MINNEAPOLIS – Sleep Number Corp. said third quarter net sales grew 12% to a record $531 million, with demand growth of 16%. Third quarter operating income grew 78%.

The company also provided a 2020 earnings outlook of approximately $4.00 per diluted share, a 48% increase versus full-year 2019 earnings per diluted share of $2.70, on estimated net sales growth of 7% to 8%.

“Our exceptional third quarter performance reflects the ongoing relevance of our life-changing 360 smart beds as consumers deepen their understanding of the importance of quality sleep to their overall health and wellness,” said Shelly Ibach, president and CEO. “For the third consecutive year, since transitioning to our smart beds, our Q3 results reflect double-digit demand growth. We again demonstrated the resilience of our vertical business model through our top and bottom-line performance and a trailing twelve months ROIC of nearly 21%.

“I am thankful for our team’s amazing dedication to our mission, their ingenuity and how they keep each other safe, healthy and happy,” she continued. “Driven by our purpose, we are accelerating our strategic initiatives, strengthening our competitive advantages and creating meaningful value for our customers, team, business partners and shareholders.”

For the quarter ending Sept. 26, net sales increased to $531 million, including an 11% comparable sales gain. Online and phone sales were up 111% versus the prior year and represented 14% of net sales, the company said.

The gross profit rate increased 70 basis points to 63.1% of net sales compared with 62.4% for the same period last year. Operating income increased 78% to $70 million, or 13.1% of net sales.

Earnings per diluted share increased 90% to $1.79, compared with $0.94 for the prior year.

Sleep Number generated $287 million in net cash from operating activities for the first nine months of 2020, up 51% versus last year, with year-to-date operating free cash flows of $259 million, up 81% versus the prior year.

The company invested $28 million in year-to-date capital expenditures compared to $47 million for the prior year period. It reported return on invested capital of 20.8% for the trailing twelve-month period, up 240 basis points versus the prior year comparable period.

 

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