Casper Sleep Shares Slump After Results Miss Estimates

Casper Sleep shares fell after the mattress maker on Monday posted weaker-than-expected third-quarter results.
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Shares of Casper Sleep  (CSPR) - Get Report fell on Monday after the mattress maker reported third-quarter results that missed analysts' expectations.

Shares of Casper at last check were down 18% to $6.09.

The New York company narrowed its net loss to $15.9 million or 40 cents a share, from $23 million, or $2.16 a share, in the year-earlier period. 

Shares outstanding nearly quadrupled to 40.1 million from 10.6 million. The company went public in early February.

Revenue declined 3.3% to $123.4 million from $127.6 million. 

A survey of analysts by FactSet produced consensus estimates of a GAAP net loss of 36 cents a share on revenue of $145.9 million.

The results "don’t fully reflect the health and potential of our business," said Chief Executive Philip Krim in a statement.

"Challenges in our supply chain, including industrywide shortages in textiles and chemicals critical to foam production, led to significant out-of-stock inventory both in our direct-to-consumer and retail partnership channels. 

"Many of our core mattresses were out of stock on our website for weeks at time and we were unable to monetize the full demand from retail partners leading to cancelled orders."

Inventory for the three months ended Sept. 30 was down 13% to $34.2 million from $39.3 million at the end of last year.

Gross-profit margin in the quarter widened 4.8 percentage points to 55.5%.

The company recorded restructuring expenses of $200,000 related to its efforts to cut costs and exit its European operations.

"We have made significant progress addressing some of our supply chain challenges," Krim said. 

"Specifically, we have on-boarded new Tier 1 and Tier 2 suppliers and vendors; we are putting in place redundancies across key supply chain points and implementing improved inventory planning; and we are actively building up our safety stock, which will help protect against further disruptions. 

"We believe the worst of our supply chain disruptions are behind us, and we are well-positioned going forward."

At present, the company has reopened all of its 66 stores in the U.S. following the temporary closure due to covid-19 in mid-March. 

In the fourth quarter, Casper expects to increase revenue by 7% to 15% and generate $132 million to $142 million. FactSet's survey of analysts is looking for $143 million.

In the quarter Casper appointed a new chief financial officer, Mike Monahan, who joined the company on Aug. 31.