Sleep Number Corp. saw first-quarter sales and earnings growth slow as the company finalizes its transition to the Sleep Number 360 smart beds that were introduced a year ago.
"We are on track to complete the transition to our revolutionary Sleep Number 360 smart beds by midyear," said President and CEO Shelly Ibach in a news release.
The company has introduced five models of its 360 smart bed and will release two more models this year. However, it is still working through the inventory of its previous models.
The company earned $20.5 million, or 52 cents per share, down from the $24.5 million, or 56 cents per share, in the same period last year. Revenue was down 1 percent to $389 million.
The company was expecting a flat quarter but company performance still missed analysts' expectation. Analysts tracked by Thomson Reuters had expected the company to report sales of $397 million and earn 56 cents per share. The misses sent shares down sharply in after-hours trading.
The gross profit rate dipped from 62.6 percent in the first quarter of 2017 to 61.1 percent as the company admitted to "inefficiencies of operating two supply chains."
Ibach said on the earnings conference call that the company remains on pace for the previously issued earnings guidance for 2018 of $1.70 to $2 per share and 2019's goal of $2.75 per share.
Sensors in the 360 smart beds, introduced in 2017, allow the beds to respond through the night to each individual's movements — automatically adjusting firmness and support.
The beds also use the company's Sleep IQ technology, which allows users to track how well they sleep each night and produce a numerical score that gauges the quality of each night's sleep.