Shares of Purple Innovation (PRPL) - Get Purple Innovation, Inc. Report dropped Tuesday after the mattress company slashed its sales and pretax-earnings forecast for the current quarter due to production issues.
The Lehi, Utah, company also withdrew its full-year guidance after reporting problems getting machinery back online after an accident and safety upgrades.
The company expects to have production fully back online by mid-July.
At last check shares of Purple Innovation dropped 4.9% to $26.58. They've traded on Tuesday as low as $25.60, off 8.4%.
Safety improvement involving its Mattress Max production machines should reduce output for about 10 weeks, Purple said. That in turn will cause shipment backlogs and hurt second- and third-quarter revenue.
The company now expects second-quarter revenue of $175 million to $185 million, below FactSet's consensus estimate of $205 million. The company also now expects gross margin between 43% and 45%.
The company says the hiccup should not affect completion of its scheduled addition of new Max machines.
It also says it is confident that its current production issues are an isolated event and won't stop it from scaling beyond 2021.
For the first quarter, Purple reported earnings of 17 cents a share as revenue ran up 52% to $186.4 million. Analysts were expecting earnings of 12 cents a share on revenue of $175.4 million.
Purple is holding a virtual investor and analyst meeting Tuesday afternoon at 1 p.m. U.S. Eastern to detail the company's issues and plan going forward, according to a Securities and Exchange filing today.