LEHI, Utah – Bedding brand Purple Innovation will consolidate its mattress manufacturing into one factory in Georgia, shuttering two facilities located in its home state of Utah.
Purple factories in Salt Lake City and Grantsville, Utah, will close, and the company plans to open a distribution center in Utah in February that will include light assembly. All manufacturing will be shifted to the 850,000-square-foot factory in McDonough, Ga.
In addition to the factory closures, Purple is reducing positions in its corporate headquarters. Rob DeMartini, Purple CEO, told Furniture Today that fewer than 300 employees will be affected by the restructuring.
“Today is a sad day for the people that this causes disruption for,” he said. “There is a lot of passion for this company and what we do.”
DeMartini said Purple has offered employees the opportunity to relocate to Georgia where their tenure, compensation and position would be honored. The company has also offered “100% financial assistance to relocate.”
As part of the plan, the company will retain its headquarters in Utah, maintain research and product development at its Innovation Center opened last year in Draper, Utah, and retain its four showrooms in the state.
“This is not a defensive move, but an offensive move so that we can invest in innovation and marketing at a greater rate. We are preparing for better demand,” he said. “I’ve been wrongly waiting for the market to improve, and it hasn’t. We will increase our marketing and innovation spend today.”
The Georgia factory, announced in 2020, is Purple’s first facility outside of Utah and houses production, fulfillment and customer service. The company, located about 30 miles Southwest of Atlanta, announced an expansion to the factory a year after its opening.
“We are not doing this because we have to,” DeMartini told Furniture Today. “We are not out of cash. We have turned the corner where our cash balance is fine. We still have the ability to triple our business with the single factory.”
DeMartini said the Georgia facility is younger, offers a larger footprint with the ability to expand to 1 million square feet and is where Purple manufactures its new grid technology.
Operations for employees will end Oct. 1, and they will be paid through Oct. 22 under the U.S. Worker Adjustment and Retraining Notification Act that requires employees be given 60 days’ notice of plant closings. DeMartini said employees will also be given severance based on their tenure with Purple.
The company said it expects the restructuring to be complete by early 2025 and to generate $15 million to $20 million in EBITDA benefit on an annualized run-rate basis starting in 2025. Purple expects to incur restructuring costs of $35 million to $45 million, beginning in the third quarter of 2024 through the second quarter of 2025, of which, $26 million to $32 million is non-cash.
The restructuring actions do not change Purple’s previously stated full-year guidance for 2024. In its second quarter earnings results, Purple revised its revenue outlook to the range of $490 million to $510 million, down from its previous outlook of $540 million to $560 million.
“This decision was not made lightly,” DeMartini said. “Over the past year, we have driven savings through manufacturing efficiency and supply chain initiatives, and we are confident that the consolidation of our manufacturing footprint is an important step to advance our grid innovation and build momentum with our ‘Path to Premium Sleep’ strategy, which will set Purple up for positive operating cash flow and market share growth over the long-term.”