The following is a summary of the Sleep Number Corporation (SNBR) Q1 2024 Earnings Call Transcript:

Financial Performance:

• Sleep Number Corporation reported Q1 2024 net sales of $470 million, down 11% YoY due to decreased consumer purchasing power due to elevated interest rates and high credit card debt.

• Q1 Adjusted EBITDA was $37 million, down by $12 million from the same period last year.

• The company generated $24 million in free cash flow, a significant increase from $3 million in the same period last year.

• Gross margin in Q1 rose to 58.7%, exceeding expectations and indicating an improvement from the latter half of the previous year.

• Operating expenses dropped by $24 million YoY due to cost restructuring efforts.

• Sleep Number Corporation recorded $10.6 million in restructuring costs in Q1 2024 but anticipates only $3 million for the rest of the year.

• The company plans to leverage the increased free cash flow to pay down its credit line.

Business Progress:

• Sleep Number anticipates launching a new smart bed, the c1, in the third quarter of 2024, supported by efficient resource reprioritization.

• Strategic sourcing initiatives led to a drop in the total cost of goods and services, aligning with the company's efforts to restore the gross margin rate to its historical average.

• Sleep Number is expected to close approximately 30 stores in 2024, contributing to an estimated 1-point drag on net sales growth for the year.

• The company is focusing on cost of acquisition, cost of goods, serving customers, and G&A and R&D leverage. Significant reductions in R&D have occurred, and resources have been reshuffled to support new innovations.

• Sleep Number reiterated their 2024 full-year adjusted EBITDA outlook of $125 million to $145 million.

More details: Sleep Number IR

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