A worldwide shortage of computer chips challenged Sleep Number's ability to meet orders of its signature 360 smart beds, but the Minneapolis-based company ended up with 20% more in sales during the summer months.
The company earned $2.22 a share in the third quarter, up 24% from the same period a year ago. Its record revenue of $640 million was 35% more than the pre-pandemic third quarter of 2019. The results far exceeded the expectations of analysts covering them.
"Our record third quarter financial results exceeded our expectations and demonstrate the power of our advantaged business model and our teams' stellar execution," said Shelly Ibach, Sleep Number's chief executive.
Ibach told analysts on its earnings call that Sleep Number leveraged its vertical business model to help mitigate supply-chain challenges. The company controls manufacturing, the sales process both online and in stores, plus assembly and delivery.
"We have aggressively pursued a range of solutions," Ibach said.
The actions included working directly with suppliers; employing market brokers, bots and other digital tools to find more components; switching to air freight to expedite shipping of critical components; and qualifying new component suppliers.
Still the company did warn that the shortage of semiconductors and other electronic components could lengthen lead times for customer deliveries for the remainder of this year and possibly into the first quarter of 2022.
Sleep Number released its results after the markets closed Wednesday. Shares closed Wednesday at $88.95 a share, down 2% on the day. In after-hours trading, shares were rallying and up almost 8%. Over the past 52 weeks, shares have traded in the range between $60.08 and $151.44.
