Specialty bedding manufacturer and retailer Sleep Number Corp. said second-quarter sales slid 11% to $408.4 million amid what the company described as a “prolonged industry recession.”
The Minneapolis-based company also recorded a net loss of $5.05 million, or 22 cents per share, in the quarter, but its gross margin jumped 1.5 percentage points to 59.1%.
Shelly Ibach, chair, president and CEO, said the improvements in gross margin and free cash flow, as well as reduced operating expenses, were recorded despite a more challenging sales environment than expected.
“In this environment, we continue to prioritize paying down debt and reducing leverage,” Ibach said. “Our more durable operating model is enabling us to effectively navigate the persistent macroeconomic headwinds and prolonged industry recession, while positioning us for even greater profitability when the industry recovers.”
She said the company is reiterating an earlier forecast of $125 million to $145 million of earnings before interest, taxes, depreciation and amortization for 2024. Sales are expected to be down in the mid-single digits for the year, including a low single-digit decline in the second half.
For the first half of 2024, sales fell 10.8% to $878.9 million. The net loss totaled $12.5 million, or 56 cents per share. In the first half of 2023, Sleep Number posted a net income of $12.2 million, or 54 cents per share.
Thus far in 2024, 88% of Sleep Number’s sales have come from its company-owned retail stores. The remaining 12% of sales were primarily from online and phone orders.
The company ended the second quarter with 646 retail stores, down from 672 units at the end of the second quarter of last year.
The average sales per store fell to $2.73 million from $3.09 million in last year’s second quarter.
Read more on Sleep Number quarterly results: Sleep Number Sales Decrease in 4th Quarter.
