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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
Peter Keith Piper Sandler
Bobby Griffin Raymond James
Seth Basham Wedbush Securities
Brad Thomas KeyBanc Capital
Curtis Nagle Bank of America
Atul Maheswari UBS
Call transcript
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Operator

Welcome to Sleep Number's Second Quarter 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

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

may the SEC. over commentary in some forward-looking comments. certain now actual her and our Annual our will to other Company's on filings Form number news and discussed The your in uncertainties for Report with results earnings release and Shelly detail call materially. may XX-K questions future responses are the outlined to statements. turn and However, These I subject vary risks forward-looking include statements of a to in our periodic

Shelly Ibach

more Number earnings of or our SleepIQ more than to My last was is improve never sleep through it relevant welcome and individualized Sleep lives night. been score has call. experiences The afternoon today. second important XX XXXX quarter mission to Good

one purpose enabled in challenging of focus our in number I'm to our opportunities in business finding team's growth history. grateful our continuity, as for dedication navigate for have nation's unrelenting time. customers continue our and gains, significant create effectively fleet over to periods our we serve in market share Our profitable mission on our ensuring unwavering resourcefulness the and returns belief shareholder to company's ways most to

safe, pandemic performance Our and financial and bold the expected economic the team. commitment of the of the Number testament face have over better than our competitive to second our keeping integrated and passion actions teams quarter our years. resilience, swift global is built to including of The business we in and serving maintaining taken advantages customers, have agility we concern the strategic Sleep and health, the model, monumental of significant several demonstrates the social a our operational financial combat impact our past underscore and flexibility

most remote advocates blend marketing a our online, As action we relationship customer increase chat, drive expenses, a on pivoted of We of advantage and seamlessly reminder, our We and insiders efforts service performance, home source aid appointments. the reduce from loyal sales to efficient near-term immediate And powerful prioritize delivery liquidity to headquarter phone and speed selling initiatives our that of retain options. and represents prioritized through private which competitive to recovery, brand and innovative sales. growth. CRM return value operations, selling to a we and our took solutions scaled based digital quickly approach long-term we investments in our

sales a year we June million combined, XXX XX% throughout our better to loss operating prior in second acquisition, the aided the up impressive $XX immediate by demand which of $X.XX, net we lower experienced than result, traffic May, $XXX share performance from An sales expectations including have and selling the a our below in these million, than Number Several stores of from million quarter, net per compared to-date, with cash surpassed improving points, step-up which approach than revenue financial XXXX. pivot of high digital, chat average QX. stores mitigated exceeded effective expected with digit of Stellar mix to $XX of virtual in our media year including sales resulting in reopening touch total closed relationships quarter. quarter customer ago. second sales up results our an year-to-date which growth with prior our during XX% were versus more a XXXX of online, increased we repeat single year, Year-to-date, relationships in quarter. Overall, debt to into results, lifelong our XXX% our XX% from year with referrals nationwide Net prior impact. stores, million digital customers. As flows factors from of and phone the shift to open growth Sleep our trends the and was in contributed

placed we pioneering increased pandemic while insights of financing overall our with translate Throughout we we links the about and beds, have emphasis increased actually and the unrest, our to delivering quality has COVID-XX integrated model, the smart concerns growing taken sleep personalized resilience. circadian immunity of relevance the is supported quality Through civil software proven real-time individual's boost inherent features, while near-term sleep agility, actions science-based informed vital enhancing one's lockstep for operational partners and and Sleep respond living as us healthy quality with and that our rhythm into research sleep innovations, system. strategic media SleepIQ consumers suppliers. our our significantly understanding in customers. our also including our and and overall as We to advancing decisive quality vertically There culture the reducing to sleep controls results, XXX and our proprietary which visibility In and insights brand our favorably individuality and worked evidence quarter, business on XXX of enabled sleep, proven to wellness new in all and heightened drive engagement promotions, by spending, is sleep disruption intense quickly their of wellness. to reports consumers. beds, began providing second is that immune smart broadening Number advancements,

sleeping indicate is within Since XX% minutes sleep Our sleepers that, SleepIQ a pandemic began, are sleep an in the pandemic general XX per less. individuals reported shows who sleep of sleepers SleepIQ restful sleeping better. change surveys are population, a improvement of of to since Our data have contrast night. gained which that This about in the sharp average their

over of with expertise in mine with Board an science and group console million sessions. working We data, researchers which we as are and closely physicians, Board, clinicians, our Scientific longitudinal new The sleep sleep Advisory health. Advisory providing XXX includes our interdisciplinary is

the commercialize We August, heart sleep and accuracy to health are we benefit level variability insights our energy plan variability advancement to quality. will on heart their the our utilize rate and impacts from ability bed impact how their day. on proactive bullish as next smart activity nighttime elements In the in understanding rate scientific wellness. XXX sleepers and each data highest individual with

new the increased consumers and temperature we the With designed concerns new more the sleep, MX to motion our of stores, beds feature release during greater the XX% beds by more smart spinal coming are With reopening balancing in transfer. iXX for alignment, in closely to and smart our challenged introduce beds excited our XXX than body of contour support pressure XXX temperature These are reduced to layers. weeks.

that life-changing we've we innovations our second the While ensure our discretionary success. quarter, capital most investment maintained halted temporarily in spending continued long-term in

of continued developer plan XXXX our and environment longer the of to our will due and of agility U.S. example, bedding COVID-XX The dynamic and from climate to a XXXX. the demonstrated the in introduce innovation We management and innovation, patents and heating bed For These these continue expect the discipline. patent further Presidential strengthen benefit current our recently our and we've our from advantages remains global XXX support execution acquired for beds election thermal and half Gentherm, to will our additional technologies. disruption embolden culture second term perseverance strategic technology roadmap. patents competitiveness. in We we and portfolio cooling and

profit than financial these through performance and of And our continue operating chats expect drive drive for deliver and ROIC. we solid strategy customer generation more and Our to are multiple mid-teens XX% is strong net times, stores to through open, to challenging cash strategy and we Today, acquisition designed phone years. as growth this to and digit we have online leverage growth. retention, triple drive

at exceeding year. prior Our and are all-time Customer high. all conversions traffic, digital are brand engagement, satisfaction, metrics

ago. Our a strong, balance sheet than have liquidity and significantly more we year remains

the during customer distribution, the and second expect mission digital driven teams powerful data combination We drive our proprietary to demand direct-to-consumer of loyalty and half. innovation, communications,

path, change addition, at before been accelerated us the have In COVID-XX, preserve necessary as have virtual XX% flexibility, sleep Nielsen ways ingenuity lead other and longer are a likely increasingly team, deliveries, of of a to Number wake benefits Consumers growth. our pandemic identified with our and our prioritizing Global the by and selling is And experience reallocate effective management. execution connected being moats to with as and The of future changing we than accelerating for health position we to well world. deliver as our expecting more and In of relationship to health are costs, are related we has a such the positive, actions home, tenacity purpose. purchase long-term and and product in disciplined new reinvention. in of differentiated immediate wellness strategy catalyst our use and safety, health. and is such our individuals leading initiatives in our to improve according which made will competitive behaviors capabilities structural consumers and the profitable our and The attitudes will strategically survey. use recent new family the forefront Quality our consumer Consistent These Sleep their to shift to our and opportunities continue. has related growth. capital headcount to and strengthen well learnings to us invest of the health that life business, financial served power of doing end year to the digital reduce advance term support of

Now, second additional our on details David financial provide quarter. will

David Callen

Thank you, Shelly.

the capabilities run real-time and quarter about use under years. leverage the second metrics growth by and driving agility The extremely business. technology performance differently we based agility do we past to to and things urgency on progression. We built challenging the acting all the we learn demonstrated with We conditions was few

throughout While sales from stores. has our remains quarter, uncertainty progression In certainly COVID-XX. the reach regarding future Today, reopen stores customers from were by May XX% on to just the open. being benefited anywhere April helped selling XX% of our allowed us of June, XXX are than capabilities our in XX% followed open XX% our while of and impacts nearly in more average,

We have the improve demonstrated in conditions. our even toughest lives ability to

models high Our significantly financial understandably was into the better inform second capital and performance April May demand the $XX in change resulting cost and million hyper the V-shaped forward deliveries digit for versus was in than to followed our fulfillment XX% QX. we by in more used June deployment down our year, than decisions. carrying prior capacity, single combined. This growth demand, stressed incremental quarter

XX% May COVID-XX our Looking reduction Day deliveries in year. with came in fiscal $XXX shift, year, on more QX compared about this QX. timing in $XX benefit assumed QX week than online global unit to Angeles expect X% and operated as our an our from certainly lower than partially center XX% in than agility the were be their used just versus of to and the margin also significant quarter. has the and prior the planned; Los into from the year. sales year to partners, prior QX from year. and prior Through partners. COVID-XX of in supply this $XX of newest opened X% shift resulted QX Despite by closures basis COVID-related mind is Constraints mix and betting team capital no COVID-XX points XX% by pressured fast XX% very Net delivered and manage extreme continue units distribution our challenges the of the with than rate sales. QX higher demand More Managing the real our forward, dynamics the actions from that decisions. specific gross by managed prior prior move affect support compared costs this We mattress QX sales our million sales to extra staff by lower properly. of XXX the we area. was have and uncertainties And teams The the flow One ARU and Labor of to sales offset example inefficiencies XX.X%. during volumes scenario globally of will the operational million allocation in and goods however, phone million challenging. than lower challenges we in lower is been shift expected closures QX year of supply disruptions changes mix day-to-day top our during we in in

we to from a location. as operating love elected massive and rather this location. We've leveraged As centers it result, than a run temporarily a previous learnings hub distribution assembly

volumes. We fourth assembly convert Labor it to expect we through distribution our after managed Day to center

risks. COVID-related ADC Dallas For the until similar reasons These next in we business also mitigate of were fifth our plant year. decisions postpone to necessary opening

multiyear initiative. We provide this updates will continue on quarter each to

quarter that cash operations of half. consume from in first realized, call, our the highlighted scenarios if $XX about During flow million would earnings first I free

in and to severance $XX and sales and in expenses models, our our actions performance incentive and stronger QX support initiatives This resulted were aggressive true-ups. than lower year-to-date driving year. million Our than operating QX while compensation the continuing absorbing early prior in

also innovations. up our points half gross impacts our rate support higher is XX the to net model profit business agility of operating XX% line year-to-date Our expenses the than change, face in prior is more our investing our year-to-date reduce of year-to-date financial We COVID-XX, of in sales the extreme reflects margin first while and performance with the X% net X%. challenges. the in Despite basis

Our first year, up of versus equal $XX free half cash and generated million flow of XXXX. six first XX% to EBITDA prior the we year-to-date, was the months

of million, pay of us including $XXX year our term $XX Our million commitment million nearly a to to ago, million ended at liquidity the one million by We end enabled increasing to performance $XXX $XX the down the of efficient capital addition debt management $XXX with QX quarter. year and this of while down net compared revolver a loan. the

and the is Our from year. The fundamentals and for same are covenant period ratio X improved our leverage targeted X.X EBITDAR. our ending times operating X.X leverage EBITDA strong. times is times sheet to X.X last that our times three maximum of business balance Remember range

challenges. We to support and are confidence navigating with well COVID-XX our while pace initiatives capitalized ongoing through related

pleased the of performance with business. are We the

the remain COVID-XX the possible uncertainties that back acknowledge the half and pressures. also We of from for recession year presidential election

including plans a the year. for of on this we extra balance result, flat year week to As our based spending approaching the built demand the the prior benefit year,

favors bias initiatives. in and prioritization long-term heavily Our drivers of to XXXX half our innovation and the back these of into growth intend marketing beyond. We continued more lean

online business. include half rate advantage back We and less somewhat consumer mixed in our margin both in-store of from gross year the the pressure expect shopping preferences shifts purchases, as vertical in of

sustain our We continue to our risks actively commitment balance to with advantage near-term business strategy.

the the I'd team like with coming Number add us pace and over my long-term this to thanks through Sleep orientation sleep. approach worked you. proven to Our across partners for In rebound and Chantel, please line quarters. open to Thank for quality now improve tirelessly point, embraces who enables questions. the that the to have clarifying lives performance performance at an business to drive country, closing,

Operator

[Operator Sandler. first from Peter Keith question comes Instructions] Piper with Our

line Your open. is

Peter Keith

the from to around of could you comments was upon expand hoping QX. backlog quarter $XX million the to QX pushed got the I just that

you supply chain had you that any commented I think don't issues. have

maybe caused related in was backlog exactly of the and what weeks the final So, that it demand quarter?

Shelly Ibach

Peter. Hi, Sure.

here, more been color that. have giving of than us a really and example doing know, is normal COVID-XX, an since we this intra-quarter little You

progressive that May, average you we our of And nearly If progression XX% open about down had XX of XX% nearly all then about time, now, sales and you where our high in also you and June sales quarter, in if and there's stores the correlation and the in indicator how of of average very open. June, throughout gives that that built also an a an performance XX%, has with our how stores opening good big did XX% time. had and swing we a in our so performance at mentioned I growth. our strong that single-digits our down open, for And it through during of overall become that, and we performance And stores quarter. flowed, been the open. May a the think April, And us nearly in were think of April, that

built very months, significant backlog. in of both because June, the it May increase So strong naturally, performance an and

David Callen

Peter, I'd QX. sudden June, be some for down you're and of pretty in million April and to part growth manage business fluctuations dramatic that to talking through, $XX the with delivered demand that's with we're and us just change the on. additional of big May what in seeing that XX% about add and Having causes kind of

Peter Keith

is to were up? Or just Okay. Fair guess balance I enough. up? And both June that were was clarify the on combined of it May and

David Callen

Yes. versus year. were prior those up Each of months

Peter Keith

so, mentioned, industry. the little ton something players And into difference still advertising going you with QX? quarter, back on bit to other think and now and this during from increase pulled in you Is are of that I are great lean How which hesitant makes you'd advertising of a some you'd into? not Or thinking you that the backlog? want sense about

Shelly Ibach

media media digital Peter. fact significant have this, QX. in an were that the we No, and did decrease strategy at selling, advantage to precision the the And the it we average build. quarter, XX% combination really us has find customer for store And a we're and reach us that significant have with you that the a thing remarkable leaning open, We last have say have even internal helped our that in our an up and relationship the it's May over pretty shift When year In significant with look also our that per pivot we I of buying. engaged our into been spending to a reductions. spend media virtual progression. of in ability to with

adding definitely we're COVID-XX political we around around so, here both to navigate And the as half well expect and and also pandemic many back media pace, the at back around environment. the hurdles in

Operator

comes Griffin James. Our question from next with Raymond Bobby

open. line Your is

Bobby Griffin

to I your clarify the comments want plans spending first earlier the for back back, just half. about your

about Can understand of year. you're just equal or $XX where you mentioned context now as the extra half up a getting kind -- out might worth back guess of for And I it? you you're million some you there, uncertainty whatever I'm year. put I putting well got demand of think guess little just in in I as I me last shifting it revenue up that of I to maybe orders me to conservative confused clean just on think last in having week. versus want QX it? running revenue from help that around and you since deliveries was and flat to Is

David Callen

We're We be close look when uncertainties a Good. running about guidance, control through to providing and where how all. over of even this at to guidance week stores have business thinking trying in And we're talk the we're I'll what challenged there California. the environment do that. going absorbed. is changes first not are Right. you a isn't very lot in or to don't jurisdictions still you. this of mean have I

thinking environment. navigating the in talking environment. And that of challenged business. this how prior we're the That's basing on year, back about the environment, how to that's the week. of in in managing benefit thinking And our about versus we're we're So, growth based half That's extra just the sales about the the we're prior including how spending year year. pretty a we're flat it spending through we're

that ahead. you think So, appropriate I'd was given uncertainties hope the that

Bobby Griffin

stores? I guys I versus curious, pre-COVID customer anything guess any they selling Shelly, into curious, you I'm have store up of customers your you my unique part stores about the behavior kind the Sleep And you've at have just a returned for was pretty reopen, different levels? second picked you seeing process as of is, tidbits Number. question just inside there as your noticed

Shelly Ibach

the of see, based it's consumers And different wide and played pandemic county areas. out we're has would about we there. very really all I scores meet customer, a and being needs comfortable and state Bobby, of variation it's teams all individualized, where say the how such in about during a a frontline individualized the see behavior delivery that helps and stellar aspects on in and out individualization customers make deliver for and customer safe with where time. the And and feel high connect them a they understand they're and the And way business our we're their same bed to with us experience, and home including with with customer talented we in a comforts, exciting our that to our able the they is meet sensitivity this such at, all experience, are having our team and customer. weighing need challenging satisfaction and individualized connecting

Operator

Your question Wedbush Seth Securities. Basham from comes with next

open. is line Your

Seth Basham

of the California, give us seeing a some how trends in you trending Texas recently? like color You May June, on are more Coronavirus in sales some for cases rise and markets key in perhaps we're in where commented on recent

Shelly Ibach

lead this would more have helps then, we I ups ongoing become with well. you as as is referral. or share It also, see beginning. productive, good But us concentrations. stores, all and variation counties with think from we're and management And others. Yet than a example our we you their benefiting to that frontlines customers the our certainly a right repeat throughout of all quickly country that stores the regions digital helping are from COVID-XX is some jumpstart, again, than building been the relationships with then long-term and where more Yes, flare very the of across we've would also normally in seeing have that I

it start. strong So, ensures a

Seth Basham

Xth June, of the Coronavirus and we later those as you month trail beginning how at of over Looking, in year-over-year the stores for the already growth see the rise off group trends Did through the the cases? got holiday of that course with do some example, of the weekend in were month? July at progress reopened

Shelly Ibach

we as continued to correlation the Yes, and opening quarter the our it saw quarter, full the the and shared throughout or through this progress positive store. a of in we to second consistency way progression

Seth. averaged where at now of XX% of we June, the our know of you in we're And we've about sales So, XX% progression and stores openings. the open seen progression match

Seth Basham

sorry. I'm Yes,

Just to clarify there. my question follow-up

If beginning already at say over open that group of of that sales you look six stores earlier, opened are How the did June. stores progress the was in last weeks? those stores

Shelly Ibach

going Well, progression on stores the been into strong third detail get we've stated, business. seen quarter. good, also And I that our But open. I'm not to a as have that of includes

Operator

Thomas Capital. with next Brad Your comes question from KeyBanc

Your line is open.

Brad Thomas

wanted I if going Do talk to think more they you sticky a And they of first insights you about think you business. do on converting curious here? this shift is you're think the few a individuals were the closed if I'd ask was be visited you end as reflect little you perhaps yet sales? to for curious more you're store online? as up a there in this bit growing be months, permanent to to you? is and strength be that saying decided the seeing Or the could about hadn't of I sort finally percentage direct a going last

Shelly Ibach

Sleep to me Number. fact let the very start which that XXX% with Well, unique direct-to-consumer is we're

us we've is for be the either a distribution to strategy and to through wants. designed however well digital chat touch we've our online particularly way. this lead in customer different the interact what points or she in And communication certainly pretty be during stores through able as comes to serve our customer phone management see We been of time our as to interact a our All multiple generally. able aggressive this digital with her,

we numbers. were highlighted, and in already XXXX larger we've the phone as short our online sales business I expect to forward. David our total of XX% part mentioned of be to I this business and surpassed continue move a As

lot it's reopened, continued triple And have in our in stores clarity As provide to half, to our be going COVID-XX see to growth us what still of around to so online look a we've about we digit back here fluctuation a going like. the noticed sales. this is hard

importantly, maybe it and to going she this wants think past. end, ability absolutely see consumer to is as in in be double was shop. the to responsive we've the our We In we're to penetration long-term. complementary be and very and to shown fluid pivot the additive our the stores be I it agile the where and

Brad Thomas

gross planning us week demand expense the margin growth, give you're That's standpoint? where be stop us to from ask if into for, Can help It's world flat. the guess extra you. out very guidance. some helpful, not maybe to you from more a going takes Shelly. I could insights including you're to put one of in recognizing a get giving not trying David, and and color And to think of about I

David Callen

including my thinking even on, demand Brad we're do will about the I the is, Okay, with expenses that's How about, as the year, I based week. it best. extra said, planning we're prior

our plan long-term drivers innovation growth near-term capabilities. and lean However, we into also through marketing our growth drivers, our drivers, to

in in see half of So, little bit areas the year, an relative a you'll prior to uptick those of back year. the

is on In natural addition down the the phone to for from gross mix that, I bit the little line. mix move chat, higher to margin sales coming mix guess side, tendency a and shift the our of the online, with

gross rate. a You had impact impacted pretty it impacted our saw margin by, ARU on and reasonable X% our about that us by that

sure of our we back the know don't stores to of less majority open the half. impact margin as look on what the our expect But for for of rate an expect back in We half that's again, going we more like. to have

you it. on really about giving thinking But or on guidance to on expect what of we're gross is And so, kind margin color you how that's tough. giving

Operator

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

Your open. line is

Curtis Nagle

Okay. Thank taking much you questions. my for very

first, potentially store the part for of the about many you had to many have basic were the a closed were stores think in close should leases of the So, and had And XX quick closed one on we potentially were of rest How And how I you of relocation we month-to-month quarter. think plan? those base, part the footprint so XX indicated how that permanently? year?

David Callen

Yes, the our we're majority of really the of and those those from We're profits the fronts. our stores action stores other of that much those sales were environment point, drivers that to to on all at and and into given month-to-month taking through this leaning majority geography. we pretty in part leases on, effort transfer the ability in the are growth

have and capitalization lots plans in into strong and we'll we and CapEx is half support expansion of our our store the back liquidity very initiatives Our well. leaning our as inter be to

Curtis Nagle

mix? And little just more due a much indicated as actual little of which that guess much is an about to attachment thinking stronger? bed. that, you mixing the not being perhaps a that I mattress. of tick you selling online terms people product the Understood. So, How makes mix due how actual rev total bit down guess maybe Okay. I to, lower a in bit sense. per shift, I'm did slight

kind how So P relative of beds C and do maybe more that? to thinking bed, we of I

David Callen

more if up et line. frankly, the customer. a ends best more the model model, often have store, contact them. more And it in we out customer, customer of it it comes if And have If chat, the the cetera. a business the points for And with so the we it's total solution to our plus we highest up with online, often only product. lower interactions, the have a NPS for scores online and Well, highest reach they have our touch transaction in generally got have we at satisfaction the moves

do through We've overall improved come digital overall transactions, only with total. with better a but higher they in experience So store those not capabilities been that ARU about. in we've it's significantly the talking

So there was a ARU down slippage of X%. only minor the

online these I given XX% checkpoints coming the think of chat. sales mix minor that's and of pretty phone of other from

not model much lower is that about primarily as However, in changes mix, attach.

Operator

with from Atul Your next comes question UBS. Maheswari

is line Your open.

Atul Maheswari

you to look of strategy expectation footage forward? pay stores digit So all lower every your make look Will opened. going back Or forward? square of growing if XXX% with your your stores are still footage nearly you will year? phone Does going on channels square online potentially you to rethink it adding mid-single even

Shelly Ibach

all engaged like a Having distance not highly average back be only very of our we We touch the behaviour. complementary. And XX contemplated a that And brand strategies, how And multiple pandemic And in intend have And why see for to year minutes we with that. shift but strategy to store we see going at consumer this is our an about this between a a and attitudes around we grow it we experience, XXX. have stores. not high why health excited also horizon as about for constantly to a five still I our have already. for important a we digit, shop. yes digit ours revenue still points. real availability as per see And such absolutely estate held is consumer is having with. changing our as to you're and And catalyst say a our we go and contemplated to we're as customer years. this this wellness in-store triple part been to additive. we brand they look triple see We And of strategy

Atul Maheswari

color digit Understand. Have and you any to June? And directionally? and July don't but sales to digits weeks know this decelerated would But remain high-single May versus and how understand you have two I accelerated here. want get in and is the or upon have I were compare as up first into May follow-up line? of touched specifics Just how earlier, sales that just my two high-single trended? June Or

Shelly Ibach

second XX% and sales similar earlier stores performance. of stores throughout averaged been In been progressive a indicated that have And right of our correlation strong opening increased had of question a stronger stores and is has overall And top have this reminder, stores I our we the I opened. very the opened, now along our to quarter. as us openings our with Yes, a number we XX% with a line June, in there our

Operator

question Piper of Our from Keith Peter comes next Sandler.

open. is line Your

Peter Keith

So, couple you XXX annualized David, reduction talked about a follow-ups. plans. cost of call, last million

the you year plan you that that of gotten us? provided from framework on than have the would of to sort the back you difference basis, cost sales better, the thought. peg the annualized So, for Where faster reduction an half much

David Callen

half as was year, to QX. the half, the to based there XX%-ish costs on in down the incorporated more in variable back sales associated plan with are QX, there. QX that down back in QX, whole the that levels, XX% -- higher prior down Clearly, in more essentially clearly be we you -- scenarios in variable flat recall, been flattish included QX, in for costs there's and are going Peter, talking here XX% sales excuse oh, and that about significantly me,

give we on sense update thought flows everything And from cash the cuts, we half. on comparison $XX you QX more. than I in So, look can tried liquidity the going significant in swing and in would doing did more from at significantly to that that cash indication. we based And first but overall it instead you period, expected half some spending we're in of give that, an kind the about to those so and as generation was performance in that that not be overall in an or we the models operations pretty pretty, first generated cash million $XX what so to consume and same million free in

and if where spending And pull to performance we we as So, well. uncertainties given we to always our the the continue to, drive be will needed back appropriately half, opportunities just back those lever to conservative, pull every we're continuing in allow. on can

Shelly Ibach

in challenges path. the majority did of place And pandemic, this we is have including, took and we to the if we some at the now the as add time, against provide and we our along business the actions business and back at the went brought point, same team, Peter, trajectory all here and in the significant the continue our those change a into costs, I'll furloughs Yes, result jobs eliminations in way.

our And we finance overall. the have yet, driving We performance flexibility. want to keep building and

So, be to it's and where the to cut cuts grow at. necessary it's and make depending more, important at time pivot able just or we're on the same

very remain the of time periods to second in here that going agile. pretty our ability I we've in do think short in quarter. And demonstrated dramatic we're to So, ways

Peter Keith

on that been into answer. hold good that price as over back seeing for perhaps thing the steady is there sales to from is up we their on, as to maybe Okay, transit open in hear you just or and and and Are over selling fair in of wide that July. Also, enough. moved opened May open through a stores that have want that two. up week? to that, strengthen week I or first continues kind industry One improvement average we've stores That's tends stores week June circle those sequential a that month then

Shelly Ibach

is Well, our model so than different most.

a and and professionals' We of and bit consistency consistent we've our a growing ARU process sleep have in seen. selling performance that's with quite that what delivers our very

have immediately So, sort position as seen that pretty is we're open. overall now, then far But ARU our open, we've our today of now as in normalized. of this XX% stores more

Our ARU is expect right where would it. you

back, back. of time. fluctuations. ability And our all third the, extended metrics all business has this of to move held, Peter even move in navigate right and so one of steady as they in for this the of things that's is our through one encouraging tier thing that's seen have disruption to think an period they, able held I've very the exciting with I the second be And over

Peter Keith

sorry sales Okay. $XX positive question two backlog month I'm million One for June, that in backlog? despite would around of Were impacted different used for you targeting specifically sales demand have phrases And but June growth have in that And kind you you've and maybe overall dramatically. this sales for growth. last rather big this the guys. June

David Callen

basis, talking that sales and interim were. answer orders So sales, but delivered when yes, about sales, talking an sales is, the demand we're necessarily about on not delivered and they we're

Peter Keith

net Delivered sales?

David Callen

Both.

Operator

questions further back for the I'll turn speakers over call no are There to at closing time. remarks. this the

Dave Schwantes

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

Operator

conclude conference today's call. These

You may now disconnect.