Mattress and sleep products maker
Casper Sleep NASDAQ: CSPR stock is slow grinding down as shares continue to sell-off despite raising its Q2 2021 top-line estimates. The maker of direct-to-consumer (DTC) sleep products is improving its
supply chain issues as it looks to parlay its
pandemic gains moving forward.
Mattress companies have been strong benefactors of the pandemic but thrive to become cornerstones in the post-pandemic new normal. The Company competes against the likes of giants like
Sleep Number NASDAQ: SNBR and
Temper Sealy NYSE: TPX. Casper has underperformed against these competitors but seeks to capitalize on its niche with the millennial and gen-z demographic. round. The acceleration of
COVID-19 vaccinations has sped up the
re-openings which should continue to boost foot traffic in its brick and mortar stores. Casper seeks to continue bolstering its retail channel to ride this tide. Prudent investors seeking a low-priced DTC niche player in this industry can watch Casper shares for opportunistic pullbacks levels to gain exposure.
Q1 FY fiscal 2021 Earnings Release
On Feb. 24, 2021, Casper released its first-quarter fiscal 2021 results for the quarter ending March 2021. The Company reported an earnings-per-share (EPS) loss of (-$0.52) excluding non-recurring items versus consensus analyst estimates for a loss of (-$0.52). Revenues rose 13% year-over-year (YoY) to $127.7 million, beating consensus analyst estimates for $123.46 million. Casper ended the quarter with $61.6 million in cash and cash equivalents. CEO Phillip Krim stated, “Our third party manufacturing model is enabling us to effectively navigate industry-wide supply chain challenges as we meet growing demand for our products. As a result, we continued outpacing the overall mattress industry, generating first-quarter North American revenue growth of 20% year-over-year, including 54% growth in the retail partnership revenue… In the second quarter, we continue to successfully execute on our three core strategic priorities including expanding our product offering with the launch of our new Casper Cooling Collection, increasing brand awareness with the introduction of the new ‘Love Your Tomorrow’ brand platform and growing points of retail distribution. We continue to see strong demand signals across our business and expect top-line growth to accelerate in the coming quarters and are raising our full year 2021 financial outlook to reflect these favorable trends.”
Raised Q2 2021 Guidance
Casper expects Q2 2021 revenues between $146 million to $153 million versus $133.76 million consensus analyst estimates. The Company expects full-year 2021 revenues between $580 million to $610 million versus analyst expectations for $592.46 million.
Conference Call Takeaways
Casper CEO Philip Krim set the tone, “During the first quarter, we saw industry-wide shortages in raw materials needed to produce mattresses. Despite this, our inventory management strategies and third-party manufacturing model enabled us to effectively navigate these supply chain challenges. We allocated production and worked with our partners to remain largely in stocks. As these shortages subside, we expect to capture more of the increased demand we are seeing in the market.” He went on to highlight the gross margin expansion of 540 basis points to 52.2% YoY. He mentions that the total addressable market (TAM) is $80 billion in just the U.S. CEO Krim gave details on the Casper Cooling Collection premium line of cooling mattresses and sleep products “with the brand’s most technologically advanced temperature solutions for night time overheating, one of the leading concerns among consumers shopping for mattresses.” It features the proprietary Snow Technology, the result of 18 months of research. The initial launch saw nearly one-third of Wave Mattress customers upgraded to the Snow Technology and Hyperlite sheets.
CSPR Opportunistic Pullback Price Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for CSPR stock. The weekly rifle chart uptrend is losing steam as the 5-period moving average (MA) slopes down at $9.04 and the 15-period MA overlaps the $8.48 Fibonacci (fib) level. The weekly market structure high (MSH) triggered on the breakdown under $10.03. The weekly market structure low (MSL) buy triggered above $7.16. The daily rifle chart has a slow grinding downtrend with a falling 5-period MA at $8.31 and 15-period MA at $8.75. The daily lower BBs are at $6.89. The daily stochastic has been smothered under the 20-band excessively on the $9 price break and is attempting a cross up nearing the 10-band. Opportunistic pullback levels sit at the $8.11 fib, 7.61 fib, $7.18 fib, $6.66 fib, $6.26 fib, and the $5.91 fib. Upside trajectories range from the $10.30 fib up towards the $14.61 fib.
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