Sleep Number posted record results for the fourth quarter and year, solidifying its strategy to market itself not just as a mattress retailer, but as a health and wellness company – a position to which competitors aspire. like Casper.
For the fourth quarter, the Minneapolis-based adjustable mattress maker and retailer earned $ 24.1 million, or 82 cents per share. In the fourth quarter of 2018, the company earned $ 27 million, or 81 cents per share, but that included the benefit of $ 24 million in shipments that had been lagged from the third quarter of 2018. Without those sales, Adjusted earnings per share in the last year’s quarter was 58 cents, yielding Sleep Number adjusted EPS growth of 41%.
For the year, the company posted revenue of $ 1.7 billion, up 11% from 2018 and EPS of $ 2.70 per share, up 41% for the year.
The company exceeded analysts’ expectations for revenue and earnings for both periods.
Analysts expected the company to earn 75 cents for the quarter and $ 2.64 for the year. Sleep Number also beat consensus revenue expectations of 3.4% in the quarter and 1.3% for the year.
âConsumer response to our revolutionary 360 smart beds has been exceptional, driving double-digit demand growth for six consecutive quarters, including an acceleration in the fourth quarter,â said Shelly Ibach, President and CEO of Sleep Number, in a press release. âOur differentiated innovation strategy for consumers once again generated record results in 2019.â
Competitors such as memory foam mattress maker Casper have tried to develop this type of differentiation from the competitive industry.
New York-based Casper completed a long-awaited initial public offering this month. The company touted its “cutting edge” technology and data in its registration statement, primarily promoting its prowess in direct-to-consumer e-commerce and sleep accessories focused on the technology under development.
Most of Sleep Number’s technology is concentrated in its 360 smart beds introduced in 2017. Sensors help adjust the firmness of the mattress to a person’s movements throughout a sleeping session. Its Sleep IQ technology also logs over 9 billion biometric data points collectively every night, giving users actionable data about their sleep patterns.
Casper, who has yet to turn profitable, eventually priced his IPO at $ 12 per share, the bottom of a range of offers already adjusted downward. Since its IPO earlier this month, Casper shares have fallen 25%.
Sleep Number also released a forecast for 2020, saying it expects EPS to rise 15% for the year, to $ 3.10 per share, and sales to rise to single digits. The company plans to hit those numbers through additional product innovations and around $ 60 million in capital spending in 2020.
Peter Keith, analyst at Piper Sandler Cos., Believes Sleep Number’s forecast for 2020 is reasonable in what has been a favorable market for the mattress industry.
âWe thank Sleep Number for its good execution and pursuit of innovation that drives consumer interest / demand,â he wrote in a research note. âNew product launches in 2020 with improved functionality could further help demand. “
Keith maintained his “neutral” rating on the Sleep Number share but raised his 12-month price target.
Sleep Number released its results after the market closed on Wednesday, and shares rose 6% Thursday morning to $ 59.99. They closed Thursday at $ 59.72. Its shares are up 21% year-to-date and have traded between $ 32.53 and $ 60.72 in the past 52 weeks.