Sleep Number Corp (NASDAQ: SNBR) stock rose over 6.1% in the pre-market session of August 15th, 2020 (Source: Google finance) post third quarter of 2020 performance.
The firm’s net sales rose 12% yoy to $531 million, while the net earnings per share rose 90% to $1.79. The firm’s year-to-date cash flows rose 51% yoy to $287 million. The Comp sales rose 11% during the period. Net operating profit rose 78% and 490 basis points on a year over year basis. Incremental operating profit flow-through rate was 54% during the third quarter of 2020. The firm’s third quarter’s gross margin reached 63.1% which is a 590-basis-point sequential improvement since COVID affected Q2. The firm’s EPS reached $1.79 which is a rise of 90% against the prior year. The firm’s nine-month EPS rose 45% yoy to $2.73, despite the $0.45 Q2 loss this year due to COVID shutdowns.
The firm generated a healthy $4,800 ARU, which is $14 greater than the prior year. Consumer shopping preferences largely normalized in Q3 with 98% of stores open on average. The firm’s brand reached expanded demand of 16% in Q3, driven by in stores and online sales. The firm derived 14% of Q3 net sales from online, which is about twice historic norm.
The firm expects year-to-date EPS to exceed the $2.70 earned for the entire year in 2019. The firm sees fourth quarter net sales to rise 20% to 25% over the prior year, including 8 points from the extra week in the quarter. For the full-year 2020, the firm expects EPS of at least $4, against the 2019’s $2.70, which is a five-year EPS growth CAGR of more than 30% The firm intends to expect 4% to 5% in average annual expansion of store portfolio through 2025 while growing online and phone sales.
For 2020 EPS is estimated at least $4 which makes Q4 EPS of $1.25 to $1.30, while forecasts return to an operating leverage target of 2.5 to three times while maintaining bias for liquidity preservation.