Sleep Number Q4 2023 Earnings Report
Key Takeaways
Sleep Number's Q4 2023 results showed a 14% decrease in net sales to $430 million, but gross margin improved by 190 bp to 56.6%. The company reduced operating expenses by $24 million and reported a loss per diluted share of $1.12, or an adjusted loss of $0.58 excluding restructuring costs. Full-year net sales decreased by 11% to $1.89 billion, with an adjusted loss per share of $0.14.
Net sales decreased 14% to $430 million, with demand down low-single digits year-over-year.
Gross margin increased 190 bp to 56.6% due to pricing actions, easing commodity prices, and cost reductions.
Operating expenses decreased by $24 million to $247 million before restructuring charges.
Loss per diluted share was $1.12, with an adjusted loss per share of $0.58 excluding restructuring costs.
Sleep Number
Sleep Number
Forward Guidance
The company expects mattress industry demand to remain pressured in 2024. Against this backdrop, the company expects adjusted EBITDA of $125 million to $145 million in 2024, with net sales down mid-single digits versus prior year on a low-single digit demand decline. The company expects approximately 100 basis points of gross margin rate improvement and $12 million of restructuring charges for the year. The company expects to generate $60 million to $80 million of free cash flow with capital expenditures of $30 million.
Positive Outlook
- Expects adjusted EBITDA of $125 million to $145 million in 2024
- Anticipates approximately 100 basis points of gross margin rate improvement
- Plans for $12 million of restructuring charges for the year
- Expects to generate $60 million to $80 million of free cash flow
- Capital expenditures of $30 million
Challenges Ahead
- Mattress industry demand is expected to remain pressured in 2024
- Net sales are expected to be down mid-single digits versus prior year
- Demand decline is expected to be low-single digit
- Consumer environment remains challenging for the mattress industry
- Restructuring costs of $15,728,000 were recorded in Q4