Sleep Number's Strong Performance

In a market where the mattress industry faces challenges, Sleep Number Corp. stands out with a remarkable performance in the fourth quarter of the year. The company's stock surged over 8% in the extended trading session on Thursday after announcing a narrower quarterly loss and sales that exceeded estimates.

Positive Outlook Amidst Adversity

Chief Executive Shelly Ibach expressed optimism about the company's progress despite the challenging consumer environment. With swift actions to boost demand and cut costs, Sleep Number managed to outperform its own expectations in the last quarter.

Financial Snapshot

Sleep Number reported a loss of $15 million, or 68 cents per share, for the fourth quarter. This contrasts with earnings of $37 million, or $1.60 per share, in the same period last year. However, analysts anticipated a loss of 88 cents per share. Adjusted for one-time items, the company's loss stood at 58 cents per share.

Sales totaled $430 million, marking a 14% decline. While demand dipped slightly year over year, it still surpassed the FactSet consensus of $421 million.

Outlook for 2024

Despite challenges in the market, Sleep Number projects continued pressure on mattress demand throughout 2024. The company forecasts adjusted Ebitda between $125 million and $145 million for the year, anticipating net sales to decline in the mid-single digits.

Streamlining Operations

Sleep Number's restructuring initiatives have been yielding positive results, with operating expenses reduced by $85 million in the previous year. The company aims for an additional cut of $40-$45 million in operating expenses for the current year. By the end of 2023, Sleep Number had 4,100 employees, reflecting a 7% decrease compared to 2019.

Market Performance

While Sleep Number's shares have declined by 68% over the past year, it is noteworthy that the S&P 500 index rose approximately 27% during the same period.