Bedding manufacturer and retailer Sleep Number (NASDAQ:SNBR) missed analysts' expectations in Q2 CY2024, with revenue down 11% year on year to $408.4 million. It made a GAAP loss of $0.22 per share, down from its profit of $0.03 per share in the same quarter last year.

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Sleep Number (SNBR) Q2 CY2024 Highlights:

• Revenue: $408.4 million vs analyst estimates of $416.2 million (1.9% miss)

• EPS: -$0.22 vs analyst estimates of -$0.35 (37.3% beat)

• Gross Margin (GAAP): 59.1%, up from 57.6% in the same quarter last year

• Locations: 646 at quarter end, down from 672 in the same quarter last year

• Same-Store Sales fell 11% year on year (2% in the same quarter last year)

• Market Capitalization: $254.5 million

“The implementation of our transformative initiatives is improving gross margin, operating expenses and free cash flow, as our teams continue to execute sustainable changes across the business. In the second quarter, we delivered gross margin rate expansion and adjusted EBITDA slightly ahead of expectations, despite facing a more challenging industry sales environment than anticipated,” said Shelly Ibach, Chair, President and CEO.

Known for mattresses that can be adjusted with regards to firmness, Sleep Number (NASDAQ:SNBR) manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.

Home Furniture Retailer

Furniture retailers understand that ‘home is where the heart is’ but that no home is complete without that comfy sofa to kick back on or a dreamy bed to rest in. These stores focus on providing not only what is practically needed in a house but also aesthetics, style, and charm in the form of tables, lamps, and mirrors. Decades ago, it was thought that furniture would resist e-commerce because of the logistical challenges of shipping large furniture, but now you can buy a mattress online and get it in a box a few days later; so just like other retailers, furniture stores need to adapt to new realities and consumer behaviors.

Sales Growth

Sleep Number is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.

As you can see below, the company's annualized revenue growth rate of 2.1% over the last five years was weak as its store footprint remained relatively unchanged.

This quarter, Sleep Number missed Wall Street's estimates and reported a rather uninspiring 11% year-on-year revenue decline, generating $408.4 million in revenue. Looking ahead, Wall Street expects sales to grow 1.6% over the next 12 months, an acceleration from this quarter.