Sleep Number(US:SNBR)2020-04-23 01:54Financial Data and Key Metrics Changes - The company reported a net sales growth of 11% to $473 million, with a comparable store sales gain of 7% and five points from new stores [15][44] - Net operating profit increased by 61% to 11% of net sales, while earnings per share grew by 70% to $1.36 [15][47] - Free cash flow rose by 54% to $75 million, with a gross margin rate increase of 240 basis points to nearly 64% [15][45] Business Line Data and Key Metrics Changes - Units sold grew by 10%, and average revenue per unit (ARU) increased by 2%, contributing to the overall sales growth [15][44] - Online and phone sales in Q1 increased by 21% compared to the previous year, indicating a shift in consumer purchasing behavior [45] Market Data and Key Metrics Changes - Approximately 80% of stores were closed by March 31, leading to a significant decline in sales orders, which dropped nearly 80% during the last two weeks of March [20][60] - By April, sales orders improved to being down approximately 50%, reflecting a recovery trend as digital sales surged [21][60] Company Strategy and Development Direction - The company is focused on preserving financial flexibility, increasing liquidity, and controlling expenses amid the COVID-19 pandemic [11][12] - A shift towards digital capabilities has been implemented, with 50% of sales coming from online channels, showcasing the company's adaptability [19][65] - The launch of new 360 smart bed software features has been postponed to the third quarter, aligning with expected recovery in store operations [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to rebound strongly post-crisis, citing strong competitive advantages and a resilient team [17][30] - The company withdrew its 2020 guidance due to uncertainty surrounding the pandemic's impact, anticipating continued pressure on sales through May [28][29] - Consumer demand for the company's products remains strong, with digital traffic showing double-digit increases year-over-year [30] Other Important Information - The company has taken measures to support healthcare efforts, such as refurbishing N95 masks at its manufacturing plant [23] - The company has implemented various cost-saving measures, including furloughing or reducing hours for approximately 70% of team members [12][40] Q&A Session Summary Question: What is happening with stores in states that have recently reopened? - Management noted that store performance varies by state, with some experiencing low traffic but high average revenue per unit, while others see more cautious customer behavior [52][54] Question: How are customers responding to in-store experiences during the pandemic? - The company follows CDC guidelines for safety, offering private appointments and maintaining low occupancy in stores to address customer concerns [56][57] Question: Can you clarify the sales performance in April? - Sales orders were down approximately 80% at the end of March but improved to being down about 50% in April due to enhanced digital capabilities [60][61] Question: What percentage of sales came from online purchases in April? - In April, 25% of sales came from closed stores, 25% from open stores, and 50% from online channels, indicating a significant shift towards digital sales [65] Question: How is the company managing labor costs during the downturn? - The company has taken decisive actions to manage labor costs, with plans to cautiously bring back employees as demand increases [117][119]