- Fourth-quarter net sales growth accelerated to 29% versus last year; full-year net sales increased 9% to $1.86 billion
- Full-year diluted EPS increased 81% versus the prior year to $4.90
- Generated a 48% increase in operating cash flows, and a trailing twelve-month ROIC of 25%
- Provides 2021 earnings outlook of at least $6.00 per diluted share, more than doubling EPS in two years
MINNEAPOLIS–(BUSINESS WIRE)– Sleep Number Corporation (Nasdaq: SNBR) today reported results for the year ended January 2, 2021.
“In a year of challenge and change, our mission-driven team delivered exceptional results by leveraging the power of vertical integration, digitization and focusing on what matters most to our stakeholders,” said Shelly Ibach, President and Chief Executive Officer. “We broadened our sleep leadership and brand relevance with our revolutionary 360® smart beds as consumers’ increased their understanding of the link between proven quality sleep and wellbeing. With strong momentum in the first quarter and ongoing investments in sleep science-based innovations and digital technologies, we are well-positioned to generate sustainable profitable growth for years to come.”
Full Year Overview
- Net sales increased 9% to $1.86 billion in 2020, including a 6% comparable sales gain, 1.5 percentage points (ppt.) of growth from new stores and 2.5 ppt. of growth from the extra week
- Gross profit rate increased 40 basis points (bp) to 62.3% of net sales, despite significant disruption from COVID-19 in the second quarter
- Operating income increased 65% to $185 million, or 10.0% of net sales; increased 55% excluding the 53rd week
- Earnings per diluted share increased 81% to $4.90; increased 70% excluding the 53rd week
- Fiscal 2020 included a 53rd week, which we estimate added approximately $41 million in sales, $11.2 million in operating income and $0.30 of diluted earnings per share
Fourth Quarter Overview
- Net sales increased 29% to $568 million, including a 19% comparable sales gain, one ppt. of growth from new stores and 9 ppt. of growth from the additional week in the fourth quarter
- Operating income increased 126% to $75 million; increased 92% excluding the 53rd week
- Earnings per diluted share increased 167% to $2.19; increased 129% excluding the 53rd week
Cash Flows and Liquidity Review
- Generated a record $280 million in net cash from operating activities, up 48% versus last year, with operating free cash flows of $243 million, up 87% versus prior year
- Invested $37 million in capital expenditures and $228 million in SNBR share repurchases in 2020, including $190 million in the fourth quarter; more than $1 billion cash returned to shareholders over the past six years; $247 million remains under our share repurchase authorization
- Return on invested capital (ROIC) of 25% for the year, up 720 bp versus 2019 and more than three times our weighted average cost of capital
- Leverage ratio of 2.2x EBITDAR at the end of 2020, compared with 2.7x at the end of 2019; continue to operate with a targeted range of 2.5x to 3.0x EBITDAR
The company expects to generate full-year 2021 earnings per diluted share of at least $6.00, which is 30% higher than 2020 full-year results excluding the impact of the 53rd week. The outlook assumes an estimated effective income tax rate of approximately 23% (including an estimated $5 million of excess tax benefits related to stock-based compensation largely in Q1), compared to an effective tax rate of 20.9% for 2020. The company anticipates 2021 capital expenditures of $70 million to $75 million.
About Sleep Number Corporation
Individuality is our foundation at Sleep Number. Our purpose driven company is comprised of over 4,800 passionate team members who are dedicated to our mission of improving lives by individualizing sleep experiences. Our 360® smart beds provide each sleeper with adjustable, personalized comfort for proven quality sleep. We have improved over 13 million lives as we strive to improve society’s wellbeing through higher quality sleep.
Sleep science and data are the core of our innovations. Our award-winning 360 smart beds benefit from our proprietary SleepIQ® technology – learning from over 9 billion hours of highly accurate sleep data – to provide effortless comfort and individualized sleep health insights, including your daily SleepIQ® score.