Sleep Number's shares surged despite a wider fourth-quarter loss than anticipated and a projection of weak demand for the coming year.

In recent trading, the stock rose by an impressive 36% to $15.04, now in positive territory year-to-date.

Forecast for 2024

The bed manufacturer indicated that it foresees ongoing pressure on mattress industry demand throughout 2024. Sales are expected to decrease by mid-single-digit percentages, with overall demand dropping in the low-single-digit range.

Fourth Quarter Performance

In the fourth quarter, Sleep Number reported a loss of $1.12 per share, surpassing analysts' predicted loss of 88 cents per share base on FactSet data.

However, the company exceeded expectations on the revenue front. Quarterly sales decreased by 14% to $430 million, outperforming projections of a larger decline to $420.8 million.

Operational Improvements

Gross margin saw improvement during the quarter due to increased prices, lower commodity costs, and operational cost reductions, which offset higher promotional expenses.

Adjusted for $16 million in restructuring costs, the quarterly loss per share was 58 cents. This outperformed analysts' anticipated adjusted loss of 80 cents per share, as per FactSet.

"While the mattress industry faces challenging consumer conditions, our proactive efforts to boost demand and minimize expenses enabled us to achieve better results in the fourth quarter than initially expected," stated Chief Executive Shelly Ibach.

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