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Sep 30, 2023
Sleep Number Q3 2023 Earnings Report
Sleep Number's Q3 2023 performance was impacted by a sudden deceleration in consumer demand, leading to a net sales decrease. The company responded by implementing cost reduction measures, recalibrating sales and marketing strategies, and amending their credit agreement.
Key Takeaways
Sleep Number reported a challenging third quarter with a 13% decrease in net sales to $473 million due to an abrupt slowdown in consumer demand. The company initiated additional cost reduction actions and amended its credit agreement to navigate the challenging environment. They updated their full-year EPS outlook to a loss of up to $0.70 per share.
Net sales decreased by 13% to $473 million compared to the prior year.
Loss per diluted share was $0.10, compared to earnings per diluted share of $0.22 last year.
Gross margin increased by 130 basis points to 57.4% due to pricing actions and easing commodity prices.
The company initiated approximately $50 million of additional operating expense reduction actions for 2024.
Forward Guidance
The company updated its full-year 2023 diluted EPS outlook to a loss of up to $0.70 per share. The 2023 outlook assumes net sales are down low double digits versus the prior year, with approximately 100 basis points of gross margin rate improvement year-over-year. The company anticipates 2023 capital expenditures of approximately $60 million.
Positive Outlook
- Gross margin rate improvement of approximately 100 basis points year-over-year.
Challenges Ahead
- Full-year 2023 diluted EPS outlook updated to a loss of up to $0.70 per share.
- Net sales are expected to be down low double digits versus the prior year.
- Includes an estimated $10 million, or $0.35 per share, of restructuring charges to be recorded in the fourth quarter.
Historical Earnings Impact
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