MINNEAPOLIS – Supply chain issues impacted deliveries for Sleep Number resulting in a 13% decline in fourth quarter net sales, and company executives said it will be challenged with ongoing backlogs into this year due to the supply of a semiconductor component used in its beds.
The company’s net sales for the quarter ended Jan. 1 were $492 million, compared with $568 million during the same period last year. Net income for the quarter slid to $11.1 million from $61.4 million in the prior year quarter.
Sleep Number’s stock price had dropped more than 13% to $56 per share prior to the market opening today.
“The fourth quarter proved to be the most challenging as we ultimately did not receive a semiconductor component soon enough to fulfill our planned deliveries in the quarter,” said Shelly Ibach, president and CEO, during the company’s earnings call. “Electronic supplies remain constrained near term as semiconductor demand is still overwhelmingly global supply capacity. The suppliers are adapting as they enter the third year of difficult operating conditions.”
Net sales for the year increased 18% to $2.18 billion compared with $1.86 billion in the prior year. Net income was up 10% to $153.7 million compared with $139.2 million for the prior year.
Ibach said the company is using “numerous levers of our vertically integrated business model to anticipate and respond to dynamic business conditions and drive sustained demand. Digitization efforts are enabling real-time inventory visibility, scheduling, communication and customer fulfillment.”
The component shortage is impacting Sleep Number’s FlexFit adjustable bed.
David Callen, Sleep Number chief financial officer, said the delayed components, delivered late in December, moved more than $125 million of net sales – or 2.5 weeks of deliveries – out of the fourth quarter.
