A quick pivot to online and phone sales as most of its stores were closed by stay-at-home orders — as well as consumers turning attention to refreshing their homes — helped deliver better-than-expected results for Sleep Number.

The challenges are not over in the least, though, as the coronavirus pandemic continues to affect the economy.

To plan for the quarter and the remainder of the year, Minneapolis-based Sleep Number went through different models, eventually settling on assumptions that sales could be down 50% in the second quarter, 25% in the third quarter and flat in the fourth.

Based on those models, the company made significant financial and operational changes to preserve its financial position.

"The pandemic has served as a catalyst for positive longer-term change in reinvention," Sleep Number Chief Executive Shelly Ibach told analysts on the company's earnings call after the market closed Wednesday.

At one point, 80% of the company's stores were closed because of stay-at-home orders. But as the company's nearly 600 stores gradually reopened throughout the quarter, sales rebounded more than expected.

Sales for the quarter were $285 million, off 20% from the same period last year.

The company lost $12.6 million, or 45 cents per share, in the April through June quarter. Last year in the same period, the company earned 14 cents per share.

Chief Financial Officer David Callen told analysts that 27% of sales in the quarter were from online and phone sales, up from 7% in the second quarter of 2019. The company has already exceeded the level of online and phone sales from all of 2019.

Sleep Number and other mattress manufacturers saw some benefits from consumers' increased attention to improving their homes as stay-at-home orders had them spending more time there.

The company also said consumers were wanting ways to improve sleep, including a better mattress.

"We are confident in ongoing improvement in the premium bedding market industrywide," wrote Peter Keith, an analyst who follows Sleep Number and the mattress industry for Minneapolis-based Piper Sandler, in a research note last week.

Sleep Number sells its mattress directly to consumers. It has an online store but until the pandemic relied heavily on physical locations.

During April on average 23% of Sleep Number stores were open. In May an average of 47% of the stores were open, and in June 81% of the stores were open. During that time the company focused on reaching customers digitally.

The past quarter has shown that the company can accelerate long-term plans to sell more through its online and phone channels, Ibach said. The company plans to continue driving sales through those channels even now that 95% of its stores are open.

"I expect this business to continue to be a larger part of our total as we move forward," Ibach told analysts. "As our stores have reopened, we've continued to see triple-digit growth in our online sales."

Citing continued uncertainty around the pandemic, Sleep Number has not reinstated guidance for the rest of the year. While the quarter presented new opportunities, it is still trying to balance risks to the business and from the pandemic.

"These opportunities are leading us to reallocate head count and strategically invest in new capabilities," Ibach told analysts.

Sleep Number has restructured some teams, leading to layoffs of less than 10% of Sleep Number's employees, a spokesperson said, while adding new positions to digital and sleep-science teams.

The results were released after the markets closed Wednesday. Shares closed Thursday at $48.70 per share, down 9.2%. Year-to-date shares are now down about 1%.

Patrick Kennedy • 612-673-7926