer of the Company since May 2022. Mr. Hutchings has more than 20 years of experience in strategic
business leadership in innovation, new product introduction and quality assurance. Prior to joining the Company, Mr. Hutchings served
as chief product officer at Skullcandy Inc., a designer and manufacturer of performance audio and gaming headphones and other accessory
related products, from December 2018 to May 2022 and as vice president of product from June 2015 to December 2018. Prior to that from
July 2010 to June 2015, Mr. Hutchings served in various engineering and director roles at HARMAN International. Mr. Hutchings holds a
Bachelor of Science degree in Computer Engineering from the University of Utah.
Jeffery S. Kerby has
served as the Chief of Owned Retail Officer of the Company since January 2023. Prior to joining the Company, Mr. Kerby served as vice
president, head of stores of Sephora, a retailer of personal care and beauty products, since May 2019, responsible for leading 86 stores
throughout Canada. From March 2018 to January 2019, he served as the senior regional director of American Eagle, a specialty retailer
of clothing, accessories and personal care products, where he led American Eagle/Aerie stores in the Midwest United States and Canada
with 225 stores. Prior to joining American Eagle, Mr. Kerby was with L Brands’ LaSensa, a Canadian retailer of women’s lingerie
and apparel, from February 2017 to March 2018. Prior to that, Mr. Kerby was the vice president, head of stores/store operations for L
Brands’ Victoria’s Secret International from June 2015 to September 2016. From October 2008 to June 2015, Mr. Kerby grew from
director to associate vice president, head of stores for Bath and Body Works. Mr. Kerby holds a Bachelor of Science degree from Washington
State University’s School of Communications.
John J. Roddy IV has
served as Chief People Officer of the Company since October 2021. Mr. Roddy brings to the Company over 20 years of experience in
culture transformation, talent development, organization design and change leadership. Prior to joining the Company, Mr. Roddy served
as the chief people officer for VASA Fitness, a fitness club operator, from 2018 to October 2021. Prior to that he was the chief human
resources officer for SeaWorld Parks and Entertainment, a theme park and entertainment company, from 2016 to 2018. From 2012 to 2016,
Mr. Roddy was the senior vice president of human resources for Luxottica Group. Prior to joining Luxottica Group, he was the vice president
of human resources for Starbucks Corporation from 2004 to 2012. Mr. Roddy holds a Master’s degree from Columbia University
in Organizational Psychology and a Bachelor’s degree in Organizational Behavior from Brigham Young University – Hawaii.
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