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With new leadership in place after exiting the public markets, Casper is focusing its strategy on one thing: profitability.
“We’re no longer in the business of not making money,” CEO Emily Arell said at eTail’s Boston conference last week.
Arel He took over as CEO In November, founder Philip Krim announced that the company would be taken private by the private equity firm Durational Capital Management. She joined the DTC mattress brand as president and chief commercial officer in late 2019, a few months before Casper’s initial public offering.
The brand was only in public markets for about a month before the pandemic upended every aspect of the retail industry. At the same time, the brand – which reported a net loss of more than $92 million in 2018 – is focused on cutting costs, which includes scaling back its marketing costs.
But as consumers were forced to spend more time indoors in the early days of the pandemic, they started investing more in their personal space. Other retailers in the country “were pouring money into” their marketing budgets, Arel said. “We made a miscalculation. As a leadership team, we made the wrong call. And our competitors are better than us.
Casper, like other DTC brands, has struggled to achieve profitability despite rising domestic demand. As the income grows 13% in fiscal 2020, brand loss reached $90 million. At the same time, the transaction cost is 156.8 million dollars, which is more than 30% of the total income of the year.
The financial situation, coupled with the challenges of industry-wide supply chain problems, led Casper to contract to go private.
“It was a very quick transaction. “No one really knew what was going on in the company,” Arel said. “My No. 1 priority was to make people understand what going private meant, what private equity meant, why it was a great thing for us and our balance sheet.”
Now as a private company, the brand is focused on controlling costs, including reducing marketing spend and focusing on its core product.
Over the past several years, Casper has moved beyond mattresses into products such as dog beds, pillows, and more. Smart night light And in fact CBD resins Intended to help consumers sleep – all to capture a greater share of the so-called “sleep economy.”
“Part of the issue at Casper over the last few years has been the shiny penny syndrome. Oh, that’s so fun. Let’s go do that.’ That’s very confusing for people,” Arel said. Now, the brand is solely focused on being a mattress retailer.
“The strategy was to be a sleeping Nike,” said Arel. “No one knows what this means. That sounds like a lot of fun, but it’s hard to execute. We were not making any money. We are not a non-profit… VC money is not falling from the roof, we need to be unique in what we do. And from being a lifestyle brand – from being the Nike of sleep, selling to everyone – to saying ‘We’re a mattress retailer’.
“The strategy was to be a sleeping Nike. No one knows what it means. That sounds like a lot of fun, but it’s hard to execute.
The brand has made changes in its people and management to build the right team to lead it forward, especially now that consumers are starting to pull back on discretionary spending. “Taking a company from zero to $50 million is a lot different than taking a company from $500 million to a billion,” Arel said.
The mattress category often shows signs of inflation and economic turmoil before other sectors as consumers first pull back on spending on big purchases. “This is the worst mattress market we’ve seen in over 20 years … We have to focus on what we can control and that’s costs.”
That, Arel added, means the brand won’t be opening new stores anytime soon. Casper – who previously announced the plan They operate 200 stores in North America – It currently has 73 stores and with this number they will “sit there” for at least a year because the stores are very expensive to build.
“We didn’t build them efficiently,” she said. Still, the brand sees value in physical presence: “The store is the best representation of our brand. It’s the best way to showcase all our products. It’s an experience we can physically control,” said Arell, noting that nearly 80% of mattress purchases are made where you can try it on.
“These stores have to be able to be profitable. They used to be run like showrooms. So we’ve made small changes, which are really big changes, like putting store associates on commission,” she says.
And while the brand’s strategy of controlling costs and focusing on the “hard stuff” may not be exciting, Arel said, “a culture of frugality is very important.”
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