Sleep Number’s first-quarter revenue grew 11%. But during the last two weeks of March, when the effects of COVID-19 were in full view, the economic slowdown was evident.
“During the last two weeks of March, as government mandate closed 80% of our stores, our sales orders also abruptly declined almost 80% to the prior year,” said Chief Executive Shelly Ibach on the company’s earnings call.
For the full quarter, the company earned $39.1 million, or $1.36 per share, up from $25.4 million, or 80 cents per share, in the same period a year ago. Revenue, which beat analysts’ expectations, was $472.6 million.
The manufacturer and retailer of adjustable-firmness mattresses adjusted quickly, both financially and operationally, to adjust to the changing market dynamics caused by the coronavirus.
The company took quick steps to bolster its finances by drawing down the remaining $262 million on its revolving line of credit, adding a new $75 million short-term loan, reducing media spending and instituting $150 million of cost savings.
Operationally, it furloughed or reduced hours for 70% of its workforce, senior management reduced or deferred their compensation and the company quickly adjusted its manufacturing operations to reflect new demand.
While most of its stores were closed, the company still provided most delivery and service operations.
With store operations still limited in April, Sleep Number began to focus sales efforts on referrals and past customers looking to upgrade or add additional beds by leaning more heavily on its e-commerce and phone sales.
“As a result of these pivots, our sales orders per day have steadily improved in April,” Ibach said on the earnings call.
For April, overall sales were down about 50%, she said. About one-quarter came from store sales associates reaching customers by phone or online chat.
Stores are gradually reopening, with reduced hours and fewer staff members.
Sleep Number released its results after the market closed Wednesday. On Thursday, shares closed up 29% at $29.70. Year-to-date, the company’s shares are down more than 35%.