Daily News
From Home Furnishing Business
Sleep Number Corp. Announces Second Quarter 2023 Results
July 30,
2023 by HFBusiness Staff in Business Strategy, Industry 
Sleep Number Corporation reported results for the quarter ended July 1. “As we continue to navigate a challenging macro environment, our business is well positioned for growth,” said Shelly Ibach, chair, president and CEO, Sleep Number.
“Demand has steadily improved year-to-date, and we expect this trend to continue in the back-half of the year as we benefit from the launch of our entire next generation smart bed portfolio, the Climate360 smart bed, and the advancement of our ‘Sleep Next Level’ advertising campaign with the start of the NFL season.”
“We have taken actions across the business to drive efficiencies and remain on track to expand margins and generate more than $100 million in cash from operations in 2023.”
Sleep Number also announced the appointment of Francis Lee to Executive Vice President and Chief Financial Officer.
Second Quarter Overview
Net sales decreased 16% to $459 million, with demand down mid-single digits; demand improved throughout the second quarter, although slightly below expectations
Gross margin was 57.6% and in line with our expectations; as a reminder prior year second quarter results benefitted from the delivery of more than $100 million in margin-rich backlog
Operating expenses were reduced by $22 million to $253 million compared with $275 million last year
Earnings per diluted share of $0.03 compared with $1.54 for the same period last year
Year-to-Date Overview
Net sales decreased 8% to $985 million, with demand down high-single digits versus prior year
Gross profit decreased to $575 million compared with $627 million for the prior year; gross margin rate of 58.3% was consistent with the same period last year and up 290 bp versus the back half of last year
Operating income of $37 million compared with $54 million last year, with an 8% decline in gross margin dollars, partially offset by a $36 million reduction in operating expenses
Earnings per diluted share of $0.54 compared with $1.60 for the same period last year
Cash Flows Overview
Net cash from operating activities of $19 million for the first six months of the year, compared with $29 million for the same period last year
Leverage ratio of 4.7x EBITDAR at the end of the second quarter versus covenant maximum of 5.0x
Adjusted ROIC of 12.3% for the trailing twelve months
Financial Outlook
The company updated its full-year 2023 diluted EPS outlook to a range of $1.25 to $1.75. The 2023 outlook assumes net sales are down low to mid-single digits versus the prior year and gross margin improvement of more than 150 basis points versus 2022. The company expects to generate more than $100 million of operating cash flow for the year and positive free cash ows. The company anticipates 2023 capital expenditures of $50 million to $60 million.
Conference Call Information
Management will host its regularly scheduled conference call to discuss the company’s results. To access the webcast, please visit the investor relations area of the Sleep Number website at https://ir.sleepnumber.com. The webcast replay will remain available for approximately 60 days.