Specialty bedding manufacturer and retailer Sleep Number reported double-digit sales declines in the fourth quarter and 2023 calendar year amid continued weak demand in the mattress industry.
The Minneapolis-based company said its gross margins increased, however, due to a restructuring effort that saw operating costs slashed by $85 million in 2023.
For the fourth quarter, sales totaled $429.5 million, down 14% from $497.5 million in the final quarter of 2022. The quarterly net loss totaled $25.2 million or $1.12 per share, up from a loss of $5.4 million or 24 cents per share in the comparable quarter.
Gross margin totaled 56.6%, up from 54.7% in the fourth quarter of 2022.
For the 2023 calendar year, sales totaled $1.89 billion, down 11% from $2.11 billion in 2022. The full-year net loss came to $15.3 million or 68 cents per share. In 2022, Sleep Number recorded a profit of $36.6 million or $1.60 per share.
Sleep Number ended the year with 672 retail stores — a net gain of two from 2022 — and said 86.8% of sales came from those stores. In the fourth quarter, the average sales per store totaled $2.85 million. That was down from an average of $3.28 million in the fourth quarter of 2022.
“While the consumer environment remains challenging for the mattress industry, our swift actions to improve demand and reduce costs allowed us to make better progress in the fourth quarter than we expected,” said Shelly Ibach, chair, president and CEO. “Through broad-based restructuring actions to streamline our cost structure, restore margins and strengthen our balance sheet, we are transforming our operating model to improve our financial resilience and position our business for accelerating growth as the mattress industry demand environment improves. Importantly, our long-term opportunity remains intact as we lead through this transformation.”
The company said it plans to reduce operating costs by an additional $40 million to $45 million in 2024.
Sleep Number said it expects mattress industry demand to “remain pressured” in 2024 and is forecasting a sales decline in the mid-single-digits for the year.
The company didn’t issue a forecast for earnings per share, but said it expects adjusted EBITDA to be $125 million to $145 million. The figure consists of earnings before interest, taxes, depreciation amortization and restructuring costs. In 2023, adjusted EBITDA was $126.7 million.
