Sleep Number shares jump on impressive 4Q18 results

Sleep Number Corp. released fourth-quarter results on Wednesday (13 February), with the firm posting earnings of $27mn, or USc81/share, up from $16mn, or USc39/share in 4Q17. However, adjusted EPS came in at $0.58, which was lower than the Refinitiv consensus analysts’ expectation of $0.72. Revenue rose 13% YoY to $412mn, above the Refinitiv consensus estimate of $407.51mn. Operating income advanced to $38mn, or 9.3% of net sales, a 380-bpt rate YoY improvement.

The firm said that it expected an even better 2019 due to increasing sales of its new 360 smart beds and it guided towards FY19 EPS of $2.25-$2.75, vs a Refinitiv consensus forecast of $2.36.

The better-than-expected earnings and forecast resulted in the mattress company’s share price rising as much as 19% on Thursday morning following the results. On Tuesday (19 February) it closed at an all-time high of $43.84/share – up 22.3% WoW.

During the quarter, Sleep Number continued to adjust its store operations, opening 20 stores and closing 10. The Group expects to open 60-70 new stores in 2019.

As of 29 December 2018, the remaining authorisation under Sleep Number’s share repurchase programme stood at $186mn, which the company said was sufficient to support its 2019 planned repurchases of $125mn-$145mn.

President and CEO, Shelly Ibach wrote in a press release that the firm’s “ … purpose-driven brand and our revolutionary new 360 smart beds are driving enthusiastic consumer engagement and accelerated performance, including 12% adjusted net sales growth and 48% adjusted EPS growth for the second half of 2018,”. She added that company expects “… this trajectory to continue in 2019 as we advance our initiatives to drive demand, leverage our business model and deploy capital efficiently.”

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