What happened
Shares of Sleep Number (SNBR 2.48%) were gaining today after the mattress maker posted middling results in its fourth-quarter earnings report, but comments about 2023 were enough to please the market.
As of 3:24 p.m. ET, the stock was up 11.2% on the news.
So what
Sales in the quarter rose 1% to $498 million, edging out estimates at $495.7 million.
Gross margin fell from 56.9% to 54.7% as the company faced similar macroeconomic headwinds to other retailers and struggled with elevated inventories and chip shortages for its smart beds.
On the bottom line, the company posted a per-share loss of $0.24. That was well below a per-share profit of $0.47 in the quarter a year ago, which was a stronger retail environment. Analysts expected a per-share loss of $0.22.
CEO Shelly Ibach said: "As we navigated a series of significant macro challenges in 2022, we achieved important strategic advancements that strengthen our sleep technology leadership. These advancements will position Sleep Number to capitalize on profitable growth opportunities when the consumer environment improves."
Ibach also said that the customer response to the new Climate360 smart bed has been strong and that demand trends have improved to start the year.
Now what
For 2023, the company forecast net sales of flat to down mid-single digits for the year, and expects gross margin improvement of 150 basis points. It also called for positive free cash flow, at $40 million to $50 million, after losing $33 million in free cash flow in 2022, and forecast earnings per share of $1.25 to $2, which compares to the consensus at $1.76.
The comments show Sleep Number is on the right track, and investors seem hopeful for a recovery after the stock fell sharply last year.
