Shares of Sleep Number Corporation (NASDAQ:SNBR), a sleep services and solutions company offering bedding, furniture, pillows, and other products, were soaring more than 30% Thursday morning after the company released strong first-quarter 2020 results.
Sleep Number shares jumped in the extended session Wednesday when the company released first-quarter sales and earnings that topped analysts' estimates and then went higher Thursday when markets opened. Sales increased 11% to $473 million during the first quarter, topping analysts' estimates of $433 million. Earnings per share soared 70% to a record $1.36, far above the prior year's $0.80 per share and well ahead of analysts' estimates calling for $0.72 per share. It was a strong first quarter in just about every metric, including a 7% gain in comparable store sales and a 240-basis-point improvement in gross profit to 63.9% of net sales.
"Our record first quarter performance reflects the exceptional consumer demand for our life-changing 360® smart beds, our significant competitive advantages and strong business fundamentals. We are effectively managing the near-term challenges caused by the pandemic," said Shelly Ibach, president and CEO, in a press release.
Now the question most businesses are facing: Is the company prepared for the full financial impact of the COVID-19 coronavirus? Management believes it can navigate the challenges from the outbreak in part thanks to actions to quickly preserve cash by suspending share repurchases for the year; reducing capital expenditures, compensation, and benefits; and furloughing 40% of its team members. Its collective actions are expected to reduce cash spending by roughly $250 million compared to its original 2020 plan, and the company has $239 million of cash at the end of the first quarter, with an additional funding of $75 million on April 3. All in all, it was a strong quarter by any metric, and management seems well positioned to weather the economic impact from COVID-19.