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Sleep Number (SNBR)

Participants
Dave Schwantes Vice President of Finance & Investor Relations
Shelly Ibach President & Chief Executive Officer
David Callen Chief Financial Officer
John Baugh Stifel
Brad Thomas KeyBanc Capital
Bobby Griffin Raymond James
Peter Keith Piper Sandler
Atul Maheswari UBS
Curtis Nagle Bank of America
Seth Basham Wedbush Securities
Call transcript
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Operator

Welcome to Sleep Number's Q1 2020 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 welcome Callen, conference Sleep joining call. Schwantes, and Finance am and Shelly today quarter our Chief Ibach, us. Corporation Financial XXXX Dave President and of President earnings Thank and Vice With to afternoon me Number are David the CEO; first I Relations. our Good you for Officer.

This in distancing telephone release the replay. call our are social as The and sit available for conference is will three refer our the today, on at conference offices the room. of being recorded our news our Minneapolis details in access us sleepnumber.com. in we are to apart be to but Please website

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

commentary our questions and certain include However, your forward-looking statements. responses to may

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

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

Shelly Ibach

economy live and XX score Good environment. In afternoon businesses and all welcome radically just weeks, to navigating quarter we earnings last are night. was our unfamiliar few our My SleepIQ changed first call. an XXXX a and short have

unlike ever human is our pandemic crisis world experienced. a COVID-XX The anything economic has and

have customers, and partners, health this the to families workers, been and who hurt the all by out team, our virus. businesses go hearts Our care

business company, energy members on have continuity. we our our customers our and As team resources and our ensuring purpose-driven a safe. Serving keeping focused

adhered local closely CDC to national by the provided the governments. and have guidelines We and

were closed. customer March headquarters, XX% our stores result, labs, And by teams service, XXst, remotely of working store mid-March. our a and As began

have and teams serve quickly our customers Our solutions alternative operations. to our support implemented innovative,

swift announced in actions a expenses. we As loan the million taken flexibility financial our credit In have $XX liquidity through our remaining on control drew April $XXX under preserve increase to added and we cash facility down mid-March, term Xrd. we two weeks million available revolving ago, and

and We made we plans incentive our Board, And of reductions of programs the began or senior than more variable executing and million. members. expense $XXX company-wide have approximately for $XXX We reduce to and through decision capital reduced more comp million leadership, benefits difficult decreased than other by actions. deployment hours furlough XX% team and

measures near-term market manage Sleep through abates These the are shareholder intently value focused gains, on our and position, necessary recovers. In economy to this the remain we share and superior retaining effectively creation as environment. current crisis parallel, leadership

double-digit advantages quarter through competitive week enabled quarters Our the significant extended results of growth exceptional the second trend and prior demand of our first consecutive March. six

of the on strategy the consumer of impact March. back execution despite record results, COVID-XX half quarter first Disciplined by caused differentiated adverse produced demand our severe in innovation

a X% in per with gain in XX% from share net results growth to growth stores, QX new comp and to sales, XX% of earnings XX% profit million to cash million. growth operating to five sales XX% $X.XX and net XX% $XXX $XX growth flow in included points net free

driving our provided accelerating XXX X%, and rate reflect results by and nearly XX%. gross increase grew wellness units XX% to quarter average demand per for in a point XXX the beds. margin revolutionary basis smart benefits revenue the During unit rose consumer health These

bases attachment with with features. our In better foot smart of growth in and addition efficiencies, drove Snore improved good, to mix operating premium Partner we warming best across the strong and

outcome key from to growth over units drive of both time a and is ability our ARU Our strategy.

the are unprecedented real results we consistent business these after expect crisis. to for underlying this the decile our to potential Importantly, performance return and top

near-term are pandemic substantial. the caused challenges by The

and balance resilient our of team with ability great the confidence rebound with give our me measures we and weeks strength the sheet in However, have and business our recent engaged taken strength. to highly in combined

which Here are under to our a agility current continuity few and highlights the demonstrate business ensure mindset innovative circumstances.

of stores sales. media business highlight and our With how brand closed and repeat our April than reduction, a insiders we We is to our represents refocused more efforts often important and loyal referral target our significant XX% overall marketing which advocates.

to easily implemented while to solutions time uncertainty model. retaining ability life-long these transact powerful selling value into our performance customers digital lean is quickly of numerous We and of relationships to the engage this Our in and driver. us, enable CRM a advantage relationship-based with

blended model operating via and new from a and stores chat, team capabilities include phone members home online. selling of Our digital open

our phone As in coming our sales and of closed sales of up year. sales live result online composition the include XXX% actions, prior of a from in another sales April with of approximately over our our XX% chat from from stores XX% open the online XX% stores,

We also delivery including request, implemented a rescheduling contact-less and solutions customer self-service service solution. digital

levels with for customer record and of scores. include high service XX% delivery of satisfaction approximately sustaining home Results open our markets

As a per sales these result steadily of improved in orders April. pivots, have day our

government also as During to the orders weeks last our declined the closed two XX% stores, abruptly of XX% mandate sales our almost year. prior March, of

April. sales in sales near-term our to approximately have outlook. rapidly We to we've our manufacturing chain down taken, supply in lower XX% actions our the modified reflect With operations improved

business commitment of an well vertically with leadership frame. we resilience and in seasoned model, our in purpose-driven our a demonstrate addition, and on agility, the actions time acceleration suppliers repressible These In plans for working the as team. our visibility are as inherent real-time ambiguous integrated controls

tenacity in part live, operate their for time. And our ingenuity. we deeply couldn't during and work; and all I team As and will advancements we digital future. redefines proud the further these shop our the in pandemic am be Sleep how how of this be more capabilities technology Number I grateful of difficult

customers, our community. are and I making Every evidence for other, that our company each day, see they our difference a

Irmo a for supply for plant Carolina is health South NXX refurbishing Carolina care example workers. Hospital manufacturing needed by supporting the much Association Our masks, nearly XXX,XXX South fulfilling

Number has proven about The quality resilience. important concerns between Sleep overall beds current more ever that smart immunity sleep society individuals' and to sleep quality a It environment strong is wellness. for and and from mental our proven than positive their has emotional XXX provide. connection life-changing heightened the benefit forged

customers XXX insights, between circadian health overall the Near-term, software sleep advance rate wellness we all delivering link exclusive to understanding features reporting bed plan our SleepIQ rhythm personalized of our and of and variability to heart deeper provide a with and wellness. smart

XXX second in-store when April from media operations business marketing us be low to third to responsiveness expected new recovering is to to or we our in our current training. spend moved Though, inventory bed were launch also launch quarter introduction prepared impact allowing levels. to and without postpone We are model smart adverse from

our this combined with culture us quickly expect agility kind enable of We to store logistics our mission-driven rescale to and operations. manufacturing

excited the line for important this rebound. an We be of our part new to of launch are

guidance. around we and Given uncertainty the XXXX the COVID-XX, impact duration withdrew of our

the We a May followed on to a meaningful recovery June back pressure expect in of half extent to lesser year. place closures existing the by the to into and sales gradual through continue government-mandated

share continue on clarity we our have outlook. updates to will we more As

communities quality and navigate are this through to higher customers keep We power financially, help team our and our crisis everything strategically our continue safe achieve doing in and effectively sleep. to operationally

extremely our are been their to and grateful ensuring partners We our has for support continuity. instrumental suppliers valued which in business

exceptional to pandemic Consumer be we into XXX going after smart this our the demand for expect and life-changing beds it exceptional crisis. was

Our digital the remains prior over traffic double-digit at increases year.

we and strategic use at Our this opportunity health high mission brand metrics accelerate remain our dislocation and to will all-time wellness. around and

navigate challenging and environment. provide details David financial this our Now to actions in first additional will quarter on our

David Callen

crisis I'd the add and my unknowable. makes are and this this complex. The your the for depth planning Shelly. environment in challenge. financial loved to of you, ones Thank the like of duration and That forecasting wishes unprecedented extremely best recovery of business through safety health this

if sales We've XX% would our prior were severe variety One deep forecast indicated the a for our model quarter. into the example just That liquidity including the take was current us of of with of pressure some inputs model XXXX. our if liquidity balance fourth tested to what year scenarios. liquidity

is sales experience. realistic, not our XX% since it's decline actual materially worse than an Now

it liquidity variety illustrate our uncertain the a in business of the sufficiency manage effectively the and However, highly of to inputs does we've environment. considered

businesses our remember sales quarter. the impact under in we at today, capital some we at are modeled cost states that of low the most providing outcomes of form we we here consumers With we is of half While the guidance not are generation one QX COVID-XX Therefore, cash expect possible and say quarter. on our seasonally order, sales prior year. sharing Also and about QX second home used all deployment nearly decisions. inform set and to

consumer While business and mandates improve the knows be may confidence conditions government of assume still back will no year. through half one what the effect, in we

of year One QX the with be Then to of benefit the sales modeled the decline about QX versus assumes week, prior about models extra with of the the sales a our QX decline. half flat prior we year.

than net still below end year also in more and Based $XX peak cuts, first this million half. leverage $XX free in at deployment of back They debt indicate of half ratio on cost EBITDA models would generation consumption and million our cash times more of quarterly with these the our capital QX our and a covenant. than X.X the the

What's control with advantaged important to strategy. near-term actively understand to levers all sustain financial in the is to our our commitment are balance we managing risks our that

rebound challenge taken with embraces performance to bias date. long-term for actions orientation approach Our this the now enables pace. from to that us This an we've inform

with sales meaningful teams the suspension and but of our share repurchases. decline customers and abrupt preservation, in prompted mid-March our is along priority daily Our of immediate capital in the safety

down rather end $XX need, the out indicates off These kicked modeling taken revolver we'll the of were repay accordion loan process. unused of caution the our also its at We as actions million drew expansion the term. and XXX-day than

actions are to based learn modeling of realities COVID-XX we've are date today. The I've on week the The Each taken we dynamic. more. outlined

improve preserve needed. be pursued of to rebound other enables business to vertically business maximum is conditions are actions us to should conditions available nimble. will integrated approach if model Our as certainly be our Alternatively, worsen, flexibility control faster. and quickly Having

to continue pace. with will We act

and properly by close balance rent component real-time by from accounting decisions for closures, to inventory locations business actions million for impacted Other profits and important Act; the flow partnerships continued under CARES deferrals; liquidity on labor though and evaluation our concessions for leases enabled to sales to credit across and accordion or our cash deferrals XX the plus the and availability other to needs of remaining deferral our stores transfers $XX recoveries operating meet in sources, negotiated profits to preserve facilities. high close treatment our with mandatory liquidity associated; of marketing of operating ongoing with those XXXX other liquidity including our stores and month-to-month COVID-XX approximately sales, probability suppliers; include: flow and liquidity partners; markets, adjustments expect we tax from advantaged existing

business fundamentals result a our as strong recent investment and actions of years The our balance of sheet in decisive are our weeks. prioritized and of

to continue the long-term We we capital. as allocate execute for

more environment, Given we profits. are by with to immediate benefits the flexibility current preserving prioritizing projects

investments For store example, payback. generally have a two-year our

So of delayed XXXX store actions. about have we planned the half

the center proceed benefit Angeles in On we new distribution our cost hand million assessment should planned. indicated the other of assembly $X.X as Los

expect existing hub early May. when the replaces operations cost of total this We in ADC lower

not actions our but to The of the COVID-XX date significant derail will value-creating business disruption related delay from business. prospects and our pandemic

of improving delivered value quarter financial in compelling The in the so the creation highlights quarter business. business the in XXXX again continuously performance the initiatives first did XXXX. strength of Our that the across first

of grew $XXX sales trailing store. million up million our stores. from per of comp X% XX% more per store five were sales XX% grew and grew million including and XX-month X%. of with net Our Units stores points generating ARU XX%, $X X% new than Average $X.X

sales in Online prior XX% grew and QX year. phone over the

with basis more the quarter favorable delivery and year's inflation. offsetting points QX over prior margin Our operating first improved gross efficiencies labor mix than XXX

increase point our support and to rate basis of a while our year-over-year We spending to operating our in also profit net XX% increase sales drove growth drivers, XXX net in spending. a XX% R&D including long-term near-

COVID-XX net $X in partially million incentive by offset cash lower compensation. participation broad approximately $X approximately plus were investments costs payroll million These

of The and XX% quarter tax while up utility grew share XX% of profit XX%, year-over-year. EBITDAR. earnings up XX.X% increase drove trailing operations, sales in ending XX% per absorbing our our With ratio $X.XX in times infrastructure diluted to a approximately income ROIC leverage $X.XX, the X.X XX-month from and cash QX of a headwind a operating

million $XXX April They convey the cash funded ahead business with on These of challenge on new our X. added also health the of of the our ahead. ended $XX million and our insights another of metrics We quarter how overcome balance facility sheet provide through we'll COVID-XX.

wellness starting Number value price while attainable for cX Sleep our of a packed innovations improve health highly Bed. $XXX and XXX being with Smart

we demand as expect consumer confidence and to significantly, are able reopen grow We improves. to stores

We also again over to be expect time. investors rewarded

questions. at Cheryl, this the open line please for point clarifying

Operator

first ahead. Please comes question of Stifel. go [Operator Instructions] The John from Baugh

is line open. Your

John Baugh

in that Shelly Good in exactly you. in. your on and quarter Thank is jump states to management and Florida economic states, sharing what any recently or Could Congrats happening first in those maybe states have to great pain. afternoon. going you near-term if you kudos open? the what the talk to right anything that I'm stores, "opened" anticipate with

Shelly Ibach

John. Sure,

reopened variation open, have see it's on locally, the As country. or that And across it that is we county the variation depending to you transpiring stores are and in what whether state. a or state the really is look there so a at speaks

So And transaction, some with with customers kind to low environment. have markets of regular-type states you -- the all reopened traffic out coming are then them opened customers have other our in. say I'd ARU, to customers on where with we've close significant but in-store high bring low -- significant a in coming reach based and we

So different it's state. by

traffic. normally business country. consistent situation, swings think under quite a is interesting the don't I it's see normal big because in We across our

very you weather short impact, Sometimes but it's have term. some

innovative And continue a little to what like impressive over this executed these we're learned about last What consistent. our rise seeing and is above their drive four different. generally, utilize and pretty It weeks performance. solutions really John. to it's I So ability we've to is team's circumstances so

has our It to team out the speaks mission-driven a that and culture our way. to figure tenacity

selling where opening lead we're because the we dependent our and have not strategy that ongoing of sitting our stores model so, a situation And relationships here then on relationship-based marketing traffic, we're in in driving the of us been with our performance. and accomplish last our business portion over the insiders really which represent with in what four significant I'm unbelievable pleased And we've drive able weeks the such circumstances. a ability to to gives and

John Baugh

how come what Yes. been is how I'm off It's come because typically I've and Number. getting comfort from the or and -- in level customers included your in bed bed, a your selling you're curious, a anxiety on or that sure. unprecedented for you're Street, either function laying addressing -- just new prompting if on that whether a Sleep their customer maybe in finding your your

I'm to So that? as curious how navigating you're

Shelly Ibach

So have strictly beginning on the hygiene since sanitation. CDC John, follow social on and guidelines we distancing,

and appointments. low -- stores have occupancy we are traffic, offer Our low private and

the have needed. consistently cautious to way hourly communities work have business we ways best able contributing and and forward. obviously many ensuring have beginning, and to our hours pivot the of and kept prioritization for the we and separate our clean continuity with been customers. keeping our members and populations and find our customers elderly vulnerable as We and We're from team safe to very the have And

customer some in my environment So quickly our there of normally. behaving we concern. the our And response, they way very it any yet the then with mitigates only are earlier to have other more markets markets and the apprehensive. store conduct customers type we where -- with And small where business back store, are are

And Our so team experience had is they already. still professional. much have

quite So it's been going well.

John Baugh

walk through quite precisely comments? you clear? It shipments Thank then XX%? walk again XX%? us All was That orders that was question It the down is versus maybe through Could for clarity wasn't And you. last just David. April right. my us down

Shelly Ibach

John, around QX for performance? asking clarity you're

John Baugh

falling commentary how of is and XX% precisely the There tracked XX% April I clear and orders April. April, month was about wasn't off on far? so

Shelly Ibach

actually going I because performance I'm just understand with Well Sure. think the helps QX, start intervals. to it

a And the the XX% then sales came double-digit March, our down pandemic time March. with March XX% sales momentum second were we had well. with of demand. declined. of of XX% roughly And results up that hit our stores quarter-to-date into had COVID-XX week through XXst, closed we we So nearly into our by of seventh were by quarter the the as our have of growth of And and QX end sales and we at

able able been we've and week improve. days, new been through And as create. we've our to the digital days, seven been different different And the day, selling improve capabilities to April, now all lines week per steadily We of we've three to every at look XX model right our average that able days. performance with well revenue as and trend

so now approximately of at being And we've April looking down improvement XX%. and consistent had we're

John Baugh

Thank that. in And good tough job. Great. congrats luck. the you Very Good for environment.

Shelly Ibach

John. you, Thank

Operator

Your next Brad question from of Please KeyBanc go ahead. Capital. is Thomas

open. Your line is

Brad Thomas

my for little thanks talk last the taking to John's I in just follow-up for a color. Hi, want all question the sales bit on April. question about and

business understand that how even just into You some but April, may store? a on from converted dollar go little go about your store if trying stay into understand in the an came a Internet that away time. that consumer of for from you customers And the much of details some of you bit customer prepared talk for to from of not came even didn't -- to Shelley, to this that could the I’m maybe wants much remarks business sales purchase? the in gave that be much value a strength of a stores retained that how how and

Shelly Ibach

sales you April, composition start from XX% are that came the of at Yeah. stores look I'll Brad here, when in closed.

over phone no customers and phone mix from chat, stores calls XX% open the the either selling channel traditional sales all. XX% method. phone means are so Sleep and that's and follow-ups the from from that interaction at then coming that online generated of into home and store. our And more a customer total of or through their was So professionals via chat

Brad Thomas

That's Great. very helpful.

might the And maybe might being here of XQ where on is like if you the the operating so about equation give us rate the think scenario play this sense run income side XX% and to you us move Can -- XQ for the of revenues model potentially what maybe about the a revenues equation of out and down maybe cost here talked on to over cost side help a costs. the look in of range.

David Callen

guidance. pulled is futile. guidance unusual reason. our when to very a not and Yeah. Brad, we're is bit predict I'm a that We've going way working to for circumstance through happen provide trying and what will This a our all

we've some modeling help that make environment. what you We in We've the provided need Now to decisions of used this is decisions. that. certainly to we've done us make

we'll However, are we you to you continue be the possible working the deliver we and best can group as we year. to can results to update that going bet the through progress rest of and that hard the

Brad Thomas

Okay. all Thank and Fair enough. luck. so you good much

David Callen

Brad. Thanks,

Shelly Ibach

Thanks, Brad.

Operator

is Raymond of next Griffin Please question ahead. from James. go Bobby Your

Your line is open.

Bobby Griffin

Thanks you everybody. congratulate questions on quarter. a I first great and for my afternoon Good taking

David Callen

Bobby. Thanks,

Bobby Griffin

I on first talk guess, Dave or sorry. the maybe question I is want David to about --

to that while market? open some back dark the a talk demand slower that in demand back Is it have about stores others, the kind On than forward is looking to store-by-store, keep what you're way basis, can yet not up quite if market-by-market up ready you some ability do of in comes the you stores? recovery,

Shelly Ibach

and local mandates our for reopening stores. follow government we national Bobby, Yeah.

that following and the approach mandates. CDC government we as So such. reopening are And is guidelines our

vertically we've that our able process, to situation with date. single business and generate We and company, we're selling a every have as to integrated demonstrated unique in model

last of community last XX able you week. stores So these reopened in We a to variety and decent and demand different of business. with give XX each And stores different environments store I'll a every their generate states, for the week. were was example

it ways. Now, came in different

well on to able some relationship that utilize had we we're have insiders is traffic, and digital as and and markets right sales. significant build as this really traffic our convert not brand to focus Some to where be now, able advocates, our the did

Bobby Griffin

appreciate I that example. That's Okay. helpful. And

in consumer your financing But in you has can program than last exactly, your type availability? completely you different seeing side of hearing consumer from are of an slowdown talk program? you credit the financing the Secondly, from within program important terms very credit Synchrony recession. terms of Or is about them of the business availability been consumer what successful what are

David Callen

connected We risk Back and cash team. they their business is XXXX, with certainly of basis. a cash-constrained is Bobby very with close as have well XXXX they bigger to the them capitalized. we something counterparty and tightly are very Well, obviously And today, on that keep regular a last from connect Synchrony been different that in were was recession. highly part their versus company management

on significant have very accounts strong. And and so their deposits balance is they sheet

a tend reiterate customer love So, they a their a as company little us. generating that, it is they business love older business customer continued – only publicly to bit little me have skew operations. our with and our in well they're through traded They to and as is credit We base. to And base. income their higher

us, And in it committed going to they're continue. and they've that's that so with

Bobby Griffin

Thank you, helpful. you, Best quarter. luck in the of Dave. very It’s Shelly. second Thank

David Callen

Bobby. Thanks,

Shelly Ibach

Bobby. Thank you,

Operator

Please Keith Your Piper ahead. next of Peter question is go Sandler. from

Your line open. is

Peter Keith

out How you you advertising heavy effect well of really of quarter. better ripple just kind do I a of the or And, how finished wanted about effect we a over were a of It there months? yeah, spend? strong. April that of advertising or but afternoon. guys. than be in to even say, couple I'd Good about nice expectations that ask could much think shaped April a is couple XX% expecting. impact QX helping April, the March May terms pulling is approaching And in maybe and strong back pullback where still quite that Shelly, any guys June. in weeks the delay down to advertising Hey, you're quite were on

Shelly Ibach

the in immediately we decline Yeah. saw Peter. sales. right away when in March Thank We you, responded

March. the back takes that of us middle So to

possibly, some we spend increase. not And awareness about at I in pulled April certainly having as hangover same media dark. our same thinking the here so customer we the the mean, on the from our significantly have and it but on completely time, more sales could we're level back

good to you deep it's way how So for a cut. we've consider,

At traffic by with we're brand – along and which the prior same been demand speak encouraged the digital it very extraordinary we along time, over our with continue see in does net double-digit seeing. metrics satisfaction to the to year incredible we've

We here just of growth. double-digit our quarter lapped sixth

is the third quarter the So, this prior the of lapping year double-digit sales quarter. from in growth first

speaks in of So, strength the the demand beds. it the XXX to smart

Peter Keith

also just XX%. Okay. XX% down understand down to attach of the your expect in are like It bases. rate of with mix I maybe would kind to running and wanted orders April right sales sales and be sounded you adjustable

for really to confirm mix. But of could and no terms change us just ARU maybe that So, the in you attach rate?

Shelly Ibach

process And composition. but also And normal has XX% we interaction online -- look selling was chat. coming and of that in-store experience our at know. than phone with from our store, composition We're team the When It's speaks the sales as to have experience you highly our very definitely. that our you in Yes. a in change the members. superior mix different ARU

So, there will in change be mix.

QX ARU -- driving growth the can our strategy we from advantage pleased well. on it gross And Peter quite like an XX% And fact both always what's in really quarter ideally, quarter both from a in we're have in our And with growth in of both. big we're We certainly units. see explosive. can drive a margin you QX that do we and and is the as basis it's annual

see we're to During be we of impact going ARU going it's our this in during and we'll as and same time in mix well. at not down margin the And the as at because rate probably attaching same sales. online And certainly mix you're to time, before. to fluctuation April, the probably going were

can performance are that going that fluctuation. is both lots trying This from is be thing I important to and drive think be still of going There's we it's to The short-term. these in short-term. we're tactics. different the remember to great the

the we're to have our advantages. strategy drive been and do with really spend focus pleased able with where quickly to we've competitive We our and marketing advantaged and don't we pivoted April insiders to on changed for of more sales to model level what

Peter Keith

the assemble understanding beds Certainly, into there carry And the is on than Number have great. maybe hesitant kind pushback the that's deliveries we because delaying some to that Sleep XX% or much I lastly forward Okay, their of me would at to have point. expected the been down have agents think is for people come home months. better this in has coming customers any Just on of could or how that are shipments? just

Shelly Ibach

we've able and here. precautionary of XX% been in XX% down sanitary the was about point XX%. one to around to deliver Peter this Clearly, now continue the CDC it's to At all market. follow the guidelines approaches and

sleep. want their their recognizing don't a or right quality wellness for bed in that -- a time bed. sleep in situations delivers many proven situation be overall where and their people importance the they this now They want the same may of have people -- at are bed they health and And people

we added capability online. rescheduling also addition of In a

gives both that's the and changes very with create and so for customers efficient marketplace be to ability the And that a especially us. able reschedule customer effective to for and

Peter Keith

Okay, a helpful. good luck. that's Thanks lot and very

David Callen

Peter. Thanks

Operator

open. Maheswari question ahead, next is of Your your UBS. line Please from is go Atul

Atul Maheswari

a Thanks questions. taking for Good evening. my lot

for stores analysis? being that you stress when rent or cost for There's did So fixed manufacturing you distribution you have center assume sales facilities. year, obviously And down your then did on for and cost. test your what XX% in full the corporate the the

any are able did in assume? these costs you size So way? costs for And us or you to other what fixed quantify

David Callen

about, a obviously. very not costs so to Well, situation at our are variable model and that's in model business because a normal we out, operating that it's unusual level, our it's and all one just are are of

reductions in significant required business. the across our it cost So structure

as intent way long However, would in was flatten how the conservative liquidity what we business in to support would be relatively as could our we the that our that the see so burn -- a possible. assumptions,

I So scenarios but the it's we the I illustration. modeling that as that year, business ran. we that of use from just suggest of this it expect an we many in wouldn't what -- your one nonetheless. you provided how

commentary I cash seeing the cash what illustrative talking directionally set we're half generation reason first about a more what parameters The of talked free our is the about cash versus regarding the for are reasonable usage of -- we're free half far. back so in more in

Atul Maheswari

of homes? follow-up. more at customers' of little And Understood. can That's you. the on provide you And what initiative, your then just my percentage delivery In lines very Thank past color those so helpful. example, sales going beds a products along helpful. tutorial and as contactless you delivery assembly just on your involve you. how themselves? color about of any providing here can Thank are very online shoppers your that sort be the some would they Just to for so bit it? an you're assemble And

Shelly Ibach

our change beds, ago. we of beds all a that beds With quarters moved transpired all seven smart that's home are smart delivered. And our when to

in testing delivery, for adjacent. of just but the assembling been in it and it's essentially the last We've or customer we're it. delivering the it Regarding couple here early garage complete weeks, their contactless stages of bed in the

type It here's online. in this it the is importantly have response It's a we wants have but how you specific no, not we a So delivery. small who to customer do percentage, solution. a assemble of very

Atul Maheswari

the year. good and with the of rest Understood. Thank luck you

Operator

Please America. Nagle is Bank question of go next ahead. Curtis Your of from

Your line open. is

Curtis Nagle

for Thanks Great. questions. very my taking much

occur? Or if any an they're a Are you First question that percent the credit just at seeing tightening standards I on us guys accounts you putting or follow-up in could you quick that on Synchrony. credit what through? the the sales terms of that could do And remind wanted have of for? expectation standards this point one,

David Callen

Sure.

being been about half us About tightening seen the in very our they've I partner an exceptional creative us portfolio. any in not business with have environment, this of much in engaged business partnership. But how that with appreciate for XXXX was do we and what and And financed. than to really may that for of seeing their We expect customers be at conditions to all. different they're some credit term. don't our happen Obviously, near

Curtis Nagle

detail. of, flow. perhaps see if guess, when Yes. the occur. for of in it XQ you didn't cost just March March lag given until to just orders to order demand or in just Great. Thank one between guys a And that terms shift I there's half you I'm the then in a and falls, second and curious that P&L started quick deliveries

David Callen

Curtis, Are you a clearly. asking I know I'm little quite -- from if about COVID-XX? heard I a cost that don't

Curtis Nagle

Yes.

So for yes. --

problem question I'm a problem mean not is, So so revenue question. cost asking basically the recognition -- I

of back when the in in it actually the saw a least Or the occur March those second you and that did question quarter deliveries being part be flow big and in orders is, lag when in through So because spill the all the recognized? of second there a half, just March? into orders at falloff demand will over did between costs

David Callen

close as highlighted she Shelly XQ X/X really had week about that demand. second the point at the was of delivery our shut last demand highlighted capability of weeks were a The Right. was strong the In of down that deliveries. both one well country. we affected portion well, quarter as as three of through the

And our quarter. so total there our some deliveries on and in was the within QX capabilities impact demand in demand

Curtis Nagle

appreciate. very I Thanks much.

David Callen

Curtis Okay,

Operator

from is last Please question Wedbush. Basham ahead. Your Seth go of

line is open. Your

Seth Basham

clarifying one. good just first to Thanks a lot afternoon. question My the and is a question last

the impact timing at the of orders most and given in Is slowdown the from that of didn't on occurred top the that presume end from quarter. the and the quarter, would it on activity first take second about I in correct? the the slowdown that actually lines the thinking them. both bottom that occur deliver P&L in impact time quarter, that lag the of you you Just between P&L

David Callen

you couple was growth our is highlighted things look of sales XX% Shelly a net as March posted through XX%. demand week to point up in can of March. And we Well quarter-to-date second

you're in So there our on quarter that's in been looking sales quarter. the have first some certainly for. what for the total not stronger, would if COVID-XX impact Certainly was recognition if much

of quarter operations. cost We of well. terms costs three Those in didn't we clearly weeks our as have In the efficiencies well. the as last had impacts

as Our things factories that busy weren't of nature.

quite So last three cost we pressure of a those absorbed weeks. bit

Seth Basham

figure? of current rate. Is XX% second month-to-date run just And commentary negative on a is that point of you. the sales that Or Got April is a rate? clarification

David Callen

month-to-date. was That

Seth Basham

Month-to-date.

Okay.

was that April in it presumably beginning of at worse so point improved And time. this better than that and in it's

David Callen

even March or Shelly as in And proceeded April then each was couple to said last of -- in and Yes. week mean the it worse weeks better I consecutively get month. this

Seth Basham

half generation in assumptions Got based analysis some $XX thinking is that obviously you it. scenario. with on assumptions your second et-cetera of the And sales scenario there's then the cost I the that had laid million in last question cash involved about out

insight to back And as your cost provide to relative Can you management labor thinking How labor not pretty understand are exactly that what bring sales? to But more going standpoint. broadly, you're any from manage how thinking ramps a up? fluidly? back are demand I going about you management just your you're that into you

David Callen

Yes.

the demonstrated, Seth. is the I decisiveness already evidence think in we've

accelerate that hand want and see do year. back. be And then reduction I in company. we've of entire cautious We they the last operating start our we well, to some across closely. cases of our out from other furlough we our quarter we'll very come fronts of initiatives planned bringing either labor or nine expenses manage labor, And the that go before think, XX% on obviously months and demand to we'll our cost what labor costs a on teams but reduced lot taken having hours the of hand of a balance we about on as believe that in

Seth Basham

that, risk? that Is real a contemplating about to that have furlough? think the on that losing plans? of your you when Is related risk And employees you

David Callen

certainly. Well

we as a team We real it's -- are of think -- family. members our

had when to people that drive can challenging this taking of performance we're those so, everybody. of for actions And total health then we to pain back overall necessary the so sooner. make decisions of that's that all mind for strong that that faster, is the Certainly the top is bring we -- incurred certainly but we business. And the

Seth Basham

just Okay. is on last question And labor.

In terms to of a on operate when basis? you're operating a store, what's daily the requirement minimum store that labor

David Callen

structure, actually modified because depends it a once was. we've it's gone less it Well hour so than to

staff across the people where look we're so, country. And to three was our a of past like the couple stores minimal a it in with able

Seth Basham

right. of Thank All you, luck. Understood. much best very and

David Callen

Seth. lot, a Thanks

Operator

will turn company the remarks. no There at closing over to for are the further questions call time. this I

Dave Schwantes

you well Thank to our today. We you discussing us forward look July. for Sleep dream second joining and quarter with XXXX in performance big.

Operator

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

You may now disconnect.