Core Insights - The article emphasizes the importance of the Zacks Rank system, focusing on earnings estimates and revisions to identify strong stocks [1] - Value investing is highlighted as a popular strategy for finding undervalued stocks across various market conditions [2] Company Analysis: Sleep Number (SNBR) - Sleep Number (SNBR) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is a strong pick for value investors [3] - The company has a Price-to-Sales (P/S) ratio of 0.14, significantly lower than the industry average of 0.41, suggesting it may be undervalued [4] - SNBR's Price-to-Cash Flow (P/CF) ratio is 4.96, which is also favorable compared to the industry's average of 6.76, indicating a solid cash outlook [5] - The metrics suggest that SNBR is likely undervalued, especially when considering its strong earnings outlook [6]

Core Viewpoint - Sleep Number (SNBR) has experienced a downtrend, losing 7.9% over the past week, but a hammer chart pattern suggests a potential trend reversal as buying interest may be emerging to counteract selling pressure [1][2]. Technical Analysis - The hammer chart pattern indicates a possible bottoming out, suggesting that selling pressure may be subsiding, which is a bullish signal for the stock [2][5]. - A hammer pattern forms when there is a small candle body with a long lower wick, indicating that despite a new low, buying interest has emerged to push the stock price up towards the opening price [4][5]. - The effectiveness of the hammer pattern is enhanced when it appears at the bottom of a downtrend, signaling that bears may be losing control [5][6]. Fundamental Analysis - There has been a notable upward trend in earnings estimate revisions for Sleep Number, which is a bullish indicator as it typically leads to price appreciation [7]. - Over the last 30 days, the consensus EPS estimate for the current year has increased by 46.4%, indicating strong agreement among analysts that the company will report better earnings than previously expected [8]. - Sleep Number currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which historically outperform the market [9].

Core Insights - Sleep Number reported a revenue of $393.26 million for the quarter ended March 2025, reflecting a decline of 16.4% year-over-year [1] - The company's EPS was -$0.38, a significant drop from $0.03 in the same quarter last year, with an EPS surprise of -245.45% against the consensus estimate of -$0.11 [1] - The revenue exceeded the Zacks Consensus Estimate of $391.57 million by 0.43% [1] Financial Performance - The total sales change rate for Sleep Number was -16%, which was worse than the estimated -14.7% by analysts [4] - The number of stores at the end of the period was 637, slightly below the average estimate of 641 [4] - The number of stores at the beginning of the period remained stable at 640, matching the average estimate [4] Market Performance - Over the past month, Sleep Number's shares have returned +10.6%, outperforming the Zacks S&P 500 composite, which saw a change of -0.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Sleep Number (SNBR) reported a quarterly loss of $0.38 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.11, marking an earnings surprise of -245.45% [1] - The company posted revenues of $393.26 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.43%, but down from $470.45 million in the same quarter last year [2] - Over the last four quarters, Sleep Number has surpassed consensus EPS estimates three times, but has topped consensus revenue estimates only once [2] Stock Performance - Sleep Number shares have declined approximately 50.2% since the beginning of the year, in contrast to the S&P 500's decline of -5.5% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.09 on revenues of $381.67 million, and for the current fiscal year, it is -$0.47 on revenues of $1.58 billion [7] Industry Outlook - The Furniture industry, to which Sleep Number belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, indicating a challenging environment [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Sleep Number's stock performance [5][6]

Sleep Number (SNBR) Q1 2025 Earnings Call April 30, 2025 05:00 PM ET Company Participants Linda Findley - President & CEOFrancis Lee - Executive VP & CFOAlessandra Jimenez - Senior Equity Research Associate - Consumer Hardline/Specialty Retail Conference Call Participants Dan Silverstein - Equity Research AnalystPeter Keith - Managing Director & Senior Research AnalystBradley Thomas - Managing Director & Equity Research Analyst Operator Welcome to Sleep Number's Q1 twenty twenty five Earnings Conference Cal ...

Financial Performance - Net sales for Q1 2025 were $393 million, a decrease of 16% compared to the prior year [8] - Gross profit margin expanded to 61.2%, up 250 basis points from last year, driven by operational efficiencies and product mix [8][9] - Adjusted EBITDA for the quarter was $22 million, a decrease of $15 million from the prior year, with an adjusted EBITDA margin of 5.6%, down 230 basis points [10] - Operating expenses, excluding restructuring and one-time costs, totaled $237 million, a $23 million or 9% improvement over last year [9] Business Lines and Market Performance - Positive consumer response to the Climate Series beds helped expand Average Revenue per Unit (ARU) by approximately 4% versus last year [8] - The company is focusing on marketing efficiency to drive sustainable returns [8] - The impact of tariffs is estimated to be approximately $30 million for 2025, with $17 million potentially offset through supplier partnerships [11] Company Strategy and Industry Competition - The company is undergoing significant changes to stabilize the business and enhance competitive advantages [4][5] - A new executive and senior leadership structure has been created to streamline operations and improve decision-making [20][21] - The focus is on customer obsession, leveraging data to understand customer needs and improve product offerings [19][30] Management Commentary on Operating Environment and Future Outlook - Management acknowledges challenges in the current consumer environment, with a decline in consumer confidence impacting spending [39] - The company is not providing full guidance due to the rapidly evolving macroeconomic environment [13] - There is an expectation of continued top-line pressure in the near term, but cost management strategies are in place to maintain gross profit margins [14][15] Other Important Information - The company anticipates annualized cost reductions of $80 million to $100 million compared to the 2025 cost structure [13][27] - A focus on optimizing the debt capital structure without diluting current shareholders is underway [12] Q&A Session Summary Question: What are the low-hanging fruit for improvement in 2025? - Management identified opportunities in marketing efficiency, organizational structure changes, and leveraging past innovations to meet current customer needs [33][34][36] Question: Can you provide color on quarter-to-date demand? - Management noted a challenging environment with declining consumer confidence impacting spending, but emphasized a focus on rightsizing the organization [39][40] Question: What are the biggest opportunities to strengthen the brand and messaging? - Management sees opportunities in leveraging new technologies for effective marketing and optimizing existing partnerships for maximum benefit [48][50][52] Question: Is there an increased appetite to explore wholesale distribution? - Management stated that everything is on the table and they are open to exploring various strategic options [53] Question: How does the company view its core value proposition? - Management emphasized the importance of communicating the core benefits of Sleep Number beds, focusing on comfort and quality sleep [58][60] Question: How is the company navigating tariffs and pricing? - Management is evaluating various strategies to manage tariff impacts, including potential pricing adjustments and maintaining core pricing for key products [77][78] Question: What is the strategy regarding store openings and closures? - Management plans to maintain the current strategy of store openings and closures while reviewing the overall distribution strategy [79]

Exhibit 99.1 FOR IMMEDIATE RELEASE Sleep Number Announces First Quarter 2025 Results Cash Flows, Liquidity and Balance Sheet Highlights (all comparisons year-over-year unless otherwise noted) Management Implements New Organizational Structure, Driving Company-Wide Efficiency, Including Marketing, Research and Development and General and Administrative Costs New Structure Aims to Improve Cash Generation and Shareholder Value MINNEAPOLIS – (April 30, 2025) – Sleep Number Corporation (Nasdaq: SNBR) today repor ...

Company Overview - Sleep Number (SNBR) shares increased by 14.7% to close at $5.40, following a notable trading volume and a 32.8% loss over the past four weeks [1] - The company is expected to report a quarterly loss of $0.11 per share, reflecting a year-over-year change of -466.7%, with revenues projected at $391.57 million, down 16.8% from the previous year [2] - The consensus EPS estimate for Sleep Number has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without earnings estimate revisions [3] Industry Context - Sleep Number operates within the Zacks Furniture industry, which includes other companies like Hooker Furniture (HOFT) [3] - Hooker Furniture's consensus EPS estimate has increased by 23.8% over the past month to $0.10, representing a 66.7% change from the previous year [4] - Both Sleep Number and Hooker Furniture currently hold a Zacks Rank of 3 (Hold), indicating a neutral outlook for these stocks [3][4]

Core Insights - GEM HEALTH has partnered with Sleep Number Corporation to integrate its flagship product, GEM SLEEP, into Sleep Number's BreatheIQ digital sleep health app, enhancing user access to virtual sleep care [1][4]. Company Overview - GEM HEALTH specializes in virtual specialty care, focusing on sleep disorders, particularly obstructive sleep apnea, which affects an estimated 30 million people in the U.S. [7]. - GEM SLEEP offers comprehensive virtual care, including clinical evaluation, diagnosis, treatment setup, and ongoing support, all without requiring in-person clinic visits [2][7]. Product Features - GEM SLEEP aims to provide a user-friendly solution for the 80% of individuals with undiagnosed obstructive sleep apnea, addressing significant health risks associated with untreated conditions, such as stroke, diabetes, and cardiovascular diseases [2]. - The integration with BreatheIQ allows users to easily connect to GEM SLEEP, facilitating a streamlined care journey [3][4]. Market Access - GEM HEALTH's services are in-network with health plans covering 53 million Americans, ensuring broad access to care services [5][7]. - The company emphasizes reducing the time to relief from months to weeks, which benefits both patients and insurers [5].

Financial Performance - Net sales for 2024 decreased 11% to $1.7 billion, compared to $1.9 billion in 2023, primarily due to ongoing weakness in the mattress industry and consumer spending scrutiny [213]. - The average sales per store for the year ended December 28, 2024, totaled $2.6 million, down from $2.9 million in 2023 [213]. - Operating income for 2024 remained at $23 million, with an operating income rate of 1.4%, up from 1.2% in 2023, despite the decrease in net sales [213]. - Adjusted EBITDA for 2024 was $120 million, compared to $127 million in 2023, reflecting ongoing gross margin improvements [213]. - The net loss for 2024 was $20 million, with a net loss per diluted share of $0.90, compared to a net loss of $15 million and $0.68 per share in 2023 [213]. - Gross profit for 2024 was $1.0 billion, down $86 million or 8% from 2023, while the gross profit rate increased to 59.6% of net sales from 57.7% [221]. - Total net sales for 2024 were $1.68 billion, a decrease from $1.89 billion in 2023, with retail store sales at $1.47 billion and online sales at $208 million [397]. - The company reported a net loss of $20.3 million for 2024, compared to a net loss of $15.3 million in 2023, resulting in a basic and diluted net loss per share of $0.90 [392]. Cash Flow and Liquidity - The company generated $27 million in cash from operating activities in 2024, compared to cash used in operating activities of $9 million in 2023 [213]. - Free cash flow provided $4 million for the year ended December 28, 2024, compared to a cash usage of $66 million for the same period last year [213]. - Cash provided by operating activities was $27 million in 2024, a significant increase from net cash used in operating activities of $9 million in 2023 [234]. - Cash and cash equivalents at the end of 2024 were $1,950, a decrease from $2,539 in 2023 [288]. - The company had cash and cash equivalents of $2.0 million as of December 28, 2024, down from $2.5 million in the previous year [233]. - The Company’s additional borrowing capacity as of December 28, 2024, was $123,753,000 [372]. Expenses and Cost Management - Sales and marketing expenses decreased to $767 million in 2024, with the expense rate increasing to 45.6% of net sales due to an 11% net sales decrease [222]. - General and administrative expenses rose to $150 million in 2024, representing 8.9% of net sales, up from 7.8% in the prior year [223]. - Research and development expenses decreased by $11 million to $45 million in 2024, as the company re-prioritized R&D resources [224]. - The Company incurred $18.1 million in restructuring costs in 2024, compared to $15.7 million in 2023, with an expectation of an additional $5 million to $7 million in 2025 [226]. - Total operating expenses decreased to $979,901 in 2024 from $1,065,588 in 2023, primarily due to reductions in sales and marketing expenses [282]. Debt and Financing - Interest expense increased to $48 million in 2024, up from $43 million in the previous year, primarily due to a higher weighted-average interest rate [227]. - The Company amended its Credit Agreement, reducing the total aggregate commitment from $825 million to $685 million, with an accordion feature allowing an increase to $1.0 billion [239]. - As of December 28, 2024, the Company had $547 million in borrowings under its revolving credit facility and net liquidity available of $124 million [242]. - Outstanding borrowings as of December 28, 2024, were $546,600,000, with a weighted-average interest rate of 7.6% [372]. - The Company was in compliance with all financial covenants as of December 28, 2024 [373]. Inventory and Assets - The number of retail stores decreased to 640 at the end of 2024, down from 672 at the end of 2023, with 12 stores opened and 44 closed during the year [218]. - Total assets decreased from $950.88 million in 2023 to $860.81 million in 2024 [280]. - Accounts receivable decreased from $26.86 million in 2023 to $17.52 million in 2024 [280]. - Inventories decreased from $115.43 million in 2023 to $103.15 million in 2024 [280]. - Finished goods inventories decreased from $106.249 million in 2023 to $91.588 million in 2024, with specific categories showing declines: finished beds from $39.235 million to $34.725 million, finished components from $46.179 million to $39.634 million, and retail accessories from $20.835 million to $17.229 million [363]. Shareholder Returns and Stock Compensation - The company repurchased $768 in common stock in 2024, down from $3,747 in 2023, reflecting a strategic shift in capital allocation [288]. - At December 28, 2024, there was $348 million remaining authorization under the $600 million share repurchase program [316]. - Total stock-based compensation expense for 2024 was $11,444,000, down from $14,855,000 in 2023 [381]. - The Company expects to recognize $2.1 million of total stock option compensation expense related to non-vested stock options over a weighted-average period of 1.2 years [384]. - The company had $8.7 million of unrecognized compensation expense related to non-vested stock awards, expected to be recognized over an average period of 1.8 years [389]. Market Conditions and Industry Trends - The mattress industry unit volumes are estimated to return to 24 million units in 2024, the lowest level since 2015, indicating ongoing sector-level recession [211]. - Net sales decreased by $205 million year-over-year, primarily due to a $144 million decrease in Total Retail comparable net sales and a 12% decrease in Total Retail smart bed unit sales [220]. - The Company continues to focus on its vertically integrated business model, offering high-quality, individualized sleep solutions and expanding its product offerings [291].