Casper's IPO documents reveal big losses due to returns - Business Insider

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Casper, the buzzy mattress seller adored by millennials, has a costly returns problem that could be a nightmare for its IPO

. That's about 20 cents out of every dollar in sales the company took in, including those that it ultimately refunded.

For its part, Casper has recognized that returns represent a significant issue. Reducing returns was one of the top initiatives it listed in its public offering document for improving its financial results. But purchasing a mattresses without feeling it first would seem to be a tough sell for many consumers. Mattresses are among the most expensive products consumers buy, and people tend to hold on to them for years and years. What's more, people's tastes in mattresses tend to be idiosyncratic; some like firmer mattresses, others harder ones. Few would want to get stuck with a mattress that doesn't meet their needs.

As return costs have risen, Casper has repeatedly upped the amount it sets aside for them. Its return reserve stood at $8.6 million at the end of 2018 and $5.3 million at the end of 2017.

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