Specialty bedding manufacturer and retailer Sleep Number said first-quarter sales tumbled 16% to $393.3 million amid continued weak demand throughout its network of company-owned retail stores.
The company also said its net loss increased to $8.65 million, or 38 cents per share, from $7.48 million, or 33 cents per share, in last year’s first quarter.
Gross margin, however, increased to 61.2% from 58.7% a year ago due largely to reduced sales, marketing and research and development expenses.
Linda Findley, Sleep Number’s new president and CEO, said a new organizational structure that is being implemented will allow the company to further reduce costs “without compromising our top line.”
“We are fundamentally changing how we operate,” Findley said. “We implemented an organizational redesign, including changes to our leadership team, to simplify decision making and bring us closer to the customer. With that change, we reduced corporate management roles by 21%.”
She said the changes have already reduced operating expenses in the second quarter, which began March 30, by 10%.
“Sleep Number is truly differentiated and no one else does what we do,” she said. “With the organizational changes implemented, we are now focused on building a strategy for growth with our customers at the center. I joined Sleep Number because I believe strongly in the company’s long-term potential, and I am confident that we can change our trajectory to drive sustainable growth and profitability.”
She said the actions will reduce the company’s cost structure by $80 million to $100 million on an annualized basis, as compared to the recently completed first quarter.
Sleep Number ended the quarter with 637 retail stores, down from 661 at the end of last year’s first quarter. Comparable-store sales fell 15% in the most recent quarter, and the average sales per square foot fell $96 to $807.
Findley said the realignment includes the following personnel moves.
- Melissa Barra, formerly executive vice president, chief sales and services officer, has been appointed to the newly created position of executive vice president, chief product and enterprise strategy officer. Barra will have oversight of the company’s product portfolio, from development through distribution. She will be responsible for streamlining research and development efforts and ensuring that products, partnerships and distribution continue to evolve in ways that meet the needs of today’s customers.
- Chris Krusmark, formerly executive vice president, chief human resources officer, has been appointed executive vice president, chief retail and people officer. He will be responsible for managing the retail experience and real estate footprint for customers as well as the team members and processes that support them. In this combined role, Krusmark will focus on strengthening the connection between customers and team members to increase conversion.
- Hitesh Patel, senior vice president, chief information officer, will take on expanded responsibilities by leading the consolidation of corporate technology capabilities to reduce duplication previously distributed across multiple teams and functions. By consolidating technology resources, they can more seamlessly adapt to customer needs.
- Tanya Skogerboehas been appointed senior vice president, chief supply chain and transformation officer, responsible for leading all aspects of Sleep Number’s supply chain operations. This will bring end-to-end efficiency to the supply chain – from manufacturing to fulfillment – to ensure quality, consistency and efficiency at every step of the customer journey. Tanya will continue to oversee the rigorous transformation efforts to get closer to the customer and optimize operations.
- As was recently announced, Amber Minson will join as executive vice president, chief marketing officer. Amber will be responsible for driving sustainable demand generation, brand visibility and media efficiency to fuel growth. In her role, she will establish a new marketing model that delivers more customer engagements from fewer dollars.
In addition, Findley said Annie Bloomquist, executive vice president and chief innovation officer, is leaving the company and her position is being eliminated.
The remainder of the executive leadership team, including Francis Lee, executive vice president, chief financial officer, and Sam Hellfeld, executive vice president, chief legal and risk officer, will continue in their current roles.
Read Leggett & Platt’s Q1 report here.
