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CASPER: Popular DTC Brand, Unprofitable Business, Sells for $286 Million to Private Equity

By November 17, 2021No Comments

$1.1 BILLION is what Capser was valued at in its private round valuation. The sleep company, mainly known for selling its popular mattresses and being part of the DTC movement that has sweetheart names such as Warby Parker and AllBirds has known gone private again selling to private equity for $286m.

There’s a lesson to be learned here for entrepreneurs and investors alike. No matter how much money you inject into a company, if theres no roadmap for a solid economic model and good metrics to lay that foundation, money isn’t always the solution. High valuations can be tricky.

Third Quarter 2021 Financial Highlights (as compared to the quarter ended September 30, 2020)

  • Revenue increased 26.8% to an all-time quarterly record of $156.5 million;
    • Direct-to-Consumer revenue, inclusive of Casper’s 72 retail stores and e-commerce channel, increased 6.7% to $96.5 million;
    • Retail Partnership revenue increased 78.6% to $60.0 million;

  • Gross Profit decreased $4.6 million, or 6.7%, to $63.9 million;

  • Net Loss increased by $9.4 million, or 59.4%, to $25.3 million, inclusive of a $2.4 million one-time lease write-off charge;

  • Adjusted EBITDA loss of $12.1 million, compared to a loss of $7.5 million; and

  • Cash and cash equivalents were $43.1 million on September 30, 2021.

[From 3Q company press release] Commenting on the third quarter 2021 results and proposed transaction, Casper’s Chief Executive Officer, Philip Krim, said, “Our strong top-line growth of 26.8% and ability to onboard additional world-class retail partners, such as Sleep Country, continues to underscore the strength of our brand and value proposition of our award-winning mattresses and sleep products. However, ongoing industry-wide supply chain challenges are resulting in sustained inflationary pressures across the industry impacting our ability to meet demand effectively and efficiently and impairing the Company’s liquidity position.

We suspect, as the rest of the industry, Casper also really felt the wrath of the iOS privacy change that allowed the business to target consumers on social platforms such as Facebook and Instagram.

Between that and it’s supply chain issue as cited in the PR, it found itself in a very challenging environment that it couldnt defend its valuation therefore making a move to provide value it its shareholders most likely forecasting tougher quarters ahead.

Pablo Palatnik

Pablo Palatnik

Pablo Palatnik is an industry veteran in e-commerce & digital marketing with over 20 years experience. He successfully built and sold businesses; he now serves as the VP of Global E-Commerce for cosmetic dermatology brand DS Laboratories. Pablo is the Founder of Etrend.com.

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