Loading...
Docoh

Sleep Number (SNBR)

Participants
David Schwantes VP, Finance and IR
Shelly Ibach President and CEO
David Callen SVP and CFO
John Baugh Stifel
Peter Keith Piper Jaffray
Brad Thomas KeyBanc
Seth Basham Wedbush
Judy Merrick SunTrust
Michael Lasser UBS
Curtis Nagle Bank of America Merrill Lynch
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Operator

Welcome to Sleep Number's Q4 2017 and Year End Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session of today’s call. Today’s conference is being recorded. If anyone has any objection, you may disconnect at this time. I would like to introduce Mr. of Investor President Vice Schwantes, Finance Relations. and Dave you. Thank

You may begin.

David Schwantes

on I will refer the purpose be welcome access Good Officer. Thank included is Number information a us. measures refer on me Vice today to President Relations. discussed Corporation Financial Ibach, this news Please to news CEO; and financial just and be of details release period of you The sleepnumber.com. Dave recorded our Finance is to may President call being fourth joining financial are call. for Sleep the Chief With to website conference results and in this conference in the call. to afternoon at discuss the release David reconciliation our This non-GAAP Investor supplemental our Schwantes, the available telephone also ended. earnings of news quarter certain for replay. and release our of fiscal Shelly am primary Please and and XXXX that our the or Callen,

responses news at Please website note her and comments. in we detail our have for to risks to XX-K that Form and other updated a in call I periodic may presentation over filings with turn uncertainties annual of questions the our the certain on SEC. also Shelly forward-looking may results vary posted The company's will actual commentary materially. discussed statements. to are These number future our However, and investor in now an report on outlined subject release include and forward-looking earnings statements your our some sleepnumber.com.

Shelly Ibach

My our last was joining XX score for SleepIQ you XXXX earnings call. Thank night.

delivering strategy superior shareholder is innovation consumer value. Our

our efficient experience, operations retail top-tier and in differentiated innovations, shareholder returns. Our total reflected are more

for I'll conclude drivers detail then year outlook our with We results. long-term. for continued XXXX. today's operate our fourth an with performance of and and on in will provide the begin more full call overview our business quarter invest and to I our

XX%, results up comp operating of for Our $X.XX tax fourth included $X.XX up per the XX%. with positive net including benefit. was which were $XX XX%, reform-related Net earnings up And record sales of sales share million year. XXXX were in of profit of $X.X billion, consecutive

strategy Our the flow We million, business strength model. demonstrates free performance XX%, of cash from our flows million. record $XXX and and of cash of generated record up $XXX operations

And were the We internal exceeded prior also the in results of returned prior to $XXX operating $X.XX four quarter year. sales more $X.XX of up shareholders million million from plans. drivers detail starting our per and with were share was XX% our tax through year, $XX I'll XX growth of from cash Net up Fourth up now XX% $XXX million points new up XX%, XX%. earnings EPS, about with points of Net benefit. of stores. repurchases, demand. provide including of over profit reform-related comp share

a new Tech a hall. health profitable is on Consumer Sleep the They dominated our holistic at ranked to defining the are Out better month, Sleep of invested user have through Last Sleep brands digital brand, our our brands delivering can and established focused. sleep. driven as which of to category experience, to well-being. advantages customers more most and Electronics convergence on brand show, increasingly exactly International technology we at authentic for with focused measurably was Consumers individualized expect effortlessly category brand as stated, pathways Simply to life-changing XXth The This new out hottest that provide digital and may are the Show, exhibit. X,XXX the singled relevant the better competitive called model. with a Sleep strengthen the innovation in Number consumer We've more living become vertical We broadly innovations to business our trends value This leader, Tech. efficiency. by where recognition want health. are our capitalizes remarkable interact was powerful sleep Number

which firmness sleep XXX quality. XXXX, Our customers throughout relationship. launched effortlessly smart to revolutionary provides to adjusts improve daily the cultivates night we a bed, the SleepIQ insights in personalized and strong Sleep brand Number our technology

Our data is gathered SleepIQ sleep of wellness, enabling platform points night. every with billion $X understanding between and deeper a the correlation over biometric

year. expect The share proving be driver dollars we and that bed QX is for the in that market both units we to the XXX gained We growth in and smart anticipated. full

phased of We plan to are bed rollout attach smart line XXX We also benefiting by from of adjustable the complete mid-year. bases. increased our

of expect the our convert at measured positioning we our with smart XXX increased steady the purchase As low also by brand competitive The as levels with point. our brand of XXXX, brand to four end value is we consideration. strengthen remaining interest In price high, further internal bed four-year reached generating health models, a surveys. our increased awareness

market we high and plan In having as our and to aggressive, on environment our strategy while continuing to our in-house delivered to advance return of impact initiatives through invest a the while traffic media term this econometric our high quality we competitive investments. break record media and win In advance spending and tools search ROI. marketing Results share. is media XXXX, to model. learning website desired include in Our from noise escalating digital the and continuing buying, costs, machine to we benefit media stores

that experiences about predictive our excited are direct-to-consumer progression our our on with and in SleepIQ individualize website tools technology outreach. through We

loyal repeat These all of a and sales insiders. actions leading of more XXXX. Number's Sleep most represent announcement engagement recent increased partnership from XX% than our efficient Our are sales. and are and remain brand, is smart customer brand in important of to sleep individualized we the analytics initiatives to groundbreaking Number customers of a which customers Football Sleep with potential and athletic NFL, our Referral recognizes performance. the of importance wellness our partner official is League loyal our sleep National great example are base. the amplifying and how our the

players expect consumer broader understanding, help SleepIQ by and effectively measuring, awareness night's Sleep improves this benefits of the performance. compete how of generate and will great more a to technology and maximizing Number's partnership, therefore, sleep adjustability sleep. Through We we

We will and robustness advance also data health. of our sleep to linkage the continue to overall

also exclusive and strategic investments an retail clear competitive distribution decisions in advantage. differentiation in experience, increasing supported have of an extraordinary Our which are points

model. in In is fact, products, our we've base and relationships, advantages, existing are XXXX, of a competitive our while store lifelong integrated Since with working XX%, proprietary remodeling relocating all distribution stores. manner three an which our vertical exclusive CAGR grown X% and together

and with comprehensive conversion retail a integration online productivity. of have physical We and stores, leading

business XX% sales during net and CAGR a X% resulted average comp Our has growth in growth healthy retail this time.

average still in online development million sales to significant we have store, ended forward, target per average of an opportunities We store including sales. and of us. $X $X.X per of Looking continue XXXX market million with front

overall up online continue to outpace to in as and XXXX XXX growth sales stores. track expect did We to XXXX our on growth remain end it with to

our investments customer and in are is to leverage, experiences priority integrated, more in enabling our efficient faster, XXXX. Turning business This a operations. top

and improve the eliminate teams process Six and methodologies, reduce to service, embraced implementing Sigma Our waste. costs improvements business across have Lean

and distribution two value our In absorbing deliver successfully we XX of important orders our ultimately manufacture track to while remain network we'd to latest driving our XX% supply beds. discussed are plans from to our business expected. in recent and fully chain. pilots to We realign logistics the multi-year fulfill profitability on costs. delivery centers. efficiency, our quarterly that transition XXXX, we assembled assembly validated improvements and pilots stage across XX the increased to In evolve calls, completed These reliability We

We ROIC from retail above has our in efficiently. well top remains cost stores. long-term investments of XXXX. This an approach third to revolving resulted With XX.X%, our high $XXX million advance our million. driver, deploying We credit high priority EPS $XXX confidence, in continued like ROI an capital orientation, in today our to of which X.X% facility capital increase our announced was our

provides to continued commitment and addition capital -- accelerated reflects results our structure. of cash this and financial In flexibility facility significant our our for evolution generation,

shareholders share to which remained We returning were repurchases, also up through in XX% to committed XXXX. cash

of of shareholder with the consumer to on full generate past This $XXX in we've per assumes six average share shares superior sales million we earnings are years, returns. In In mid to XXXX, growth commitment high we track year at of between slow growth and cost $XX.XX. an diluted expect Over $X. our delivering environment. repurchased single-digit of choppy, summary, $X.XX a

at XXX initiatives we the full strength half We year. the expect our until the we smart quarterly be won't invest back in fluctuations with half while first our in of beds and

opportunity and to Our Thank quality innovations our are delivering customers. Number anticipating constantly adapting looking consumer, to millions experience. for members improve the to passionate of who changing Sleep sleep you and our customers' to talented team better are

I'll details on to to relentless is year, more success. focus innovation on David, over team's now call turn vital Our long-term outlook. provide who the the will our and quarter the

David Callen

Thank you, straight an journey a involves Shelly. innovator path. The rarely of

overcame risks we execution While drivers. we've in realized our challenges through responsive of steadfast XXXX, performance yet

the from including results record the weighted TSR of free sales is flows performance building XXXX; stronger early business. appreciated in our which our accelerated of reflected Sleep differentiated and XX% delivered XX.X%, XX% XX% ROIC we Number while cash average in shareholders than cost and are Our our in the XX% highly These business, is growth, in this XX% growth, operations operating cash EPS cumulative growth, investments financial net This also innovations, capital. profit results expected XXXX.

actions executing commitments to have toward do, we're we accelerate the to and While required work beyond. XXXX our

and to financial tax bringing taxes. our recent elements assets led at tax less changed, for the rate other smart XXXX, effective going Revaluing have and Before rate details, our and benefit our the guiding QX benefit tax federal year in of the deferred a forward. legislation of we deduction $X.XX the XX% deductibility I'll of actions of income of optimization year effects tax certain from tax full state including manufacturing costs discuss are overall and Many tax All-in, on end XX.X%. limited to covering financials. briefly tax liabilities code

on I'll details financials. Now, QX provide our

in sales Our and sales QX also Favorable model reacted million, QX fourth to in during across impacted strongly year. the our up weather initiatives benefited recouped the prior Consumers the quarter. weeks have by versus quarter delivered bed our XX% expected launch two of hurricanes. may performance. stronger values pX net XXX country $XXX We than delivery the also smart of closeout

QX metrics as However, this that rates each for include evenly and and is the growth including attach strong units X%, came ARU out increased SleepIQ company-controlled parse across bases to the difficult technology. country. sales FlexFit

drove ARU X%. added As growth in XXXX unit growth of of QX year store our comp new We had X%. initiatives stores full growth a XX% X% net result, and and

all in comps noting, year, annual marked and stores operated relationships, our from differentiated retail for stores clear X% and that by X% XX full an exclusivity growth. to our than It's and through XXX about of companies, since closures new the XXX general, the environment a states advantages, At sales up year years direct-to-consumer points and ago. for XXXX. where across issued customer we guidance For bankruptcies retail last grew in see up more growth end, XXXX year, long-term year worth stores, record store X,XXX XX% seven with we country. contributed online and retail up continue three In XXX retail are opportunity experience, product we to

million of trailing XXX included with just from $X basis XX% points sales per stores store over years up million. $X.X three That's average ago. Our sales XX-month our

our a grew also in our online improved she sales to shop. store sales, $X.X business to serve wants XXXX million. combined online customers XX% healthy per Including as we wherever average Our experience were

repeat sales and opportunities. referral grow ability Our continue to driving business a be comp profit strong to in

costs controls QX basis across including prior our $X.XX, incentive While leverage the year point contributed of quarter. Earnings transition media with up basis the XXX our XX% XX profit rate share a costs QX net this points we performance, in cost Diligent improvement. in versus per were and P&L, compensation diluted year-over-year. our to the initiatives, operating sales year-over-year XX% QX, increased pressured

sales is twice the EPS would accretion. from $X.XX yield which each XX% benefits, net grown and operating and growth leverage, to grow of reform demand, committed the count use tax rate. have to We remain EPS related Excluding drivers generate XX%, our share

against as credit a expansion to up our intend expect ended and revolving year our million to provides capital with two flexible We it's extended million. with provides our attractive $XXX We terms. million The capital be going drawn $XXX debt structure. sheet years new maturity Our modest financial part evolve highly conservative we of capacity maintain XXXX model to posture the facilities to and revolver $XX forward. amendment balance

capital of use unchanged. priorities Our the remain for

Our first priority confidence, continues to be high ROI investments. high for

support risk. an share. including endeavor $XXX In to to business shares per to finally, continue $XX price million we liquidity, and cash through return average expect Second, maintain shareholders of initiatives to repurchased XXXX, share capacity, to repurchases. we And downside our we appropriate of debt at

Our clear are priorities be the our stewardship XXXX. in flow XX% value can in creating diluted per in EBITDA share for cash seen year-over-year per XX.X% and our and capital the shareholders. increase free share This our diluted in increase

include single-digit EPS Our supporting EPS deliver growth range ARU growth. Key growth growth economy. growing in comp, to new sales mid midpoint, $X.XX call a our net of $X would which units, Specific initiatives market combination our of to guidance to slowly above we high for assumptions a represent and sales stores. annual from represents XX% guidance earnings at believe XXXX range $X.XX assumptions top-tier

metrics different the launch Sleep quarterly sales four at in expected stronger bed different fluctuations during the the year our than smart Completing of is use drivers we to of Number back in times remaining first drive models half expect the by the half. growth mid-year year. in phased We XXX as the

gross XXXX a in improvement following expansion For modest years. the annual point two rate basis last expect we margin, XXX

bed this margin XXXX About in the absorbed least supplier year. our are in to overall XXX Costs labor and offset cost initiatives is are lean and goods to launches performance three million smart largely be the in managing launches, sales transitions, of closeout fluctuations of $XX driving $X compared cost migration be expected product million expected in expected with half And quarterly cause while of first improvement continuous to Specifically, single-digit sold. to and XXXX. million quarters model in at expected and our inflation from logistics are $X commodities. low XXXX to for rate

to XX opportunities basis in leverage up of for also see all our long-term. expect expense to continue lines operating of XXXX across leverage We points and P&L

of significant from shape the about XXXX, it's remember XXXX. think important to you As quarterly call-outs

been business For hurricanes grew the net example, net QX XXXX. sales from sales QX sales various $XX And to of EPS of XX% QX Considering partially we in QX recouped of to timing million impacted sales million and about flat expect initiatives, Component have QX XXXX XXXX. shifted $XX of into may QX be grew to by in supply XXXX, XXX%. shortages in QX of QX million in our net EPS XXXX XXXX $XX XXXX. and of and

expect returns of projects we to $XX The planned. million capital share finally, $X.X and deliver ROIC generating remaining We XXXX. we business the $XXX in value And from since XXXX approximately billion repurchase profits and to reap of mid-teen entered of continue with million expect investments as nearly authorization. is we XXXX shareholder

like and XXXX, perseverance. open line Our to for committed priorities drivers continue to deliver execute and questions. we'd economy. earnings we Christine, EPS and a remain to the point, at are to clear, $X.XX with continue assume passion of share per this in all We slow-growth our using up

Operator

formal begin session [Operator Stifel. like of Baugh conference. At comes you. time, to with would this John question-and-answer question first a Instructions] we the The from Thank

You may question. ask your

John Baugh

the on Thank finish you nice a Congratulations and year. good evening. to

David Callen

Thanks John.

John Baugh

that higher figure? we about, does a it there mistaken, EPS that Could a Or if that maybe assumption go? at believe, $X.XX talk on rate, with with I your higher still for lower tax XXXX, is guide update was the not to rate? of with million any done, tax Or I'm outset the is go and

David Callen

the performance for does for We next our the that the for that. Yes, question. was XXXX, $X.XX XXXX shareholder our EPS announced commitment just the When John, from superior XXXX generate our at exactly important it's over beginning we we increase issued two XX% believe that. in years an value. Thanks to of guidance

to. all the We expect is to to $X.XX and use the our levers committed hurdle EPS there get we're that

John Baugh

Okay.

So, you're higher with the with just a lower the Is rate, not going $X.XX. adjust to that tax stay takeaway? right that

David Callen

Yes, that's right.

John Baugh

margins gross a line curious into that XXXX. event. delve can think, think on puts the into I'm we how heard, then bit. then margin the I maybe and and what clearance were And about some we And gross Okay. I little takes

David Callen

John, rate. Yes, we in a QX, margin our couple things pressured of that had

One call XX last margin that our last quarter again the impacted on in we on It year some year-over-year comp QX basis called points out pressure QX by of incentive was going to them and current rate. put year-over-year. the

rate And products sourced rates margin We pX also our had which mattresses. come attach our lower at stronger-than-expected we than somewhat demand expected our of gross the implied of a closeouts closeout the bases quarter, stronger -- because side. SleepIQ, and those have in level are than on FlexFit discounts of higher had which

the really accelerated the as sales strong quarter So, you last and profit profit in the accelerated on line. performance net and pretty dollars of gross see this elements operating two drove could

John Baugh

And this, how about think XXXX? in Okay. we do Dave, then

David Callen

Right.

think So, that in our rate improvement various XXXX, takes, XXXX about we're about talking modest as gross I in puts and overall. margin we expect

However, expecting rate see we quarter-by-quarter our use margin performance on to as drive different to fluctuations gross we in quarterly a basis. levers are

John Baugh

you maybe Okay. much trade continued specifically? or couple at to thrown without And guess, of gave well. in as giving you that curious, Because Thank Shelly, today, secrets, I out else. about, It like of metrics And a then, not years see but doing I a us you. it guess. in four it record working? you you, some sounds somebody may what's cash there forward What have dollars confidence onslaught be the is at marketing. so for least you're going We've color marketing on more on being like away maybe investment Could sounds little I just I give something. a think, for was return

Shelly Ibach

things. amount being the you're at And Great. thrown now Well, Board. two advertising category this right pretty across dollars absolutely it's a doing John, right. crazy of There's

a driving costs. First it's noise. secondly, search of it's fair And up of amount creating all, term

So, we this made been the that, delivered pleased clearly, up very in back with you last is that we've the essentially each holding and competitive inroads dynamic over look moving. and year all with the recall, performance half continues. Having we at we've basis kind When initiatives. real been those in advancements media in our if defined you XXX we're year some it advancing said and while we've outcome. environment last strategy levering of quarter environment, points against and the clear very XXXX media and our flat And constantly of is some initiatives

continue advance delivered ahead initiatives each these important month, is And the to So, and last it to we media. year more look we this this we will very leverage line. expected had do some XXXX, in that year than we we deliver each competitive and to again share plan into a will knowing quarter. invest year. We went at to as be little take we in on And

the of our with which nimbleness like in-house, media be search especially us As the advancing with is then that and specifically, we've the quite gives econometric advancing. base keeps background. And us quickly, effective they a customer advancements initiatives moved make far in lot loyal that of things referral then, to our highlights and background against. of been been again, initiatives, fact in steady the in having the repeat we've very we've our And able as those ones model to terms. buying and our asked And digital are the that model econometric the one executing you of adjustments

John Baugh

good and color luck. that for Thanks Great.

Shelly Ibach

Thanks.

David Callen

John. Thanks

Operator

Peter from Piper Jaffray. comes with question next Keith The

You may your ask question.

Peter Keith

earnings XX% XXXX. -- accelerating kind inclined envelope math. XXXX. the thanks like But I just launch tax going Roughly, are it there this moving in put results. back for changes. I'm just for XXXX. with the wanted like up in not XX% I some costs you're normalized looks some of doing parts earnings up sales I'm know $X.XX guess And I with implied Hey, assume the of guidance XXXX growth context rate to a year of to acceleration everyone. and to Great

for through would next walk So, allow of go us model type that the you year? we as acceleration changes could the in EPS that into

David Callen

And about whole launched and those positioning to Peter. line the back us then having into year been the the with long-term launching our getting We've some talking does provide the with the which the high XXX in Glad of least for aligned smart sales half at of business benefit of mid-year opportunity guidance XXXX, by for benefit beds. Yes. in single-digit growth. growth XXXX is sales and this

mid that, a that as our which network, that the little higher network costs So, bit those transition year Then of have evolution high and the position million you've us well. products are of to that we than single-digit got XXXX. -- XXXX this of acceleration million launch $X for to of is provides helping $X both us some assumption top our profitability the into logistics on

Peter Keith

that adjust transition all guys Okay. working your you those supply chain, accomplished I walk are model of was maybe as and meaningful us how XXXX guess in XXXX flow does follow-up, and might I could for costs XXXX in still opportunities acceleration. the and the like you overall? pretty it XXXX trying through steps XXXX through to to what a where look you and are and Maybe as the improve

David Callen

small XX% We or assembled six still proportion closer volume all maybe those We've of that mattresses to forward, facilities deliver relatively go so. XXXX. our majority But highlighting we're customers. continue is producing those of around fully expecting two that a move year in to been during as mattresses, and the overall to opened our now are Sure. we assembled which of plants to fully assembly the to efforts

is, the three us the our the with in achieved we've that handling the supported evolution centers opportunities spokes, we got major being Those great those our cross-docks, for talked of through number what about we hubs. have, and and from our the the to business our the moving we reduce of handoffs -- logistics call the And of distribution excuse plan, we cross-docks hubs. not moving of take hubs other event, our just have we that as me, point evolution through in was XX% of out challenges about through today we supported I come of being XX% opened to of with any we the But the efficiencies our our and our business excess was, that talking hubs. year are The handling. network some this that reduction There's in spokes. XXXX spokes.

Shelly Ibach

Peter, other Hey, highlight in right that place we stand, one contrast make of will back XXXX two that beyond would have I help are to and now lines we where that is do half the we where right now.

We have three line chain adds operating will XXX bed our of supply XXX as then level once still be network. well efficiently. our with in are core the the by And our of the actual our models and then models both more throughout prior have in full logistics lines. we of a smart rest the that And marketplace beds suppliers the we mid-year, smart as of complexity

Peter Keith

Okay, that's good color.

question last share XXXX buyback EPS the one in have guidance? for any you Just me Do quickly.

David Callen

buying shares of have, provide opportunity the us typically we level detail. last probably the little you some to us gives over cash that couple place, at with our level well. back years, don't revolver least bit in we been a of flow that. free It use level. And as of the But at Yes. of But that use will an see --

Peter Keith

Good Thanks a lot luck. Okay, guys. very good.

David Callen

Thanks.

Operator

Thomas with Brad comes question next from Capital Markets. KeyBanc The

You question. may your ask

Brad Thomas

is heard are first about commentary quarter. Good if be year-over-year. think you it and sounded expected congratulations you my you about let like to I in quarter earnings as well. the add EBIT the two imply David, One that that of first some said If right, afternoon follow-up heard right, me down would the the or around that maybe I on XX%. flat I

quarter -- Greatly appreciated. expectation the any Just be? additional color first color on would

David Callen

my on costs. highlighted any of have of didn't impact the of that half transition will that million we first you I prepared year, remarks that last $X of in recall in year. we the year. the $X XX% the transition And large to the will quarter, A -- first million Brad. first Sure have half costs

for strong strong a the about And pacing fluctuations the how initiatives, with of negative a And shape results year. is right And item we're but the the of like on up. was for our though, So, a the then that against QX. our up saw of just line. -- just comps seeing year-over-year business it's impact kind is the XXXX matter day EBIT end quarterly very in were XXXX, we're of this guidance initiatives. full there feel great in At we the on -- QX you basis, there just

to expect thing same the in We XXXX. do

Brad Thomas

to job of of the And real locations locations? curious, great kind then all quarter, the the some done how of performed I'd color the you Great. in mall have just of a follow-up estate. your geographically mix business on be any versus on non-mall repositioning

David Callen

locations to and non-mall having continue economics. We very mall see similar locations

Brad Thomas

And sales was in terms saw? you of performance in quarter, the there anything that interesting

Shelly Ibach

we non-malls total at in performing penetration non-mall. of stores strong were in and and pleased have for of less But mall we point. malls continue The this and them our us both be with Brad. significant, Nothing very Nothing. to greater

Brad Thomas

much. very Great. Thank you

Operator

comes from Seth The next Securities. question Wedbush Basham with

question. your ask may You

Seth Basham

Thanks a lot good and afternoon.

David Callen

Hey Seth.

Seth Basham

Brad's following question My about is on quarter the just first first question. up

will comps to imply partly driven in down comps product in points help you the our for new after such weaker a closeout me to through first quarter. by I'm through think launches. the QX? would well in think Can QX sales. as models closeout be that be seemed strong imagine just other will a in trying sales fourth be might couple that You report quarter, here why as I why

Shelly Ibach

back performance year the flat advance for with quarter. to into up took that continued initiatives are half we that guiding guided. of a growth does the is year, first knowing as assume from knowing this the we prior the consistent towards our and what we're is growth single-digit what And we're to Seth, mid-high a the trend. seeing Yes XX-week our for full year, we business the XX% That against slight in increase consideration the

Seth Basham

the Has environment the XXXX the end beginning changed into of of much since XXXX?

Shelly Ibach

say, ago. environment the changed from a would year I Yes,

right is last year-over-year, first a look quarter We stronger it QX. I if than now environment now. fairly of So, right similar was year at see the as environment

Seth Basham

it. Got

business Okay. a and XX% mix, the on And ago? you've of the strength being of give commented year was that's referral repeat trended? then of that say, you how sense Where us over Can mix. a

Shelly Ibach

our it been over many consistency this XX%, performance up It's been growth. that years was We've ago, year on business. of I focus of a a don't it now steady point calling XX%. with of to continuing now to of recall the it's but exactly XX% north we're that where over is

for customers We to continued our constantly model the of to which lifelong on in We SleepIQ our more influence all digital, our customers, our a efficiently. daily technology, with unique see factors company and that to like help this it and with important new and is brand advantaged initiatives customers as this way. growth brings area business efficient relationship basis that an reengaging our our a

Seth Basham

Got it.

Okay. me. And for last question

to the to the about here think we quarter, fourth they quarter would As the sales closeout the in compare benefit how first with pX?

David Callen

or end we're work down line will run tell the going For talk to the you sales cetera. our that models. models, actually to the exactly way we're But to competitive which not we're our when planning of closeout et of timing to the when reasons, top we're with about from remaining going launch we going

Seth Basham

expect than the that But in you was little fourth the a -- would comps, benefit limited experienced more be quarter? Understood. to to that bit you

David Callen

that initiatives the factors providing We we looking to lens and to -- plan, and We're best think at how looking really the initiatives year. the QX seeing. we're that the feel balance of you our Again, rollout we're have as the and Seth, about business good making year. all and we're the a We've at What talking that. the the is shape doing how we That is lens about about color sure for provide are changed. think where just the business right with of of to the business. hasn't for what about lot we're provided we

Seth Basham

All Thank appreciate. right, you.

David Callen

You bet.

Operator

next comes Keith The with SunTrust. question from Hughes

You question. your may ask

Judy Merrick

any coming quarter Yes, the the up it have I demand you on as that going this Do is with fourth Merrick on forward. products was was sales Or Judy fluctuation actually well? sort in kind the of comments talked tell -- had of hard then? do or Keith. initiatives about choppy think and know you for steady you all you new to the the

Shelly Ibach

we QX, And the we is line full knowing end quarter is to choppiness did similar in that I've low Judy, smart experienced. the here the competitive as to the we've our well. having strengthen and will hi by beds at what environment see I reference the the line the XX-week consistent our of in with QX pricing look describe would our that marketplace -- trend. in forward mid-year of some first and it Yes, in guidance

Judy Merrick

by beds? strong attachment you the Thank bases. you. sounds trend Okay, also, is great. smart the that Was for for kind the rates lot of It quarter? had have of the all the you overall adjustable that of like sense in driven the And bed. a similar Do

David Callen

flexible the product, one XXX the that's take we benefits line so Judy, really of the includes accrue balance as bed that the which we're -- reasons getting of customers why base. excited the of smart out adjustable the full about to is

So, -- technology. and the SleepIQ

really for about we're excited our yes, can what that customers our shareholders. for and do So,

Judy Merrick

you. Okay, great. Thank

David Callen

You bet.

Operator

The UBS. from Michael next Lasser comes question with

ask your question. You may

Michael Lasser

for my lot taking a Thanks question. evening. Good

impacted you much fourth third that us? think you do the the some second quarter of from the how quantify quarter? the the Can that you catch-up So, demand in and for experienced in disruptions

David Callen

$XX that think given might $XX imprudent of don't able some the from in Michael, results honestly, get to million. the like a benefited estimate I quarter, But to impact lens that parse --the out growth in the much quarter. really in we rebound. how we we fourth XX% feel -- to We that highlighted didn't have it's million great we fourth exactly the to our be have of hurricanes for QX was the

Michael Lasser

first talked then comparison difficult in the a about quarter. you And Okay.

arguably, the going three comparison, now to Your in be and against in and five versus the given first XX the quarter quarter. harder you're third is the the the fourth up that

compares? the So, is how business get despite tougher better do going to you think the

Shelly Ibach

confidence the Our comes initiatives, performance, with business. where excitement and and walk Michael, a this to continue us strengthening our towards is

improved with have proven We bed. XXX sleep smart the

people which best We to able we're bringing have across and are entire our And that bed to interest out pricing and the it's brand. represents in excited line, better loving new good, creating the more premium. customers be this from to

full have it. and our will we to advance will efficiency with line deployed along mid-year, initiatives by So, the continue

to on means it that and what with and both excited a our we're big able ARU with So, units, know impact has we the drive to be business model business.

Michael Lasser

we to -- comp XQ. decline in single-digit should you confirm, just low a And model

some is already you've So, of at that least that you not as yet, of introductions benefiting -- the rollout made? the

David Callen

Yes.

in of appropriately QX. just We not -- are aware another we're launching model being

pX in closeout behind the market of us. already is models our and three already have We

don't if initiatives. up and a pretty guidance last appropriately performance QX basis, in timing against, a we're of QX and about on just regarding thinking not, it's or being we're I we're -- conservative know appropriate So, the it's year our strong for how but year-over-year our

Michael Lasser

Understood.

Shelly Ibach

a few the look right challenging more ago And that I minutes in a Michael, if indicated prior now it's QX at consumer also environment the versus environment. I year,

initiatives your backdrop up that. you layer then that's So, our and against

Michael Lasser

Good luck you Thank so year. with Understood. much. the

Shelly Ibach

Thank you.

David Callen

Thanks Michael.

Operator

of Curtis The Nagle Bank next question from America. comes with

ask may You your question.

Curtis Nagle

taking Great. question. Thanks very much for the

quick just very So, a one.

a a the what If And that. in driver mix ticket? up and then how bit And or quick primary of little provide else? balance I on color follow-up much you helped bases Was units. guess adjustable the something equal more could then it after was an XQ of of clearance

David Callen

We not sales breakdown I normally we've a the break again lot we're Curtis, call. think of do And on this detail. to model. it provided by don't down going

pX is expectations. our proposition performance brand. into some -- value say the to them drive XXX our really a we quarter, its help great relative customers, our to attraction strong did and bed smart to in that the doing clearance some the pX for saw bringing Just well suffice units the very incremental And also it

lineup. the about great feel we So,

value We second these to tremendous are advancement believe with for that and get the and the offer sleep. rollout some eager of quarter that people's into life-changing improvements

Curtis Nagle

And still I sure have you be will enough. Is any Fair straight, price right? Okay. not this this to assumption? the then that taking just year, make

Shelly Ibach

it at modeling, look would I We've just consistent and, pretty how that probably about year, pricing. been time as over to time again, think in with last over ARU, messaging. X% of growth ARU

David Callen

to benefits typically that's benefit-driven And all the not for at Yes. as pricing. consumer pricing, it's just well, tied

Shelly Ibach

Right.

Curtis Nagle

understood. Right No, I

Shelly. ahead, Sorry, go

Shelly Ibach

performance. in our and attach which a bases, XXX, drives of adjustable the the strategy our keep seeing the of higher ARU part you're mind, Well, with overall that is in

Curtis Nagle

was It drive around like you're guess going try more I that any question guess it not. in I -- commodity being a it. business, inflation, and efficiencies -- pressures Got the so if was around, just taken But sounds to [ph].

David Callen

and initiatives but very have our operations. commodity lean But We XXXX, improvement across manufacturing of going pressures well entire business. Yes. strong initiatives we elements as some the see logistics continuous into in -- and

So, expect be able we to to pressures. offset those

Curtis Nagle

questions. Okay. for Thanks the answering

David Callen

Thanks. You Curtis. bet

Operator

call like back now to closing would remarks. to turn company for the the I

David Schwantes

with first look you Sleep performance well joining We months. a our couple big. quarter and to us XXXX Thank in of forward today. for discussing you dream

Operator

Thank This concludes today's for participation. you your conference.

at You this disconnect may time.