Shares of Casper Sleep (NYSE:CSPR) were stumbling today after the mattress maker posted its first-quarter earnings report.
The stock was trading down 11.5% as of 10:57 a.m. EDT even though it was initially higher in pre-market hours.
Despite the onset of the COVID-19 pandemic in mid-March, Casper, a digitally native seller of mattresses and other sleep products, still saw solid growth in the first quarter, which also included its IPO in February.
Sales rose 26.4% to $113 million, which beat expectations of $110.2 million. Direct-to-consumer sales through e-commerce and its branded stores increased 12.8% to $90.3 million, while sales to retail partners jumped 142.9% to $22.7 million as the company has ramped up its wholesale strategy over the last year.
General and administrative costs rose sharply as a percentage of revenue, from 34.5% to 42.7%, to support its new stores, and its adjusted EBITDA loss expanded from $14.3 million in the quarter a year ago to $22.9 million. Net loss on a generally accepted accounting principles (GAAP) basis doubled and Casper reported a per-share loss of $1.23, compared to estimates of an $0.84 loss.
Even with the challenges around COVID-19, CEO Philip Krim expressed optimism, saying: "I am pleased with the solid financial results in Q1 and strong early performance in Q2. Our brand and digital strength have positioned us well to address shifting consumer behaviors."
Like most companies, Casper declined to provide guidance for the current quarter or the year, but the company has seen solid results in April thanks to its e-commerce platform. E-commerce sales were up 35% last month and overall sales rose 15%, even as all of its own stores were closed.
Casper has taken steps to cut costs, laying off 21% of its corporate workforce, closing down its European operations, and scaling back on capital expenditures, which should help it emerge from the crisis more efficient.
The stock was actually up in premarket trading, and it wasn't entirely clear why it reversed. Considering the challenges from COVID-19, Casper seemed relatively well positioned with its e-commerce platform, but the company warned that the recent trends that have favored online retail may not persist. As a maker of big-ticket, discretionary, durable goods, Casper is also the kind of company that generally sees sales pull back in a recession. Given the plunging economic indicators, the market may be assuming that there is pain ahead for the recent IPO.