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Sleep Number (SNBR)

Participants
Dave Schwantes VP, Finance and IR
Shelly Ibach President and CEO
David Callen SVP and CFO
John Baugh Stifel
Bobby Griffin Raymond James
Brad Thomas KeyBanc Capital Markets
Peter Keith Piper Jaffray
Seth Basham Wedbush
Curtis Nagle Bank of America
Call transcript
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Operator

Welcome to Sleep Number’s Q2 2019 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today’s call is being recorded. If anyone has any objections, you may disconnect at this time.

I would like to introduce Dave Schwantes, Vice President of Finance and Investor Relations. you. Thank

begin. may You

Dave Schwantes

Investor release welcome CFO. conference Sleep Please joining call. Schwantes, Finance am and Shelly today in will quarter and our Ibach, us. on be David Corporation XXXX and Dave President and of President earnings Thank Vice With our Senior access refer is to details conference afternoon me Number are the to website second I Relations. Vice Good you our CEO telephone news being sleepnumber.com. to replay. available our the and President at Callen, This the recorded and for

discussed also non-GAAP this purpose primary this news financial Please included period call. release call certain supplemental of discuss the ended. is and fiscal reconciliation maybe financial the information of release our results on to measures just news of in The for refer the to a that or

questions forward-looking our number periodic actual may certain and release the and on our with include our earnings in in forward-looking to and a and XX-K Form company’s to Report may filings SEC. subject news vary discussed These future your some statements. materially. of outlined The are in detail However, responses Annual results uncertainties commentary other risks statements

turn I Shelly call the will for now to over her comments.

Shelly Ibach

translate at end results. consecutive growth response double into sleep quarters beds digit thank four sleep quality to smart wellness demand financial consumer for innovation Sleep into proven our of to a Number life earnings and strategy call. including has company XX transformed smart Consumer smart We’ve is through The and My quality performance our you QX. expectations delivering beds. high our is is afternoon created for technology joining of our the changing an purpose linking Good night. our for SleepIQ score execution last was with that XXX XXX driven superior

business. Our across metrics our integrated vertically operational excellence is apparent in key

million, prior $XX million $XXX up the of cash prior versus with sales $XX share results $X record $X.XX, per year prior operating quarter Earnings For the up included, the an and the XX% X% year. net of million prior over of flow year versus year. million year-to-date operating second income million XX% of comp, over $X

performance term by made strengthen differentiate to business work advantages Number proprietary drive our top They also the fueled quartile lifelong the has and These robust This relationships. focus been in we’ve profitable results. sustainable sleep advantages to of our distribution marketplace growth. on exclusive our hyper investments long competitive financial across innovation, support commoditized customer and synergistically Sleep

it how is with the Not Best how said, patterns, address. problems and to smart a a rates has of the sleep heart Lee what Sleep track aware how our so comfortable ever and an difference mention these mattress, Louisiana happy difference ability breathing customers. our made.” for we Here made support we’ve made comfort. us lacking mattresses were bed, of to and and purchase need previous is example no in this is “we’re our is genuinely important sleep making much a really bed, advantages we had Number from idea are our

in innovations. differentiated Thousands product embodies are communication products satisfaction which of advantage and has our brand sleep at first rating customers benefitting smart the customer marketing life proprietary of our compelling changing beds already that health, around are XXX level. from sleep competitive our unprecedented quality experience Building resulted multifaceted

more online this our proprietary and qualified We is Investing refinement. stores. driving our testing strategy optimize into through traffic tools media in

professionals advantage driven mission distribution. are converting record competitive levels, at exclusive of highlighting Our our second

of we last XX openings of highly stores new our evolve in we net the also have relocations are a portfolio XX stores as productive new experience, While continually enhancing our These stores. in and combination months. expand online opened

Our comp million is store $X.X average a per XX basis. trailing revenue on now month

Our to insiders reflect a in consumers a brands We companies passionate lifelong relationships. their business this strong and retaining These nearly that advantage own by that consumer two-thirds and engagement developing do acquiring role our purpose, involves of central with beliefs. our consideration. both prefer manifested future have play customers in purchase third competitive sales. Today and values see

purpose of a in driven Our community advocates. brand engaged has deeply resulted vocal

daily our followed start professionals Sleep dedicated of related this insiders Our beds relationship their our relationship We SleepIQ Number and technology. proprietary their love through sleep by interactions strengthen with products. with

software The Customers’ Number’s InnerCircle click stories digital app. to now Sleep loyalty InnerCircle their social recent to on enables then SleepIQ update our award winning customers one SleepIQ are most platform. amplified program connect through media through and with

are Our also one of brands our business. that driving [beloved our it the over efficacy most is part resulting business and sales of This repeat referral XX% to important a is of in brand difficult and develop status] strength. perhaps is most

of balance We’re and the program beyond. loyalty advances our the excited about numerous for year the in

the end our $X.XX revised lifelong EPS in our are profitable blocks over distribution building $X.XX. This to by raised exclusive resulting of $X.XX, With half a low innovations, relationships growth the guidance growth prior range first XX% to sustain marketplace. reflects we Our and the of performance, XX% year. EPS this strong to a in

half levels we back adjusted achieving give of as initiatives strong sales second specific five One, confidence growth smart are that our of XXX from half the the satisfaction us beds. lap record XXXX. digit performance Here customer double for with

insider is community performance. the increased activated and technology now business and retention is fueling program. SleepIQ integration by our repeat key InnerCircle loyalty This our and ongoing which extraordinary a for advantage is further digital growing metric is our referral of Our

brand reaching consideration. expanding Two,

XXX a higher without driving not beds as hero. campaign the traffic, featuring Number bed smart this quality is our are Sleep We

of introduced recently new versions for new competing aggressively We campaign and have this are customers.

Sleep X,XXX this beds we year. time consumer year starting sleeping NFL over about engagement Three, have only of a our players at dozen two compared amplifying players partnership through last on partnership, with NFL now our active Number our to

stores new influence and media, and have telling markets. the including top with We being of emphasis TV on in NFL featuring ad NFL is one a a an kind the of This initiatives one expanded team intensified player athletes. story national amplified XX digitally partnership

Four, advancing store in cohesive digital winning experience. our award

driving Our relationship with initiatives are fueling Sleep Number. conversion strong lifelong in

strategy market comp Our is growth. driving development store new both and

the new the Sleep celebrate our store and XXXX nationwide. will XXXth of over This XXX growth third expect stores opening We approximately net Number quarter in prior to the represents end X% with year. store

operating our integrated while customers' tools and driving from we refine routing. efficiencies experience capabilities vertically analytical improving These capturing inventory, including continue manufacturing, our Five, for are profitability. to mobile and advancements our business logistics

teamwork. their to Building consistently returns mission. our our an like would ensuring values our the dedication team perseverance, a courage shareholder of innovation superior driven unparalleled company, our purpose thank I Sleep passion, to consumer hallmark experience are delivering to sleep for culture. and These and takes Number customers

we With integrated strong trends across driving our and business are steady performance. vertically progressive advancements

life and resulting are sleep customers. in consistency execution our strategic Our steadfast changing for

the the I'll who and over quarter will year. remainder expectations on the David, now turn call details of to for provide more the

David Callen

EPS of Shelly. and We've topline XX%. the to In X% of power leverage XXXX, business made average we in grew while average emphasized you, of through we've sales accelerated EPS growth, the changes how of capital growth per year drivers deployment. delivering Thank combination XXXX this and our a would reveal

our in and trailing growth in per net sales our ROIC and average operating XXXX have have of the XX% than XX% basis. This earnings more over XXX growth, decisions net weighted capital a smart share. diluted profit beds is on initiatives accelerated through XX% of capital. growth performance deployment delivered first Our a XX% resulting XX.X% And half premium of XX-month cost

investments the It to shareholder made value is the envisioned. be an exciting Sleep as we time we've Number create a

We growth the total shareholder $X.XX expect midpoint. to in deliver of XXXX to with compelling $X.XX reflects which $X.XX returns XX% at earnings

XX% of on for X include while unit the of points sales net grew comp $XXX quarter the stores. of year. which and quarter including new X units results grew X% the prior X% ARU points million top growth Second growth from XX% grew

are points XX% including For the of comp of million the sales of year, first up half X growth. $XXX net

are continued to to our comparisons in the back high balance geared growth sales of growth, digit mid the deliver single tougher While half, of competitive sales get advancements XXXX. advantages the

quarter incremental of the tariffs. points operating of basis Our costs XX and actions profit second points basis XX flow comp absorbing drove operating incentive XX% while efficiency incremental through in

increase into We with and demand leaned our R&D. generators XX% media a in XX% a also increase in

leverage operating Prioritizing drivers deliver continues approach investments model. XX% top-line for to business our basis our in QX in a and point improvement XXX our profit. resulted This growth growth in net

XX and the year-over-year pricing. Our points incurred included from improved second quarter. QX basis basis XXX Headwinds delivery year inflation. points gross in tariff transition points of in XX gains through QX impacts tailwinds Meaningful operating included basis points from basis and XXX efficiency the the XX% eliminating cost to impacts prior XX and in margin points basis

our of our the gross approximately basis full-year margin improve expect by We XXX execution to plans points.

the XX% year $X.XX we diluted earnings of benefits quarter, the tax per in included this With $X.XX This delivered year's growth for XX% last second versus a increase topline results. share. in

half XX% back We expect the tax of rate XXXX. for a income

the and year-to-date. we year-to-date. directly the P&L highlighted, earlier in adhered noted generated with Shelly in cash As capital through first projects priorities as to deployment both $XX million capital million business We've in $XX operations from our to invest

the also in have in $XX shares We realized year-to-date. value million repurchased tremendous

and measurement return over program periods. rate well year has generated of excess mid in Our of repurchase teen three internal one, five

all of seasonally capital of Disciplined in our our historically point what plans enabled priorities cash support low QX our is for generation. execution in

Xx ratio As our the $XXX liquidity end remaining credit expected, million was our EBITDAR of revolving the quarter facility. under ample at leverage with

year, spending repurchases. and full capital to million the to in $XX expect $XX million For continue $XXX we to million million of share $XXX

X.Xx range in time operate We slightly our short leverage may support also or the though with below of to in above business operate Xx initiatives to seasonality. and this we of EBITDAR periods range for expect

one in from of model of earnings shift recall provided quarter a XXXX resulted reconciliation of the half the to our you tables non-GAAP in please year or fourth release accelerated about of QX million refer back into with $XX the details. about demand As balance deliveries week that Please for XXXX QX. the

to business future superior expect We are growth value this Jordan, shareholder of bullish please and point the at XXXX for the earnings in on and questions. beyond. top-tier line deliver and open our

Operator

Baugh Our comes question Stifel. John from from first

is now line open. Your

John Baugh

on good Congratulations good and you quarter. evening. Thank a

David Callen

Thanks John.

John Baugh

about find little a competitive little talk a to bit a But, went, little environment, on. Could the a Xth digital went, we a about less going environment? felt still was advertising bit that a said, curious morning obviously comp the they competitive there believe. July about is I'm Day competitor environment, marketing I talk maybe very navigating just how you're this Memorial hard how how good little

Shelly Ibach

let of transitioned which are since start us Well, Thanks for trend to quarters important the we've with smart four our XXX most growth me John. and beds. perhaps double-digit

again think had end we itself of strong consistent quarter confidence guidance we've the I raised Secondly, that that at half. performance the fact great we this illustration is our by the $X.XX point as head back and into the low our a of

You asked media some also about our the there. tactics of and

and our really initiatives on are we the We that quarter confidence refining proprietary the of our and have head at media strategy April testing be And delivering some about spend spoke into conference leaning as would high our advancement internal results and we recall been with specifically pleased end of we our expectations. each of with you the into QX. I the if our call,

in about I asked XX% did consistent a had think QX, competitive competitive in spend up, as spend the and about the quarter we XX% and And in QX. level in in QX environment second a we in quoted very increase finally, slightly actually you spend saw we competitive the competitive

that innovation. So our think strategies down I And not speaks that our and just coming the is of specifically effectiveness to overall.

Operator

[Operator Our Bobby from comes Instructions] question next Raymond James. Griffin from

is line Your now open.

Bobby Griffin

Good appreciate good my David quarter. on and you congrats Shelley, I Dave. questions and taking afternoon a

David Callen

Thanks Bobby.

Bobby Griffin

the when ARU level look but attachment do So, in you your products question been look growth going the and ARU you some you it's maybe at current a when think more for quarters. nothing the but pipeline? my you multiple feeling forward high R&D is first rates of of here type have of How at impressive about question,

Shelly Ibach

big ARU to our the great we The and of selling important and coming competitive to are how of an Bobby, advantages. growth system work and really get think both innovations been strategy and the units This we're investments three up to I we've has bed the and speak that made continue is ARU our question Well delivering, ARU. the nicely our to from that pieces smart outcome different expect process. together in

in also line I Our about speaks highlight R&D pipeline. our would and we their drive stores feel our ability continue then ongoing and investment sleep innovation to increase to up bullish to professionals, the and how

Bobby Griffin

Thank you, Shelly.

Operator

comes Stifel. Baugh from from follow-up question from a John next Our

Your line now open. is

John Baugh

it that's rate the curious bed, correctly with a ticked customers emphasizing And just Number bit. referral number pillows Thank seeing maybe existing speak Sleep you. little customer up first sounds and bought Shelly, as one? were they're are to that intrigued a these I and bought number you retention trading new a to, people up you understand who Do like and of offering? and base? who Are by kind of years ago your are and maybe these you're what can at

Shelly Ibach

we that important brand this on and this us this Retaining having lifelong. world kind place of your and and want especially be area between focus. appreciate direct John your today for is of area Yes and customers of to growth brands question. value in important This relationship the customers your relationship a customers of

you're consumer innovation technology. with what and really growth of seeing key that's here have our it's part yes, So and strategy a expected we SleepIQ

are are their technology, getting single when from them with brand the engaged our therefore day and referring. and night incredible their SleepIQ reminded bed our see our of our With highly and customers our keeps that customers interacting now score they're that sleep customers every

the brand the now and then is of growth referral, a for customers coming be as with bed Older there, adding the of part key metric a as who this of customers the are in referral. entered So well technology the technology all course There's is opting may pillow new and key growth above. us. for the the who SleepIQ from the is are

John Baugh

adjustable any And there then mean you how much mix I can maybe way maybe helped, roughly the ARU, much was any as follow-up. parse pricing like-for-like Is a how Thank out helped, you. how and color? much

David Callen

Yes John.

about on basis. from We an we pricing, have benefit ongoing X% that driven consistently said get pricing

rate more end at complete we're we to driver the You chooses are the adjustable recall is and package and year where this how in been that ARU in taken is customer deal. That XXX, call highlighted XXXX as helping we since as cases we some of pricing had products see rolled there. from. our attach customers a we a last taking work fewer further biggest the our that bases bedding Shelly highlighted big and current and There's the out only the benefiting some said, take together that's also those opportunity elements mattress of

John Baugh

the assembly and And of then nationally? the any update rollout on sites that

David Callen

opened customer. deliveries in DDCs with a of the opportunity few the providing the with ultimately and which of network learn XX% ended we distribution XX% third ultimately an for We've going opened strategy. have about and other that the the also and damage performing carrier quarter to and of through in very truckload number distribution, as amount our reschedule center with those less and limit deliveries that us go our LTL continue than We that we reduces are is mattresses Sure. or QX. preassembled we our Baltimore location pleased We're highlighted, assembly advance to we how

pleased and have to that our end opportunity beds preassembled So of probably close to think experience an we see we're of the forward. we continue this improvement the and go importantly by rate for we'll delivered margin most as half customer better being a year as very

John Baugh

Good luck. Thanks.

David Callen

John. lot a Thanks

Operator

Thomas from Our from Brad next KeyBanc. question comes

Your line open. is now

Brad Thomas

quarter here. Great afternoon. Good

David Callen

Brad. Thanks

Brad Thomas

you guidance than the first of I of the I year end about half XX as here, different it maybe raised were half thinking the ago? how guess about you've low was relates with it the maybe to think range. as second just hoping the what's we days strong the

David Callen

the stronger said year Not like back really that expected the first We we half in we've than in half. in much. business. the -- always the seeing growth the really are We progression of some

kind from can half margin, the all in were and the as head You acceleration see operating the we going into of for EPS sequential profit the looking back that changes sales, gross across lines getting year. we're that we of

hitting cylinders. we're business the had year XXXX us said that on bullish to we're clean we're feel run what on for and the So like doing. was and that's We all

Brad Thomas

That's great.

could What's clean line can think talk this guess, long running that a confidence the how bit you little about maybe on likelihood you refresh I some lineup kind in stretch of your before out your we XXX doing so, and you theme for in something the or And refresh? a end next a years? that few of current last up could that XXXX more

Shelly Ibach

society Yes sleep consumers and Brad, forward pipeline strongly we our move we're to the have meaningful SleepIQ stay sure will making very being so in build continue quality, And we value R&D our through pushed focused delivering our and in to proven on feel and quality that it's our innovation today with XXX about all that are broadly effortless. we quarter that investments smart beds the relevant on software. that every customers to that of delivering

So the we new then experience smart and basis in the that come on future. absolutely overall base about and XXX as bed the to advancements the bed, our smart product, bed improves the thinking will evolution in an that will continue have the off ongoing

Brad Thomas

where last I going talk if important and there's that's has you and you forward? you could for Great there and a bit one all, one how working opportunity Synchrony been can still about squeeze little think partner very

Shelly Ibach

our you're that doing with evolve we they've outcomes with and up important to all a see innovative of illustration to responsiveness we're we and long progressive and what such so, well that our as innovations. in continued our growth and here see as partnerships like advancing deliver to just of consumers Synchrony engage also and deep you'll to them continue do if ensure is which to see It's growth. upside This yield us us and relationship we us all great for Yes. key aspects business partners we in partnership of ARU steady matters been that and with and is as to

Brad Thomas

Great, thank Shelley. you,

Operator

Our Piper. next Peter question from comes Keith from

Your open. line is now

Peter Keith

to a Good want longer-term afternoon I growth. question Hi ask everyone. thanks. around store

XXX that could North beginning It now that regard? and expansion? seems at the So to moving further you're international and parts product the certainly expansion and contemplate any any to if stores higher, translate of you you're contemplated America wondering other of type have brand well in

Shelly Ibach

is Yes. that. Peter. question. our an great important Hi of vision indicator Absolutely That's a

broader become our and much Our one to by few an delivering is years. next sleep important beloved of experience and unparalleled the part vision most the certainly the growth strategy over world's brands that's U.S. of an than

Peter Keith

Okay, good. sheet. very on David for the And maybe just balance

revolver, you Looking a at is at I up can know the landed just rate variable rate, remind I looking an it at fixed us that X.X%. or XX-K, of rate said was

David Callen

a that's Yes, variable rate.

Peter Keith

loan, So, the point that of your to Would that some of of variable was using notes, term which fund it's maybe sort look to at longer revolver some type you with right on rate. of rate comparable debt you repurchases maybe you have some that type sort share term towards now?

David Callen

capital our slower different periods time, expanding at of for this were yet cash and there's flexibility review with when and we generate looked basis we debt all last our regular types structure We we our this structure maintaining priority is maximum of lot a where demand. even a board a time Peter, think and have on business. revolver that we

looks So, want have ourselves sure like that capital to that into structure flexibility that a we and make we that. park

Peter Keith

Okay.

David Callen

that's change someday that but about right think we may how so but now far That it.

Peter Keith

helpful. Thanks much, guys. so very Okay,

David Callen

Thanks, Peter.

Operator

UBS. from Lasser Michael from comes question next Our

is now Your open. line

Unidentified Analyst

around the Maheswari consumer Atul digit consumer a and is in you taking growth single first What remaining Michael back Lasser. my Thanks. guidance overall same as spending this half is for on at guidance This behavior place in evening. mid-to-high a your the contingent in lot half. have for sales Thanks on Good baked questions. say for

David Callen

expect is think We healthy that the continue we of consumer half in back the the year. and really

Unidentified Analyst

Thanks.

Operator

from Instructions] Basham Our from [Operator Seth next question Wedbush. comes

line now is open. Your

Seth Basham

Thanks a and lot good afternoon.

Shelly Ibach

Hi, Seth.

David Callen

Hi, Seth.

Seth Basham

adjustable has been mix may questions your being but gross terms if it a to margins. have you hindrance call My I it quarter attachments past? of around gross missed in in margins like this the out

David Callen

that other seeing had that's pressure out that No, Seth, highlight. within earlier a because we especially we call good year-over-year been on didn’t our it things have a mix Yes that basis. help we offset

no, out this as So called quarter. something that wasn’t gross we rate a pressure margin

Seth Basham

trade little it you a adjustable around within more see the more Dave, within trade could you color or is mattress you up? do more did that, of add see line up bit the a

David Callen

down year both, last an saw into CX we this Seth, the last that C-series are at time. quarter bit out actually second saw closing our and a our of Remember, improvement. we We moved so year the in mix

promotional Our in we terms lot this choices line of quarter a and result the a different people up was they as the move that mattress and made. cadence

a but was But rate. of that basis end they we greater attachment also the higher we much the attached the at three also higher flexible have adjustable higher our of models at

So, margin to some helps pressure. that offset rate their of

Seth Basham

down color. conversion conversion Got secondly, you have mattress is comparable record And but is is down comp imply may well traffic must within helpful and unit it, maintenance you slightly, now stores think that this your that's had implied stores. that then is I strong, mentioned here, that levels

how What's improve and stores? shopping less and there do the seeing your to consumer traffic Are something in happening is with you can trend? that you they're

Shelly Ibach

Yes.

has there traffic. been four very our traffic and key our measurement is and steady quarters qualified strong for Importantly,

and been qualified traffic. a we've last quality traffic of So, in couple these honing quality over years in difference to and there's on

of XX so, strategy. and why obviously, stores added the we've total remarks stay over we've months really our that And in last that that results I unit new impacts on number and been the total growth. focused with stores comp growing of media growth And we XX the been pleased and we highlighted

And we were we at annual an quarterly from there growth on And we've to our going promotion. unit basis. X%. in year drive this ARU expect you a look last fluctuations basis, said, the the in X% we second both how is looking units growth be in at of quarter, as up and But we're second because if quarter up on

which X% great growth this year pressured we're by and C-series units where heavily margin was closeout this is growth the in driven example year units I also bed other is aspects for And a from was in the in of ARU XXX back about that. expecting half. the full-year this the all Last in smart think quarter still

Seth Basham

Thank much. very you,

Operator

Nagle of Our next Curtis Bank from question America. from comes

now is line Your open.

Curtis Nagle

taking Good evening. my Thanks for question.

quickly Just back guess debt. I one going on the

looking cash your the the free year, rest is really of did flow how of for XQ strong a quarter. kind So,

at much Looking terms left to back, of what want I to you is that. how have of think you do guys in should capacity buy plenty

the Would you you down take leverage you to some consider exit continue guys a have taking debt of in terms buy up of cash bit? whatever excess or would backs

David Callen

is an seasonally Curtis, at our that are area that and manage low cash the to of range times X.X range a we and operate carefully this we end period EBITDAR in the second we the important X.X at of quarter. generation we've that highlighted end here of high within

are as We or operating through committed front expect but down come conservatively the count to we we actually relatively debt But using as business the on the progress that guideline. balance range front. in target us on that can the a the year that of range leverage the you might that

Curtis Nagle

much. Oka fair thanks very enough,

David Callen

Okay.

Operator

from Our last question KeyBanc. comes from Brad Thomas

Your open. now line is

Brad Thomas

I Yes couple follow-up of could. get questions hi, letting a in. for back me thanks if

talk million or sales quarter this about percentage ago hoping missed But I time what's think little I just $X bit that? the broken have been you'd a did over of you've stores press I was -- your a with out might maybe release and first the it.

Shelly Ibach

time. is this first No, the Yes.

Brad Thomas

little could be you bit and a base relocation more about of How actions. where hoping, and the do you those lot about or maybe stores the qualities more your whole not might think you stores I Shelly, store Yes. there opportunities? renovation a but the portfolio maybe about store think talk necessarily growing of as was

Shelly Ibach

did Well, having gave for part marketplace being video and real-estate strongly I the in key business we of example after an a shareholder strategy that annual sustainable And meeting during relocation our some store where profitable ongoing very our a we of in portfolio. on a such the I healthy in believe time. for a and think growth

And simply but and of that a mile national marketplace combination in a And the within to was with the value the first consumer the moving few experienced market months. we development XX%lift a a six speaks had it local move strategy strategy. in a having and it

how And at behaving We be staying dollars is to looking real-estate and short nationwide in the and on feel or nation. the in and close having consumer's to need experience total brand what a that that about each term. made profit strongly what that and in is we market consistent total a long healthy portfolio marketplace brand by is the that mean across moves

$X.X well this today growing XX million staying stores. driving comp we're where we or with able developing key trailing a that, still markets over in driving And high our markets. our productivity in position as were for as that months close average the being markets are And being that that stores to and fill-in new to that and the is us to

all And we at still growing levels. are

largest is our still store So, growing.

and So, stores, of U.S. our speaks we outside trajectory early in our both we're think have stores, existing expanding not markets I still the to peaked that this out developing is in adding

Brad Thomas

in squeeze and for more one modeling. guidance And great. can on if David That's

balance few and lot XQ XQ. been we and in we quarters? last the as might puts these the us remaining two that a should of Over of years shifts there's about those and for do and next in any fall how earnings think think takes you your color between and two have about how quarters,

David Callen

of $XX approximately reconciles of numbers. that from we've year all highlighted our reported earnings was last and the Yes. QX move GAAP into QX deliveries in shift provided table of a there We release that that QX million there's a

the last that non-GAAP So, performance we year. highlighted

modeling about into should that a some the of actually it, in and in we our right calls. back help the lot is after put way looking place. But with details looks together a thoughts has the That help generally speaking you your in in half other consensus can

Brad Thomas

-- And oh, sorry?

Shelly Ibach

the And underlying performance, at underlying where going just it's this clean pretty straightforward. a no. trends. big XXXX mentioned of is just driving the moving don’t We running I was illustration have in earlier good we're parts trends are the to David I overall and say business the think

Brad Thomas

Yes.

I your the quarter seasonably, think sales. is that usually third biggest for

had in well. your I the often quarter so, historically think And as third strongest you had earnings

you normal If here? second that out things somewhat a have might half, how is play

David Callen

I about that's think Yes, would how it.

Brad Thomas

and me great for Thanks quarter here. getting great. in again Okay, a congratulations on back

David Callen

Brad. thanks Yes,

Shelly Ibach

Brad. Thanks,

Operator

more We James. Raymond have question from Bobby one follow-up from Griffin

is open. line now Your

Bobby Griffin

the store thanks is of help you queue. mattress working rough for letting estimate that And better to in composition up against why change probably a cannibalizing any there us units store in how in units noticed think to units about you me the open a in have Yes, growth you and new give look jump market. back at? when us is the is can metric maybe total David, actually

David Callen

ongoing last is than Bobby business. Shelly had we with this that new more opened growth prior mentioned Yes with the stores store we XX of in the XX months. XX that's that the And an acceleration dynamic XX% months;

So, we overall of assume you is about the dollars and generally And and that's amount see units. meaningful. can cannibalization XX% cannibalization that

Bobby Griffin

in detail. for jump back quickly. here me that letting appreciate I real thanks Okay, again And

David Callen

thanks. Absolutely,

Operator

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

David Callen

and XXXX quarter October; look dream joining forward third performance with today. big! to for Thank sleep discussing us We our you well in you,