‘We’re not here to make no more money’: Casper’s new CEO on the way forward

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With new leadership in place following its exit from the public markets, Casper is focusing its strategy around one thing: becoming profitable.

“We’re not looking to make money anymore,” CEO Emilie Arel said at the eTail conference in Boston last week.

Ariel took over the role of general manager of founder Philip Krim in November when the company announced it would be taken private by private equity firm Durational Capital Management. She first joined mattress brand DTC as president and chief commercial officer in late 2019, just months before Casper filed an initial public offering.

The brand had only been present in public markets for just over a month before a pandemic upended nearly every aspect of the retail industry. At the same time, the brand – which had revealed its net loss exceeded $92 million in 2018 – focused on cost reduction, which included reducing its marketing spend.

But as consumers were forced to spend more time at home early in the pandemic, they began to invest more in their personal spaces. Other home retailers were “pushing money into” their marketing budgets, Arel said. “We miscalculated. We made the wrong choice as a management team. And so our competitors have passed us.

Casper, like many other DTC brands, has struggled to achieve profitability despite increased demand in the home sector. As his turnover increased 13% in fiscal year 2020, the brand the net loss is around 90 million dollars. Meanwhile, its marketing spend was $156.8 million, representing more than 30% of its total revenue for the year.

Its financial situation, coupled with the challenges of industry-wide supply chain issues, led Casper to sign a deal to go private.

“It was a very quick transaction. Really, no one in the business knew what was going on,” Arel said. “My #1 priority was making sure people understood what going private meant, what what private equity was, why it was a very good thing for us and our balance sheet.”

Today, as a private company, the brand is focused on controlling costs, including reducing its marketing spend and leaning into its core product.

Over the past few years, Casper has gone beyond mattresses to products like dog beds, pillows, a smart night light and even CBD gummies intended to help consumers fall asleep – all in an effort to capture more of what he called “the sleep economy.”

“Part of the problem with Casper over the last few years was the shiny penny syndrome. ‘Oh, that’s very interesting. Let’s do this. It’s very confusing for people,” Arel said. From now on, the brand focuses solely on the mattress business.

“The strategy was to be the Nike of sleep,” Arel said. “No one knows what that means. It sounds very exciting, but difficult to execute. We weren’t making any money. We are not non-profit… Venture capital money no longer falls from the ceiling, we have to be very specific about what we are working on. And so going from being a lifestyle brand — being kind of a sleep Nike, selling to everyone — to, “We’re a mattress retailer.”

“The strategy was to be the Nike of sleep. Nobody knows what that means. It sounds very exciting, but difficult to execute.”

The brand has also undergone changes in its staff and management to have the right team in place to lead it into the future, especially now that consumers are starting to cut back on discretionary spending. “Getting a business from zero to $50 million is very different from growing a business from $500 million to a billion,” Arel said.

The mattress category often shows signs of inflation and economic turmoil before other sectors, as consumers will scale back large purchases first. “It’s the worst mattress market in over 20 years… We have to focus on what we can control and that’s cost.”

That, Arel added, means the brand won’t be opening new stores anytime soon. Casper – who previously announced his intention to operates 200 stores across North America – has 73 stores right now and it will “stay there” at that number for at least a year due to the fact that its stores are very expensive to build.

“We didn’t build them efficiently,” she said. Even still, the brand sees value in its physical presence: “The store is the best representation of our brand. This is the best way to show all our products. It’s the experience that we can physically control,” Arel said, pointing to the fact that almost 80% of mattress purchases are from a place where you can test them.

“These should be able to be profitable stores. They were run like showrooms in the past. So we made small changes, which are really big changes, like putting store associates on commission,” she said.

And while the brand’s strategy around cost control and focusing on the “hard stuff” may not be “exciting”, Arel said “a culture of frugality is very important”.

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