Airbed maker Sleep Number Corp. reported net income of $39.1 million in the first quarter of fiscal 2020, which ended March 28. It is a 54% increase compared with the first quarter of 2019. Net sales at the Minneapolis-based company grew 11% to $473 million. Earnings per diluted share reached a record $1.36, breaking a company record and reflecting a 70% increase compared with the prior-year quarter. Both sales and earnings surpassed analysts’ expectations (Zacks Investment Research) of $0.72 EPS on sales of $433 million.
Earnings per diluted share
The company said it had taken decisive actions to manage liquidity and costs through the challenging economic environment caused by COVID-19. The pandemic had resulted in the temporary closure of most retail stores beginning in mid-March. On April 23, it announced plans to reopen about 20% of its stores.
Sleep Number also said it had suspended share repurchases for the remainder of 2020 and reduced capital expenditures, compensation, benefits and discretionary spending. It also temporarily furloughed 40% of its employees, with approximately another 30% working reduced hours. These actions were expected to result in more than $250 million of reduced cash spending in 2020.
“Our record first-quarter performance reflects the exceptional consumer demand for our life-changing 360 smart beds, our significant competitive advantages and strong business fundamentals,” said Shelly Ibach, president and chief executive officer. “We are effectively managing the near-term challenges caused by the pandemic. The measures we have taken in recent weeks, combined with our team’s agility, resilience and innovation, give me great confidence in our ability to rebound with strength as this crisis abates and the economy recovers.”
In its first quarter, Sleep Number generated $85 million in net cash flows from operating activities, up 25% compared with the prior year.
On March 23, the company withdrew its fiscal 2020 financial guidance due to the pandemic and said it would not provide further financial guidance at the present time.