Yahoo Finance Sleep Number Corp (SNBR) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges ...
Net Sales: $470 million, down 11% year-over-year.
Adjusted EBITDA: $37 million, better than expected.
Free Cash Flow: $24 million, up from $3 million in the same period last year.
Gross Margin: First-quarter rate of 58.7%, above expectations.
Operating Expenses: Down $24 million versus prior year.
Restructuring Costs: $10.6 million recorded in the quarter.
Debt-to-EBITDA Ratio: 4.2 times at the end of the first quarter.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you clarify the demand trends for the quarter and expectations for Q2? A: Shelly Ibach, Chairman of the Board, President, CEO - Yes, demand trends for Q1 were down mid-single digits, similar to Q4. March continued this trend. For Q2, demand is expected to be down low- to mid-single digits, with strength anticipated in May around the market share period.
Q: With the launch of the C1 product and pricing adjustments on the C2, how will this impact gross margins? A: Shelly Ibach, Chairman of the Board, President, CEO - The introduction of the C1 at $9.99 and the $200 price increase on the C2 are expected to positively contribute to gross margin improvements, particularly in the second half of the year.
Q: Have you considered taking the brand back to wholesale distribution? A: Shelly Ibach, Chairman of the Board, President, CEO - We continuously explore a wide range of opportunities to increase shareholder value and are focused on competing aggressively in the market.
Q: Can you discuss changes in promotional strategies and their impact on sales? A: Shelly Ibach, Chairman of the Board, President, CEO - We've adjusted our media and promotional strategies to be more efficient, focusing on targeted segments and precise promotional spending. These changes have led to a higher sales mix and improved gross margins despite constrained demand.
Q: What are the expectations for store portfolio changes and their impact on sales recapture? A: Francis Lee, CFO, EVP - We are on track with our plan to end the year with about 30 fewer stores. Early indications show sales transfers are meeting or exceeding our expectations.
Q: What is driving the year-over-year dip in average revenue per mattress unit (ARU) in Q1? A: Shelly Ibach, Chairman of the Board, President, CEO - The slight decrease in ARU year-over-year is mainly due to a high base in the previous year when we reintroduced certain products. However, Q1 ARU improved from Q4 due to a better product mix and reduced promotional spending.
Q: How do you view the long-term path to achieving a gross margin rate of over 60%? A: Francis Lee, CFO, EVP - We are making sustainable changes across our operating model, including sourcing and manufacturing efficiencies. These changes, coupled with expected volume increases as the industry recovers, will help us achieve and maintain higher gross margin levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
