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Dec 30, 2023
Sleep Number Q4 2023 Earnings Report
Sleep Number reported a decrease in net sales but an increase in gross margin for the fourth quarter of 2023, while also reducing operating expenses and workforce.
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