Minneapolis-based airbed manufacturer and retailer Sleep Number Corp., formerly known as Select Comfort Corp., reported that strong sales of its new Sleep Number 360 smart beds helped drive a 9.4% increase in revenue in the third quarter versus the same quarter of 2016.
The company said that net sales in the third quarter, which ended Sept. 30, rose to a quarterly record of $402.6 million. Earnings totaled $25.6 million, or $0.62 per share, down slightly from last year and short of Wall Street expectations, which had earnings pegged at $0.68 per share on expected sales of $413.9 million. Gross profit increased 9% to $253 million, with a gross margin rate of 62.9%.
In an earnings call, Shelly Ibach, Sleep Number president and chief executive officer, told analysts that this year’s third-quarter revenues were impacted by hurricanes, resulting in $12 million to $15 million in lost or delayed sales, but that the company remains encouraged by the response it is generating for its new smart bed line.
“We are excited with how the consumer continues to respond to our innovations focused on quality sleep and wellness,” Ibach said. “With cash flow generation at record levels and the underlying strength of our business, we are increasing our share repurchase authorization to $500 million and are reaffirming the midpoint of our 2017 EPS guidance.”
The company narrowed its outlook for 2017 earnings to a range of $1.30 to $1.45 per diluted share versus the previous range of $1.25 to $1.50 per share. The outlook includes an estimated $0.18 earnings per share impact from incremental costs related to the phased launch of the Sleep Number 360 smart bed line and the evolution of the company’s supply chain. The outlook assumes high single-digit sales growth, including 5 to 6 percentage points from net new store openings and low single-digit comparable store growth.
The company announced that effective Nov. 1, it was officially changing the corporate name to Sleep Number Corp. and its Nasdaq ticker symbol from SCSS to SNBR. In November, the company also moved its headquarters from Plymouth, Minnesota, to downtown Minneapolis.