MINNEAPOLIS – Citing ongoing recessionary behavior in the bedding industry, vertical mattress player Sleep Number swung to a net loss of $7.5 million in the first quarter compared to net income of $11.5 million in the same quarter last year.
Net sales for the quarter ended March 30 slid 11% to $470 million, compared to net sales of $526.5 million in the prior year first quarter. The company said it reduced operating expenses by $24 million, before restructuring costs, in the quarter. Cash flow increased $21 million compared with the prior year’s first quarter.
“Our actions to increase operating model efficiencies drove first quarter adjusted EBITDA and gross margin rate ahead of our expectations. We also generated a significant year-over-year increase in free cash flow, as planned, and continue to prioritize paying down debt and reducing leverage,” said Shelly Ibach, chair, president and chief executive officer. “As we build a more durable operating model and as demand for our category improves from recessionary levels, we expect to capitalize on our significant opportunity as a sleep wellness technology company.”
Looking ahead, the company said it expects a mid-single digit net sales decline for the year on a low-single digit demand decline.
During its conference call with analysts, the company said it expects to end the year with 30 fewer stores as it continues to implement its cost-cutting initiative started in November.