QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Page | ||||||||
i | 2Q 2022 FORM 10-Q | SLEEP NUMBER CORPORATION |
July 1, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowances of $ | |||||||||||
Inventories | |||||||||||
Prepaid expenses | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Non-current assets: | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill and intangible assets, net | |||||||||||
Deferred income taxes | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Shareholders’ Deficit | |||||||||||
Current liabilities: | |||||||||||
Borrowings under revolving credit facility | $ | $ | |||||||||
Accounts payable | |||||||||||
Customer prepayments | |||||||||||
Accrued sales returns | |||||||||||
Compensation and benefits | |||||||||||
Taxes and withholding | |||||||||||
Operating lease liabilities | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Non-current liabilities: | |||||||||||
Operating lease liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Shareholders’ deficit: | |||||||||||
Undesignated preferred stock; | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Total shareholders’ deficit | ( | ( | |||||||||
Total liabilities and shareholders’ deficit | $ | $ |
1 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Basic net income per share: | |||||||||||||||||||||||
Net income per share – basic | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares – basic | |||||||||||||||||||||||
Diluted net income per share: | |||||||||||||||||||||||
Net income per share – diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average shares – diluted |
2 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Exercise of common stock options | — | — | |||||||||||||||||||||||||||
Stock-based compensation | — | ||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | — | ( | ||||||||||||||||||||||||
Balance at April 1, 2023 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Exercise of common stock options | — | — | |||||||||||||||||||||||||||
Stock-based compensation | — | — | |||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | — | ( | ||||||||||||||||||||||||
Balance at July 1, 2023 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Exercise of common stock options | — | — | |||||||||||||||||||||||||||
Stock-based compensation | — | ||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Balance at April 2, 2022 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
Net income | — | — | — | ||||||||||||||||||||||||||
Exercise of common stock options | — | — | |||||||||||||||||||||||||||
Stock-based compensation | — | ||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ( | ( | ( | ||||||||||||||||||||||||
Balance at July 2, 2022 | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
3 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Six Months Ended | |||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Net loss on disposals and impairments of assets | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventories | ( | ( | |||||||||
Income taxes | |||||||||||
Prepaid expenses and other assets | ( | ||||||||||
Accounts payable | ( | ( | |||||||||
Customer prepayments | ( | ( | |||||||||
Accrued compensation and benefits | ( | ||||||||||
Other taxes and withholding | ( | ||||||||||
Other accruals and liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Issuance of note receivable | ( | ||||||||||
Proceeds from sales of property and equipment | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Net increase in short-term borrowings | |||||||||||
Repurchases of common stock | ( | ( | |||||||||
Proceeds from issuance of common stock | |||||||||||
Debt issuance costs | ( | ||||||||||
Net cash provided by financing activities | |||||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents, at beginning of period | |||||||||||
Cash and cash equivalents, at end of period | $ | $ |
4 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
5 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
July 1, 2023 | December 31, 2022 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in progress | |||||||||||
Finished goods | |||||||||||
$ | $ |
July 1, 2023 | December 31, 2022 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||
Developed technologies | $ | $ | $ | $ | |||||||||||||||||||
Patents | |||||||||||||||||||||||
$ | $ | $ | $ |
2023 (excluding the six months ended July 1, 2023) | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total future amortization for definite-lived intangible assets | $ |
6 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
July 1, 2023 | December 31, 2022 | ||||||||||
Outstanding borrowings | $ | $ | |||||||||
Outstanding letters of credit | $ | $ | |||||||||
Additional borrowing capacity | $ | $ | |||||||||
Weighted-average interest rate | % | % |
7 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Operating lease costs(1) | $ | $ | $ | $ | |||||||||||||||||||
Variable lease costs | $ | $ | $ | $ |
2023 (excluding the six months ended July 1, 2023) | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total operating lease payments(2) | |||||
Less: Interest | |||||
Present value of operating lease liabilities | $ |
July 1, 2023 | December 31, 2022 | |||||||||||||
Weighted-average remaining lease term (in years) | ||||||||||||||
Weighted-average discount rate | % | % |
Six Months Ended | ||||||||||||||
(in thousands) | July 1, 2023 | July 2, 2022 | ||||||||||||
Cash paid for amounts included in present value of operating lease liabilities | $ | $ | ||||||||||||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ |
8 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Amount repurchased under Board-approved share repurchase program | $ | $ | $ | $ | |||||||||||||||||||
Amount repurchased in connection with the vesting of employee restricted stock grants | |||||||||||||||||||||||
Total amount repurchased (based on trade dates) | $ | $ | $ | $ |
July 1, 2023 | December 31, 2022 | ||||||||||
Deferred contract assets included in: | |||||||||||
Other current assets | $ | $ | |||||||||
Other non-current assets | |||||||||||
$ | $ |
July 1, 2023 | December 31, 2022 | ||||||||||
Deferred contract liabilities included in: | |||||||||||
Other current liabilities | $ | $ | |||||||||
Other non-current liabilities | |||||||||||
$ | $ |
9 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Retail stores | $ | $ | $ | $ | |||||||||||||||||||
Online, phone, chat and other | |||||||||||||||||||||||
Total Company | $ | $ | $ | $ |
Six Months Ended | |||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||
Balance at beginning of year | $ | $ | |||||||||
Additions that reduce net sales | |||||||||||
Deductions from reserves | ( | ( | |||||||||
Balance at end of period | $ | $ |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Stock awards (1) | $ | $ | $ | ||||||||||||||||||||
Stock options | |||||||||||||||||||||||
Total stock-based compensation expense (1) | |||||||||||||||||||||||
Income tax benefit | |||||||||||||||||||||||
Total stock-based compensation expense, net of tax | $ | $ | $ | $ |
10 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Reconciliation of weighted-average shares outstanding: | |||||||||||||||||||||||
Basic weighted-average shares outstanding | |||||||||||||||||||||||
Dilutive effect of stock-based awards | |||||||||||||||||||||||
Diluted weighted-average shares outstanding | |||||||||||||||||||||||
Net income per share – basic | $ | $ | $ | $ | |||||||||||||||||||
Net income per share – diluted | $ | $ | $ | $ |
Six Months Ended | |||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||
Balance at beginning of year | $ | $ | |||||||||
Additions charged to costs and expenses for current-year sales | |||||||||||
Deductions from reserves | ( | ( | |||||||||
Changes in liability for pre-existing warranties during the current year, including expirations | ( | ||||||||||
Balance at end of period | $ | $ |
11 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
12 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
13 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
14 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
15 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 458.8 | 100.0 | % | $ | 549.1 | 100.0 | % | $ | 985.3 | 100.0 | % | $ | 1,076.2 | 100.0 | % | |||||||||||||||||||||||||||||||
Cost of sales | 194.5 | 42.4 | % | 224.1 | 40.8 | % | 410.8 | 41.7 | % | 449.0 | 41.7 | % | |||||||||||||||||||||||||||||||||||
Gross profit | 264.2 | 57.6 | % | 324.9 | 59.2 | % | 574.5 | 58.3 | % | 627.2 | 58.3 | % | |||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | 197.8 | 43.1 | % | 220.5 | 40.2 | % | 428.3 | 43.5 | % | 460.7 | 42.8 | % | |||||||||||||||||||||||||||||||||||
General and administrative | 39.8 | 8.7 | % | 38.7 | 7.1 | % | 79.2 | 8.0 | % | 80.0 | 7.4 | % | |||||||||||||||||||||||||||||||||||
Research and development | 15.4 | 3.4 | % | 15.8 | 2.9 | % | 29.9 | 3.0 | % | 32.1 | 3.0 | % | |||||||||||||||||||||||||||||||||||
Total operating expenses | 253.0 | 55.1 | % | 275.0 | 50.1 | % | 537.4 | 54.5 | % | 572.9 | 53.2 | % | |||||||||||||||||||||||||||||||||||
Operating income | 11.2 | 2.4 | % | 49.9 | 9.1 | % | 37.2 | 3.8 | % | 54.3 | 5.0 | % | |||||||||||||||||||||||||||||||||||
Interest expense, net | 9.9 | 2.2 | % | 3.6 | 0.7 | % | 19.1 | 1.9 | % | 5.7 | 0.5 | % | |||||||||||||||||||||||||||||||||||
Income before income taxes | 1.3 | 0.3 | % | 46.3 | 8.4 | % | 18.1 | 1.8 | % | 48.6 | 4.5 | % | |||||||||||||||||||||||||||||||||||
Income tax expense | 0.5 | 0.1 | % | 11.4 | 2.1 | % | 5.9 | 0.6 | % | 11.6 | 1.1 | % | |||||||||||||||||||||||||||||||||||
Net income | $ | 0.8 | 0.2 | % | $ | 34.9 | 6.4 | % | $ | 12.2 | 1.2 | % | $ | 37.0 | 3.4 | % | |||||||||||||||||||||||||||||||
Net income per share: | |||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | 0.03 | $ | 1.56 | $ | 0.55 | $ | 1.64 | |||||||||||||||||||||||||||||||||||||||
Diluted | $ | 0.03 | $ | 1.54 | $ | 0.54 | $ | 1.60 | |||||||||||||||||||||||||||||||||||||||
Weighted-average number of common shares: | |||||||||||||||||||||||||||||||||||||||||||||||
Basic | 22.5 | 22.4 | 22.4 | 22.6 | |||||||||||||||||||||||||||||||||||||||||||
Diluted | 22.5 | 22.7 | 22.5 | 23.2 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Retail stores | 87.7 | % | 89.4 | % | 87.4 | % | 86.9 | % | |||||||||||||||
Online, phone, chat and other | 12.3 | % | 10.6 | % | 12.6 | % | 13.1 | % | |||||||||||||||
Total Company | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Sales change rates: | |||||||||||||||||||||||
Retail comparable-store sales (1) | (20 | %) | 10 | % | (10 | %) | (3 | %) | |||||||||||||||
Online, phone and chat | (3 | %) | 2 | % | (12 | %) | 4 | % | |||||||||||||||
Total Retail comparable sales change (1) | (18 | %) | 9 | % | (10 | %) | (2 | %) | |||||||||||||||
Net opened/closed stores and other | 2 | % | 4 | % | 2 | % | 4 | % | |||||||||||||||
Total Company | (16 | %) | 13 | % | (8 | %) | 2 | % |
16 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Average sales per store (1) (in thousands) | $ | 3,089 | $ | 3,526 | |||||||||||||||||||
Average sales per square foot (1) | $ | 1,007 | $ | 1,172 | |||||||||||||||||||
Stores > $2 million in net sales (2) | 71 | % | 82 | % | |||||||||||||||||||
Stores > $3 million in net sales (2) | 31 | % | 45 | % | |||||||||||||||||||
Average revenue per smart bed unit (3) | $ | 5,990 | $ | 6,485 | $ | 5,913 | $ | 5,601 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Beginning of period | 671 | 653 | 670 | 648 | |||||||||||||||||||
Opened | 7 | 10 | 19 | 23 | |||||||||||||||||||
Closed | (6) | (4) | (17) | (12) | |||||||||||||||||||
End of period | 672 | 659 | 672 | 659 |
17 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
18 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
19 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Six Months Ended | |||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||
Total cash provided by (used in): | |||||||||||
Operating activities | $ | 18.7 | $ | 28.7 | |||||||
Investing activities | (30.3) | (36.5) | |||||||||
Financing activities | 11.6 | 7.7 | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 0.0 | $ | (0.1) |
20 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
21 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Three Months Ended | Trailing-Twelve Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Net income | $ | 754 | $ | 34,933 | $ | 11,822 | $ | 101,869 | |||||||||||||||
Income tax expense | 524 | 11,359 | 6,602 | 30,442 | |||||||||||||||||||
Interest expense | 9,948 | 3,619 | 32,289 | 9,406 | |||||||||||||||||||
Depreciation and amortization | 18,304 | 15,920 | 71,318 | 61,857 | |||||||||||||||||||
Stock-based compensation | 5,252 | 3,910 | 15,071 | 18,872 | |||||||||||||||||||
Asset impairments | 170 | 80 | 294 | 266 | |||||||||||||||||||
Adjusted EBITDA | $ | 34,952 | $ | 69,821 | $ | 137,396 | $ | 222,712 |
Six Months Ended | Trailing-Twelve Months Ended | ||||||||||||||||||||||
July 1, 2023 | July 2, 2022 | July 1, 2023 | July 2, 2022 | ||||||||||||||||||||
Net cash provided by operating activities | $ | 18,720 | $ | 28,691 | $ | 26,167 | $ | 167,281 | |||||||||||||||
Subtract: Purchases of property and equipment | 29,899 | 36,559 | 62,794 | 71,447 | |||||||||||||||||||
Free cash flow | $ | (11,179) | $ | (7,868) | $ | (36,627) | $ | 95,834 |
22 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Trailing-Twelve Months Ended | |||||||||||
July 1, 2023 | July 2, 2022 | ||||||||||
Adjusted net operating profit after taxes (Adjusted NOPAT) | |||||||||||
Operating income | $ | 50,713 | $ | 141,718 | |||||||
Add: Operating lease expense (1) | 27,040 | 25,079 | |||||||||
Less: Income taxes (2) | (21,993) | (39,798) | |||||||||
Adjusted NOPAT | $ | 55,760 | $ | 126,999 | |||||||
Average adjusted invested capital | |||||||||||
Total deficit | $ | (419,141) | $ | (442,962) | |||||||
Add: Long-term debt (3) | 484,161 | 443,779 | |||||||||
Add: Operating lease obligations (4) | 438,483 | 420,516 | |||||||||
Total adjusted invested capital at end of period | $ | 503,503 | $ | 421,333 | |||||||
Average adjusted invested capital (5) | $ | 452,573 | $ | 363,986 | |||||||
Adjusted return on invested capital (Adjusted ROIC) (6) | 12.3 | % | 34.9 | % |
23 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
24 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
25 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Period | Total Number of Shares Purchased(1)(2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(3) | ||||||||||||||||||||||
April 2, 2023 through April 29, 2023 | 3,205 | $ | 26.37 | — | $ | 348,071,000 | ||||||||||||||||||||
April 30, 2023 through May 27, 2023 | 735 | $ | 21.23 | — | $ | 348,071,000 | ||||||||||||||||||||
May 29, 2023 through July 1, 2023 | 1,587 | $ | 23.63 | — | $ | 348,071,000 | ||||||||||||||||||||
Total | 5,527 | $ | 24.90 | — | $ | 348,071,000 |
26 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
Exhibit Number | Description | |||||||
10.1† | ||||||||
10.2† | ||||||||
10.3† | ||||||||
10.4† | ||||||||
10.5*† | ||||||||
10.6* | ||||||||
10.7* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
27 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
SLEEP NUMBER CORPORATION | |||||||||||
(Registrant) | |||||||||||
Dated: | August 8, 2023 | By: | /s/ Shelly R. Ibach | ||||||||
Shelly R. Ibach | |||||||||||
Chief Executive Officer | |||||||||||
(principal executive officer) | |||||||||||
By: | /s/ Joel J. Laing | ||||||||||
Joel J. Laing | |||||||||||
Chief Accounting Officer | |||||||||||
(principal accounting officer) |
28 | 2Q 2023 FORM 10-Q | SLEEP NUMBER CORPORATION |
SLEEP NUMBER CORPORATION, as the Borrower | |||||||||||
By: | /s/ Christopher Krusmark | ||||||||||
Name: | Christopher Krusmark | ||||||||||
Title: | EVP, Interim Chief Financial Officer | ||||||||||
SELECT COMFORT RETAIL CORPORATION, as a Guarantor of Payment | |||||||||||
By: | /s/ Christopher Krusmark | ||||||||||
Name: | Christopher Krusmark | ||||||||||
Title: | EVP, Interim Chief Financial Officer | ||||||||||
SELECT COMFORT CANADA HOLDINGS INC., as a Guarantor of Payment | |||||||||||
By: | /s/ Christopher Krusmark | ||||||||||
Name: | Christopher Krusmark | ||||||||||
Title: | EVP, Interim Chief Financial Officer | ||||||||||
SELECT COMFORT SC LLC, as a Guarantor of Payment | |||||||||||
By: | /s/ Christopher Krusmark | ||||||||||
Name: | Christopher Krusmark | ||||||||||
Title: | EVP, Interim Chief Financial Officer |
U.S. BANK NATIONAL ASSOCIATION, as a Lender and as Issuing Lender, Swing Line Lender and Administrative Agent | |||||||||||
By: | /s/ Conan Schleicher | ||||||||||
Name: | Conan Schleicher | ||||||||||
Title: | Senior Vice President |
KEYBANK NATIONAL ASSOCIATION, as a Lender | |||||||||||
By: | /s/ Marianne T. Meil | ||||||||||
Name: | Marianne T. Meil | ||||||||||
Title: | Sr. Vice President |
BMO HARRIS BANK N.A., as a Lender | |||||||||||
By: | /s/ Seth Michael | ||||||||||
Name: | Seth Michael | ||||||||||
Title: | Vice President |
BANK OF AMERICA, N.A., as a Lender | |||||||||||
By: | /s/ Chad Kardash | ||||||||||
Name: | Chad Kardash | ||||||||||
Title: | Senior Vice President |
PNC BANK, NATIONAL ASSOCIATION, as a Lender | |||||||||||
By: | /s/ Ana Gaytan | ||||||||||
Name: | Ana Gaytan | ||||||||||
Title: | Assistant Vice President |
ASSOCIATED BANK, N.A., as a Lender | |||||||||||
By: | /s/ Nicholas Myers | ||||||||||
Name: | Nicholas Myers | ||||||||||
Title: | Senior Vice President |
CAPITAL ONE, N.A., as a Lender | |||||||||||
By: | /s/ Gabrielle Uzdin | ||||||||||
Name: | Gabrielle Uzdin | ||||||||||
Title: | Duly Authorized Signatory |
HUNTINGTON NATIONAL BANK, as a Lender | |||||||||||
By: | /s/ Toby B. Rau | ||||||||||
Name: | Toby B. Rau | ||||||||||
Title: | Managing Director |
CITIZENS BANK, NATIONAL ASSOCIATION as a Lender | |||||||||||
By: | /s/ Jonathan Gleit | ||||||||||
Name: | Jonathan Gleit | ||||||||||
Title: | Senior Vice President |
Tenant: | |||||||||||
SLEEP NUMBER CORPORATION a Minnesota corporation | |||||||||||
By: | /s/ Joel Laing | ||||||||||
Name: | Joel Laing | ||||||||||
Title: | Treasurer and Chief Accounting Officer | ||||||||||
LANDLORD: | |||||||||||
LEGACY 1001 MINNEAPOLIS VENTURE, LLC, a Delaware limited partnership | |||||||||||
Legacy - SP Minneapolis, as Administrative member | |||||||||||
By: | /s/ Jay Rappaport | ||||||||||
Name: | Jay Rappaport | ||||||||||
Title: | CEO |
Date: August 8, 2023 | |||||
/s/ Shelly R. Ibach | |||||
Shelly R. Ibach | |||||
Chief Executive Officer |
Date: August 8, 2023 | |||||
/s/ Christopher D. Krusmark | |||||
Christopher D. Krusmark | |||||
Executive Vice President and Interim Chief Financial Officer |
Date: August 8, 2023 | |||||
/s/ Shelly R. Ibach | |||||
Shelly R. Ibach | |||||
Chief Executive Officer |
Date: August 8, 2023 | |||||
/s/ Christopher D. Krusmark | |||||
Christopher D. Krusmark | |||||
Executive Vice President and Interim Chief Financial Officer |
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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Current assets: | ||
Allowances | $ 1,475 | $ 1,267 |
Shareholders’ deficit: | ||
Undesignated preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Undesignated preferred stock, shares issued (in shares) | 0 | 0 |
Undesignated preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 142,500,000 | 142,500,000 |
Common stock, shares issued (in shares) | 22,214,000 | 22,014,000 |
Common stock, shares outstanding (in shares) | 22,214,000 | 22,014,000 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Income Statement [Abstract] | ||||
Net sales | $ 458,789 | $ 549,073 | $ 985,316 | $ 1,076,203 |
Cost of sales | 194,544 | 224,128 | 410,806 | 448,960 |
Gross profit | 264,245 | 324,945 | 574,510 | 627,243 |
Operating expenses: | ||||
Sales and marketing | 197,779 | 220,490 | 428,267 | 460,749 |
General and administrative | 39,795 | 38,727 | 79,196 | 80,046 |
Research and development | 15,445 | 15,817 | 29,888 | 32,122 |
Total operating expenses | 253,019 | 275,034 | 537,351 | 572,917 |
Operating income | 11,226 | 49,911 | 37,159 | 54,326 |
Interest expense, net | 9,948 | 3,619 | 19,050 | 5,746 |
Income before income taxes | 1,278 | 46,292 | 18,109 | 48,580 |
Income tax expense | 524 | 11,359 | 5,890 | 11,573 |
Net income | $ 754 | $ 34,933 | $ 12,219 | $ 37,007 |
Basic net income per share: | ||||
Net income per share – basic (in dollars per share) | $ 0.03 | $ 1.56 | $ 0.55 | $ 1.64 |
Weighted-average shares – basic (in shares) | 22,460,000 | 22,355,000 | 22,378,000 | 22,558,000 |
Diluted net income per share: | ||||
Net income per share – diluted (in dollars per share) | $ 0.03 | $ 1.54 | $ 0.54 | $ 1.60 |
Weighted-average shares – diluted (in shares) | 22,502,000 | 22,713,000 | 22,543,000 | 23,152,000 |
Business and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jul. 01, 2023 | |
Accounting Policies [Abstract] | |
Business and Summary of Significant Accounting Policies | Business and Summary of Significant Accounting Policies Business & Basis of Presentation The Company prepared the condensed consolidated financial statements as of and for the three and six months ended July 1, 2023 of Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly its financial position as of July 1, 2023 and December 31, 2022, and the consolidated results of operations and cash flows for the periods presented. The historical and quarterly consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the most recent audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and other recent filings with the SEC. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. The Company’s critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. The condensed consolidated financial statements include the accounts of Sleep Number Corporation and its 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation.
|
Fair Value Measurements |
6 Months Ended |
---|---|
Jul. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value MeasurementsAt July 1, 2023 and December 31, 2022, the Company had $18 million and $17 million, respectively, of debt and equity securities that fund the deferred compensation plan and are classified in other non-current assets. The Company also had corresponding deferred compensation plan liabilities of $18 million and $17 million at July 1, 2023 and December 31, 2022, respectively, which are included in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis. Unrealized gains/(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan liabilities. |
Inventories |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | InventoriesInventories consisted of the following (in thousands):
|
Goodwill and Intangible Assets, Net |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill and Indefinite-lived Intangible Assets Goodwill was $64 million at July 1, 2023 and December 31, 2022. Indefinite-lived trade name/trademarks totaled $1.4 million at July 1, 2023 and December 31, 2022. Definite-lived Intangible Assets
Developed technologies - amortization expense for the three months ended July 1, 2023 and July 2, 2022, was $0.4 million and $0.5 million, respectively, and for the six months ended July 1, 2023 and July 2, 2022 was $0.9 million and $1.1 million, respectively. Patents - amortization expense for both the three months ended July 1, 2023 and July 2, 2022, was $55 thousand, and for both the six months ended July 1, 2023 and July 2, 2022, was $0.1 million. Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands):
|
Credit Agreement |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Agreement | Credit Agreement As of July 1, 2023, the Company’s credit facility had a total commitment amount of $825 million. The credit facility is for general corporate purposes, to meet seasonal working capital requirements and to repurchase its stock. The Credit Agreement includes an accordion feature which allows the Company to increase the amount of the credit facility from $825 million to $1.2 billion, subject to lenders’ approval. The Credit Agreement provides the lenders with a collateral security interest in substantially all of the Company’s assets and those of its subsidiaries and requires the Company to comply with, among other things, a maximum net leverage ratio (5.0x) and a minimum interest coverage ratio (3.0x). The Company amended the Credit Agreement on October 26, 2022. The amendment, among other things, (a) provides relief from the requirement that the net leverage ratio not exceed 3.75x for certain corporate actions including Permitted Capital Distributions for Performance or Taxes (as defined in the Credit Agreement) and certain acquisition activity; (b) increases the permissible net leverage ratio to 5.0x for the three consecutive quarterly reporting periods ending July 1, 2023; (c) increases the commitment fee rate to 50 basis points and the margin applicable to interest rates for all borrowings by an additional 50 basis points, in each case if the net leverage ratio is greater than or equal to 4.5x; and (d) replaces the option to borrow at an interest rate based on London Interbank Offered Rate (LIBOR) to one based on a Term SOFR Rate. The Term SOFR Rate equals the sum of (x) the Term SOFR Screen Rate (as defined in the Credit Agreement) for the applicable interest period (but in no event less than zero), plus (y) 0.10%, plus (z) the margin based on Sleep Number’s net leverage ratio. The Company amended the Credit Agreement on July 24, 2023. The amendment, among other things, extends the increased permissible net leverage ratio to 5.0x to include the quarterly reporting period ending September 30, 2023. For the quarterly reporting period ending December 30, 2023, and subsequent quarterly reporting periods, the maximum leverage ratio will be 4.5x. Under the terms of the Credit Agreement, the Company pays a variable rate of interest and a commitment fee based on its leverage ratio. The Credit Agreement matures in December 2026. The Company was in compliance with all financial covenants as of July 1, 2023. The following table summarizes the Company’s borrowings under the credit facility ($ in thousands):
|
Leases |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company leases its retail, office and manufacturing space under operating leases which, in addition to the minimum lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating expenses. While the Company’s local market development approach generally results in long-term participation in given markets, the retail store leases generally provide for an initial lease term of to 10 years. The Company’s office and manufacturing leases provide for an initial lease term of up to 15 years. In addition, the Company’s mall-based retail store leases may require payment of variable rent based on net sales in excess of certain thresholds. Certain leases may contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company’s sole discretion. Lease options are included in the lease term only if exercise is reasonably certain at lease commencement. The Company’s lease agreements do not contain any material residual value guarantees. The Company also leases vehicles and certain equipment under operating leases with an initial lease term of to six years. The Company’s operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date the Company takes possession of the property. During lease renewal negotiations that extend beyond the original lease term, the Company estimates straight-line rent expense based on current market conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be reasonably estimated. At July 1, 2023, the Company’s finance right-of-use assets and lease liabilities were not significant. Lease costs were as follows (in thousands):
___________________________ (1)Includes short-term lease costs which are not significant. The maturities of operating lease liabilities as of July 1, 2023, were as follows(1) (in thousands):
___________________________ (1)Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in the operating lease liabilities. Total operating lease payments exclude $53 million of legally binding minimum lease payments for leases signed but not yet commenced. (2)Includes the current portion of $82 million for operating lease liabilities. Other information related to operating leases was as follows:
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Repurchases of Common Stock |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases Of Common Stock [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases of Common Stock | Repurchases of Common Stock Repurchases of the Company’s common stock were as follows (in thousands):
As of July 1, 2023, the remaining authorization under the Board-approved $600 million share repurchase program was $348 million.
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Revenue Recognition |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Deferred contract assets and deferred contract liabilities are included in the condensed consolidated balance sheets as follows (in thousands):
Deferred revenue and costs related to SleepIQ® technology are currently recognized on a straight-line basis over the product's estimated life of 4.5 to 5.0 years because the Company’s inputs are generally expended evenly throughout the performance period. During the three months ended July 1, 2023 and July 2, 2022, the Company recognized revenue of $10 million and $9 million, respectively, that was included in the deferred contract liability balances at the beginning of the respective periods. During the six months ended July 1, 2023 and July 2, 2022, the Company recognized revenue of $19 million and $18 million, respectively, that was included in the deferred contract liability balances at the beginning of the respective periods. Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of revenues for both the three and six months ended July 1, 2023 and July 2, 2022. Net sales were as follows (in thousands):
Obligation for Sales Returns The activity in the sales returns liability account was as follows (in thousands):
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Stock-based Compensation Expense |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation Expense | Stock-based Compensation Expense Total stock-based compensation expense (benefit) was as follows (in thousands):
___________________________ (1) Changes in stock-based compensation expense include the cumulative impact of the change in the expected achievements of certain performance targets.
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Profit Sharing and 401(k) Plan |
6 Months Ended |
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Jul. 01, 2023 | |
Profit Sharing And 401 (k) Plan [Abstract] | |
Profit Sharing and 401(k) Plan | Profit Sharing and 401(k) PlanUnder the Company’s profit sharing and 401(k) plan, eligible employees may defer up to 50% of their compensation on a pre-tax basis, subject to Internal Revenue Service limitations. Each pay period, the Company makes a contribution equal to a percentage of the employee’s contribution. During the three months ended July 1, 2023 and July 2, 2022, the Company’s contributions, net of forfeitures, were $2.8 million and $2.5 million, respectively and during the six months ended July 1, 2023 and July 2, 2022, were $5.2 million and $5.3 million, respectively. |
Net Income per Common Share |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Common Share | Net Income per Common Share The components of basic and diluted net income per share were as follows (in thousands, except per share amounts):
Additional potential dilutive stock-based awards totaling 1.3 million and 0.6 million for the three months ended July 1, 2023 and July 2, 2022, respectively, and 1.2 million and 0.5 million for the six months ended July 1, 2023 and July 2, 2022, respectively, have been excluded from the diluted net income per share calculations because these stock-based awards were anti-dilutive.
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Commitments and Contingencies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Warranty Liabilities The activity in the accrued warranty liabilities account was as follows (in thousands):
Legal Proceedings The Company is involved from time to time in various legal proceedings arising in the ordinary course of its business, including primarily commercial, product liability, employment and intellectual property claims. In accordance with U.S. generally accepted accounting principles, the Company records a liability in its consolidated financial statements with respect to any of these matters when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. If a material loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. With respect to currently pending legal proceedings, the Company has not established an estimated range of reasonably possible material losses either because it believes that is has valid defenses to claims asserted against it, the proceeding has not advanced to a stage of discovery that would enable it to establish an estimate, or the potential loss is not material. The Company currently does not expect the outcome of pending legal proceedings to have a material effect on its consolidated results of operations, financial position or cash flows. Litigation, however, is inherently unpredictable, and it is possible that the ultimate outcome of one or more claims asserted against the Company could adversely impact its consolidated results of operations, financial position or cash flows. The Company expenses legal costs as incurred. Shareholder Class Action Complaints On December 14, 2021, purported Sleep Number shareholder, Steamfitters Local 449 Pension & Retirement Security Funds (Steamfitters), filed a putative class action complaint in the United States District Court for the District of Minnesota (the District of Minnesota) on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021, inclusive, against Sleep Number, Shelly Ibach and David Callen, the Company’s former Executive Vice President and Chief Financial Officer. Steamfitters alleges material misstatements and omissions in certain of Sleep Number’s public disclosures during the purported class period, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The complaint seeks, among other things, unspecified monetary damages, reasonable costs and expenses and equitable/injunctive or other relief as deemed appropriate by the District of Minnesota. On February 14, 2022, a second purported Sleep Number shareholder, Ricardo Dario Schammas, moved for appointment as lead plaintiff in the action. On March 24, 2022, the District of Minnesota heard argument on Schammas’s motion, and subsequently appointed Steamfitters and Schammas as Co-Lead Plaintiffs (together, Co-Lead Plaintiffs). On July 19, 2022, Co-Lead Plaintiffs filed a consolidated amended complaint, which, like the predecessor complaint, asserts claims against Sleep Number, Shelly Ibach, and David Callen under Sections 10(b) and 20(a) of the Exchange Act. Co- Lead Plaintiffs purport to assert these claims on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021. Defendants moved to dismiss the consolidated amended complaint on September 19, 2022, which motion was heard by the Court on January 17, 2023. On July 10, 2023, the Court issued an order dismissing the Plaintiffs’ consolidated amended complaint with prejudice. Shareholder Derivative Complaint On May 12, 2022, Gwendolyn Calla Moore, as the appointed representative of purported Sleep Number shareholder Matthew Gelb, filed a derivative action (the Derivative Action) in the District of Minnesota against Jean-Michel Valette, Shelly Ibach, Barbara Matas, Brenda Lauderback, Daniel Alegre, Deborah Kilpatrick, Julie Howard, Kathleen Nedorostek, Michael Harrison, Stephen Gulis, Jr., David Callen, and Kevin Brown. Moore purports to assert claims on behalf of Sleep Number for breaches of fiduciary duty, waste, and contribution under Sections 10(b) and 21(d) of the Exchange Act. Moore’s allegations generally mirror those asserted in the securities complaint described above. The Moore complaint seeks damages in an unspecified amount, disgorgement, interest, and costs and expenses, including attorneys’ and experts’ fees. On September 13, 2022, the District of Minnesota entered a joint stipulation staying all proceedings in the Derivative Action pending the outcome of any motion to dismiss the Steamfitters consolidated amended complaint. Stockholder Demand On March 25, 2022, Sleep Number received a shareholder litigation demand (the “Demand”), requesting that the Board investigate the allegations in the securities class action complaint and pursue claims on Sleep Number’s behalf based on those allegations. On May 12, 2022, the Board established a special litigation committee to investigate the demand. On October 5 and October 12, 2022, Sleep Number received two additional shareholder litigation demands, which adopted and incorporated the allegations and requests in the Demand. Both of these additional litigation demands were referred to the special litigation committee. The special litigation committee has concluded that it would not be in the best interests of Sleep Number and its shareholders to take any of the actions requested in the demands at this time.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Jul. 01, 2023 |
Apr. 01, 2023 |
Jul. 02, 2022 |
Apr. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
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Pay vs Performance Disclosure | ||||||
Net income | $ 754 | $ 11,465 | $ 34,933 | $ 2,074 | $ 12,219 | $ 37,007 |
Insider Trading Arrangements |
6 Months Ended |
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Jul. 01, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Business and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jul. 01, 2023 | |
Accounting Policies [Abstract] | |
Business & Basis of Presentation | Business & Basis of Presentation The Company prepared the condensed consolidated financial statements as of and for the three and six months ended July 1, 2023 of Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly its financial position as of July 1, 2023 and December 31, 2022, and the consolidated results of operations and cash flows for the periods presented. The historical and quarterly consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the most recent audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and other recent filings with the SEC.
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Use of Estimates | The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. The Company’s critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. |
Consolidation | The condensed consolidated financial statements include the accounts of Sleep Number Corporation and its 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. |
Leases | The Company leases its retail, office and manufacturing space under operating leases which, in addition to the minimum lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating expenses. While the Company’s local market development approach generally results in long-term participation in given markets, the retail store leases generally provide for an initial lease term of to 10 years. The Company’s office and manufacturing leases provide for an initial lease term of up to 15 years. In addition, the Company’s mall-based retail store leases may require payment of variable rent based on net sales in excess of certain thresholds. Certain leases may contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company’s sole discretion. Lease options are included in the lease term only if exercise is reasonably certain at lease commencement. The Company’s lease agreements do not contain any material residual value guarantees. The Company also leases vehicles and certain equipment under operating leases with an initial lease term of to six years. The Company’s operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date the Company takes possession of the property. During lease renewal negotiations that extend beyond the original lease term, the Company estimates straight-line rent expense based on current market conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be reasonably estimated.
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Inventories (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories consisted of the following (in thousands):
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Goodwill and Intangible Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Definite-lived Intangible Assets
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Schedule of Annual Amortization of Definite-Lived Tangible Assets | Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands):
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Credit Agreement (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Borrowings Under Credit Facility | The following table summarizes the Company’s borrowings under the credit facility ($ in thousands):
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Lease Costs | Lease costs were as follows (in thousands):
___________________________ (1)Includes short-term lease costs which are not significant.
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Schedule of Maturities of Operating Lease Liabilities | The maturities of operating lease liabilities as of July 1, 2023, were as follows(1) (in thousands):
___________________________ (1)Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in the operating lease liabilities. Total operating lease payments exclude $53 million of legally binding minimum lease payments for leases signed but not yet commenced. (2)Includes the current portion of $82 million for operating lease liabilities.
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Schedule of Other Information Related Operating Leases | Other information related to operating leases was as follows:
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Repurchases of Common Stock (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchases Of Common Stock [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Repurchases of Common Stock | Repurchases of the Company’s common stock were as follows (in thousands):
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Revenue Recognition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Contract Liabilities and Deferred Contract Assets | Deferred contract assets and deferred contract liabilities are included in the condensed consolidated balance sheets as follows (in thousands):
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Disaggregation of Revenue | Net sales were as follows (in thousands):
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Schedule of Sales Return Liability | The activity in the sales returns liability account was as follows (in thousands):
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Stock-based Compensation Expense (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense | Total stock-based compensation expense (benefit) was as follows (in thousands):
___________________________ (1) Changes in stock-based compensation expense include the cumulative impact of the change in the expected achievements of certain performance targets.
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Net Income per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Basic and Diluted Net (Loss) Income per Share | The components of basic and diluted net income per share were as follows (in thousands, except per share amounts):
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 01, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Liabilities | The activity in the accrued warranty liabilities account was as follows (in thousands):
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Fair Value Measurements (Details) - Level 1 - USD ($) $ in Millions |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Other non-current assets | Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities assets funding the deferred compensation plan | $ 18 | $ 17 |
Other non-current liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan liability | $ 18 | $ 17 |
Inventories (Details) - USD ($) $ in Thousands |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 9,260 | $ 7,785 |
Work in progress | 109 | 102 |
Finished goods | 112,077 | 106,147 |
Inventories | $ 121,446 | $ 114,034 |
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
Dec. 31, 2022 |
|
Goodwill And Intangible Assets [Line Items] | |||||
Goodwill | $ 64,000 | $ 64,000 | $ 64,000 | ||
Gross Carrying Amount | 20,823 | 20,823 | 20,823 | ||
Accumulated Amortization | 19,234 | 19,234 | 18,200 | ||
Developed technologies | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Amortization expense | 400 | $ 500 | 900 | $ 1,100 | |
Gross Carrying Amount | 18,851 | 18,851 | 18,851 | ||
Accumulated Amortization | 18,564 | 18,564 | 17,641 | ||
Patents | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Amortization expense | 55 | $ 55 | 100 | $ 100 | |
Gross Carrying Amount | 1,972 | 1,972 | 1,972 | ||
Accumulated Amortization | 670 | 670 | 559 | ||
Trade Names | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Indefinite-lived trade name/trademarks | $ 1,400 | $ 1,400 | $ 1,400 |
Goodwill and Intangible Assets, Net - Definite-lived Intangible Assets (Details) - USD ($) $ in Thousands |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Definite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 20,823 | $ 20,823 |
Accumulated Amortization | 19,234 | 18,200 |
Developed technologies | ||
Definite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 18,851 | 18,851 |
Accumulated Amortization | 18,564 | 17,641 |
Patents | ||
Definite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,972 | 1,972 |
Accumulated Amortization | $ 670 | $ 559 |
Goodwill and Intangible Assets, Net - Annual Amortization for Definite-Lived Intangible (Details) $ in Thousands |
Jul. 01, 2023
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2023 (excluding the six months ended July 1, 2023) | $ 451 |
2024 | 222 |
2025 | 226 |
2026 | 222 |
2027 | 222 |
2028 | 156 |
Thereafter | 145 |
Total future amortization for definite-lived intangible assets | $ 1,644 |
Credit Agreement - Narrative (Details) - Revolving Credit Facility - Line of Credit $ in Millions |
Oct. 26, 2022 |
Jul. 24, 2023 |
Jul. 01, 2023
USD ($)
|
Oct. 25, 2022 |
---|---|---|---|---|
Line of Credit Facility [Line Items] | ||||
Current borrowing capacity | $ 825 | |||
Total commitment amount | $ 1,200 | |||
Minimum interest coverage ratio | 3.0 | |||
Net leverage ratio, maximum threshold | 4.5 | 5.0 | 3.75 | |
Net leverage ratio, maximum threshold for three consecutive quarterly reporting periods | 5.0 | |||
Commitment fee rate | 0.50% | |||
Variable rate | 0.50% | |||
Subsequent Event | ||||
Line of Credit Facility [Line Items] | ||||
Net leverage ratio, maximum threshold | 5.0 | |||
Net leverage ratio, for the period ended December 30, 2023 and subsequent periods | 4.5 | |||
Secured Overnight Financing Rate (SOFR) | ||||
Line of Credit Facility [Line Items] | ||||
Variable rate | 0.10% |
Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($) $ in Thousands |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Disclosure [Abstract] | ||
Outstanding borrowings | $ 483,800 | $ 459,600 |
Outstanding letters of credit | 7,147 | 5,947 |
Additional borrowing capacity | $ 334,053 | $ 359,453 |
Weighted-average interest rate | 7.50% | 6.70% |
Leases - Schedule of Operating Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Leases [Abstract] | ||||
Operating lease costs | $ 28,083 | $ 27,025 | $ 56,372 | $ 54,103 |
Variable lease costs | $ 129 | $ 262 | $ 182 | $ 593 |
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
2023 (excluding the six months ended July 1, 2023) | $ 54,392 | |
2024 | 102,112 | |
2025 | 90,594 | |
2026 | 78,095 | |
2027 | 62,664 | |
2028 | 50,787 | |
Thereafter | 86,696 | |
Total operating lease payments | 525,340 | |
Less: Interest | 86,857 | |
Present value of operating lease liabilities | 438,483 | |
Amount leases executed, not yet commenced, excluded from table. | 53,000 | |
Operating lease liabilities, current | $ 82,439 | $ 79,533 |
Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Dec. 31, 2022 |
|
Leases [Abstract] | |||
Weighted-average remaining lease term (in years) | 6 years | 6 years 2 months 12 days | |
Weighted-average discount rate | 6.40% | 6.20% | |
Cash paid for amounts included in present value of operating lease liabilities | $ 53,476 | $ 48,964 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 32,831 | $ 36,180 |
Repurchases of Common Stock - Schedule of Repurchase of Common Stock (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Repurchases Of Common Stock [Abstract] | ||||
Amount repurchased under Board-approved share repurchase program | $ 0 | $ 12,561 | $ 0 | $ 54,868 |
Amount repurchased in connection with the vesting of employee restricted stock grants | 138 | 85 | 3,501 | 8,776 |
Total amount repurchased (based on trade dates) | $ 138 | $ 12,646 | $ 3,501 | $ 63,644 |
Repurchases of Common Stock - Additional Information (Details) $ in Millions |
Jul. 01, 2023
USD ($)
|
---|---|
Repurchases Of Common Stock [Abstract] | |
Authorized share repurchase program | $ 600 |
Remaining authorized stock purchase plan | $ 348 |
Revenue Recognition - Schedule of Deferred Contract Assets and Deferred Contract Liabilities (Details) - USD ($) $ in Thousands |
Jul. 01, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred contract assets included in: | ||
Deferred contract assets | $ 83,900 | $ 83,685 |
Deferred contract liabilities included in: | ||
Deferred contract liabilities | 107,136 | 107,334 |
Other current assets | ||
Deferred contract assets included in: | ||
Other current assets | 28,118 | 28,121 |
Other non-current assets | ||
Deferred contract assets included in: | ||
Other non-current assets | 55,782 | 55,564 |
Other current liabilities | ||
Deferred contract liabilities included in: | ||
Other current liabilities | 36,132 | 36,335 |
Other non-current liabilities | ||
Deferred contract liabilities included in: | ||
Other non-current liabilities | $ 71,004 | $ 70,999 |
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized, included in beginning deferred contract liability balance | $ 10 | $ 9 | $ 19 | $ 18 |
Transferred at Point in Time | Revenue from Contract with Customer Benchmark | Timing of Transfer of Goods or Services Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized at a point in time | 98.00% | 98.00% | 98.00% | 98.00% |
SleepIQ Technology | Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Estimated product life | 4 years 6 months | |||
SleepIQ Technology | Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Estimated product life | 5 years |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Disaggregation of Revenue [Line Items] | ||||
Total Company | $ 458,789 | $ 549,073 | $ 985,316 | $ 1,076,203 |
Retail stores | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Company | 402,145 | 490,820 | 860,808 | 935,157 |
Online, phone, chat and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Company | $ 56,644 | $ 58,253 | $ 124,508 | $ 141,046 |
Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Sales Return Liability [Roll Forward] | ||
Balance at beginning of year | $ 25,594 | $ 22,368 |
Additions that reduce net sales | 57,849 | 53,964 |
Deductions from reserves | (57,967) | (51,676) |
Balance at end of period | $ 25,476 | $ 24,656 |
Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 5,252 | $ 3,910 | $ 9,890 | $ 8,043 |
Income tax benefit | 1,417 | 946 | 2,670 | 1,979 |
Total stock-based compensation expense, net of tax | 3,835 | 2,964 | 7,220 | 6,064 |
Stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 4,258 | 2,940 | 8,113 | 6,214 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 994 | $ 970 | $ 1,777 | $ 1,829 |
Profit Sharing and 401(k) Plan (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Profit Sharing And 401 (k) Plan [Abstract] | ||||
Employee compensation deferral (as a percent) | 50.00% | |||
Employer contributions | $ 2.8 | $ 2.5 | $ 5.2 | $ 5.3 |
Net Income per Common Share - Components of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jul. 01, 2023 |
Apr. 01, 2023 |
Jul. 02, 2022 |
Apr. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Earnings Per Share [Abstract] | ||||||
Net income | $ 754 | $ 11,465 | $ 34,933 | $ 2,074 | $ 12,219 | $ 37,007 |
Reconciliation of weighted-average shares outstanding: | ||||||
Basic weighted-average shares outstanding (in shares) | 22,460,000 | 22,355,000 | 22,378,000 | 22,558,000 | ||
Dilutive effect of stock-based awards (in shares) | 42,000 | 358,000 | 165,000 | 594,000 | ||
Diluted weighted-average shares outstanding (in shares) | 22,502,000 | 22,713,000 | 22,543,000 | 23,152,000 | ||
Net income per share – basic (in dollars per share) | $ 0.03 | $ 1.56 | $ 0.55 | $ 1.64 | ||
Net income per share – diluted (in dollars per share) | $ 0.03 | $ 1.54 | $ 0.54 | $ 1.60 |
Net Income per Common Share - Narrative (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1.3 | 0.6 | 1.2 | 0.5 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jul. 01, 2023 |
Jul. 02, 2022 |
|
Warranty Liabilities [Roll Forward] | ||
Balance at beginning of year | $ 8,997 | $ 10,069 |
Additions charged to costs and expenses for current-year sales | 8,194 | 7,930 |
Deductions from reserves | (8,315) | (8,995) |
Changes in liability for pre-existing warranties during the current year, including expirations | 111 | (240) |
Balance at end of period | $ 8,987 | $ 8,764 |
Commitments and Contingencies - Narrative (Details) |
Oct. 12, 2022
litigationDemand
|
---|---|
Pending Litigation | |
Loss Contingencies [Line Items] | |
Number of litigation demands | 2 |
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