Cover Page
Cover Page shares in Thousands | 9 Months Ended |
Sep. 26, 2020shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Sep. 26, 2020 |
Document Transition Report | false |
Entity File Number | 000-25121 |
Entity Registrant Name | SLEEP NUMBER CORPORATION |
Entity Incorporation, State or Country Code | MN |
Entity Tax Identification Number | 41-1597886 |
Entity Address, Address Line One | 1001 Third Avenue South |
Entity Address, City or Town | Minneapolis, |
Entity Address, State or Province | MN |
Entity Address, Postal Zip Code | 55404 |
City Area Code | 763 |
Local Phone Number | 551-7000 |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | SNBR |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Amendment Flag | false |
Document Fiscal Period Focus | Q3 |
Document Fiscal Year Focus | 2020 |
Current Fiscal Year End Date | --01-02 |
Entity Central Index Key | 0000827187 |
Entity Common Stock, Shares Outstanding | 27,757 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,365 | $ 1,593 |
Accounts receivable, net of allowance for doubtful accounts of $823 and $898, respectively | 32,688 | 19,978 |
Inventories | 83,258 | 87,065 |
Prepaid expenses | 10,923 | 15,335 |
Other current assets | 36,127 | 36,397 |
Total current assets | 164,361 | 160,368 |
Non-current assets: | ||
Property and equipment, net | 178,482 | 197,421 |
Operating lease right-of-use assets | 311,179 | 327,017 |
Goodwill and intangible assets, net | 73,508 | 73,226 |
Other non-current assets | 52,587 | 48,011 |
Total assets | 780,117 | 806,043 |
Current liabilities: | ||
Borrowings under credit facility | 33,500 | 231,000 |
Accounts payable | 167,139 | 134,594 |
Customer prepayments | 75,043 | 34,248 |
Accrued sales returns | 24,085 | 19,809 |
Compensation and benefits | 61,751 | 40,321 |
Taxes and withholding | 32,030 | 22,171 |
Operating lease liabilities | 60,561 | 59,561 |
Other current liabilities | 58,449 | 53,070 |
Total current liabilities | 512,558 | 594,774 |
Non-current liabilities: | ||
Deferred income taxes | 7,037 | 3,808 |
Operating lease liabilities | 281,733 | 298,090 |
Other non-current liabilities | 81,616 | 68,802 |
Total liabilities | 882,944 | 965,474 |
Shareholders’ deficit: | ||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.01 par value; 142,500 shares authorized, 27,757 and 27,961 shares issued and outstanding, respectively | 278 | 280 |
Additional paid-in capital | 14,390 | 0 |
Accumulated deficit | (117,495) | (159,711) |
Total shareholders’ deficit | (102,827) | (159,431) |
Total liabilities and shareholders’ deficit | $ 780,117 | $ 806,043 |
Common stock, shares outstanding (in shares) | 27,757 | 27,961 |
Common stock, shares issued (in shares) | 27,757 | 27,961 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Current assets: | ||
Allowance for doubtful accounts | $ 823 | $ 898 |
Shareholders’ deficit: | ||
Undesignated preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Undesignated preferred stock, shares issued (in shares) | 0 | 0 |
Undesignated preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 142,500,000 | 142,500,000 |
Common stock, shares issued (in shares) | 27,757,000 | 27,961,000 |
Common stock, shares outstanding (in shares) | 27,757,000 | 27,961,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 531,155 | $ 474,778 | $ 1,288,659 | $ 1,257,186 |
Cost of sales | 196,195 | 178,388 | 488,558 | 481,377 |
Gross profit | 334,960 | 296,390 | 800,101 | 775,809 |
Operating expenses: | ||||
Sales and marketing | 211,574 | 213,133 | 549,483 | 568,799 |
General and administrative | 44,127 | 35,098 | 111,915 | 102,466 |
Research and development | 9,644 | 9,007 | 28,399 | 25,440 |
Total operating expenses | 265,345 | 257,238 | 689,797 | 696,705 |
Operating income | 69,615 | 39,152 | 110,304 | 79,104 |
Interest expense, net | 1,827 | 3,131 | 8,111 | 8,968 |
Income before income taxes | 67,788 | 36,021 | 102,193 | 70,136 |
Income tax expense | 16,468 | 7,967 | 24,363 | 12,384 |
Net income | $ 51,320 | $ 28,054 | $ 77,830 | $ 57,752 |
Basic net income per share: | ||||
Net income per share – basic (in dollars per share) | $ 1.83 | $ 0.96 | $ 2.79 | $ 1.93 |
Weighted-average shares – basic (in shares) | 27,973,000 | 29,085,000 | 27,918,000 | 29,859,000 |
Diluted net income per share: | ||||
Net income per share – diluted (in dollars per share) | $ 1.79 | $ 0.94 | $ 2.73 | $ 1.88 |
Weighted-average shares – diluted (in shares) | 28,634,000 | 29,796,000 | 28,560,000 | 30,688,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' (Deficit) (unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance (in shares) at Dec. 29, 2018 | 30,868 | |||
Beginning balance at Dec. 29, 2018 | $ (109,550) | $ 309 | $ 0 | $ (109,859) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 25,418 | 25,418 | ||
Exercise of common stock options (in shares) | 151 | |||
Exercise of common stock options | 2,836 | $ 2 | 2,834 | |
Stock-based compensation (in shares) | 364 | |||
Stock-based compensation | 3,638 | $ 3 | 3,635 | |
Repurchases of common stock (in shares) | (1,170) | |||
Repurchases of common stock | (46,982) | $ (12) | (6,469) | (40,501) |
Ending balance (in shares) at Mar. 30, 2019 | 30,213 | |||
Ending balance at Mar. 30, 2019 | (124,640) | $ 302 | 0 | (124,942) |
Beginning balance (in shares) at Dec. 29, 2018 | 30,868 | |||
Beginning balance at Dec. 29, 2018 | (109,550) | $ 309 | 0 | (109,859) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 57,752 | |||
Ending balance (in shares) at Sep. 28, 2019 | 28,427 | |||
Ending balance at Sep. 28, 2019 | (164,487) | $ 284 | 0 | (164,771) |
Beginning balance (in shares) at Mar. 30, 2019 | 30,213 | |||
Beginning balance at Mar. 30, 2019 | (124,640) | $ 302 | 0 | (124,942) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 4,280 | 4,280 | ||
Exercise of common stock options (in shares) | 115 | |||
Exercise of common stock options | 2,159 | $ 1 | 2,158 | |
Stock-based compensation (in shares) | 99 | |||
Stock-based compensation | 4,250 | $ 1 | 4,249 | |
Repurchases of common stock (in shares) | (1,104) | |||
Repurchases of common stock | (43,351) | $ (11) | (6,407) | (36,933) |
Ending balance (in shares) at Jun. 29, 2019 | 29,323 | |||
Ending balance at Jun. 29, 2019 | (157,302) | $ 293 | 0 | (157,595) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 28,054 | 28,054 | ||
Exercise of common stock options (in shares) | 33 | |||
Exercise of common stock options | 757 | 757 | ||
Stock-based compensation (in shares) | 10 | |||
Stock-based compensation | 4,146 | 4,146 | ||
Repurchases of common stock (in shares) | (939) | |||
Repurchases of common stock | (40,142) | $ (9) | (4,903) | (35,230) |
Ending balance (in shares) at Sep. 28, 2019 | 28,427 | |||
Ending balance at Sep. 28, 2019 | $ (164,487) | $ 284 | 0 | (164,771) |
Beginning balance (in shares) at Dec. 28, 2019 | 27,961 | 27,961 | ||
Beginning balance at Dec. 28, 2019 | $ (159,431) | $ 280 | 0 | (159,711) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 39,140 | 39,140 | ||
Exercise of common stock options (in shares) | 167 | |||
Exercise of common stock options | 3,283 | $ 1 | 3,282 | |
Stock-based compensation (in shares) | 396 | |||
Stock-based compensation | 2,051 | $ 4 | 2,047 | |
Repurchases of common stock (in shares) | (888) | |||
Repurchases of common stock | (40,952) | $ (9) | (5,329) | (35,614) |
Ending balance (in shares) at Mar. 28, 2020 | 27,636 | |||
Ending balance at Mar. 28, 2020 | $ (155,909) | $ 276 | 0 | (156,185) |
Beginning balance (in shares) at Dec. 28, 2019 | 27,961 | 27,961 | ||
Beginning balance at Dec. 28, 2019 | $ (159,431) | $ 280 | 0 | (159,711) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | $ 77,830 | |||
Ending balance (in shares) at Sep. 26, 2020 | 27,757 | 27,757 | ||
Ending balance at Sep. 26, 2020 | $ (102,827) | $ 278 | 14,390 | (117,495) |
Beginning balance (in shares) at Mar. 28, 2020 | 27,636 | |||
Beginning balance at Mar. 28, 2020 | (155,909) | $ 276 | 0 | (156,185) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (12,630) | (12,630) | ||
Exercise of common stock options (in shares) | 33 | |||
Exercise of common stock options | 817 | 817 | ||
Stock-based compensation (in shares) | 71 | |||
Stock-based compensation | 5,033 | $ 1 | 5,032 | |
Repurchases of common stock (in shares) | (15) | |||
Repurchases of common stock | (329) | (330) | 1 | |
Ending balance (in shares) at Jun. 27, 2020 | 27,725 | |||
Ending balance at Jun. 27, 2020 | (163,018) | $ 277 | 5,519 | (168,814) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 51,320 | 51,320 | ||
Exercise of common stock options (in shares) | 20 | |||
Exercise of common stock options | 550 | $ 1 | 549 | |
Stock-based compensation (in shares) | 14 | |||
Stock-based compensation | 8,470 | 8,470 | ||
Repurchases of common stock (in shares) | (2) | |||
Repurchases of common stock | $ (149) | (148) | (1) | |
Ending balance (in shares) at Sep. 26, 2020 | 27,757 | 27,757 | ||
Ending balance at Sep. 26, 2020 | $ (102,827) | $ 278 | $ 14,390 | $ (117,495) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 77,830 | $ 57,752 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 46,244 | 46,267 |
Stock-based compensation | 15,554 | 12,034 |
Net loss (gain) on disposals and impairments of assets | 208 | (409) |
Deferred income taxes | 3,229 | (895) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (12,710) | (746) |
Inventories | 3,807 | (1,626) |
Income taxes | 5,103 | 535 |
Prepaid expenses and other assets | 3,666 | (8,065) |
Accounts payable | 58,547 | 45,051 |
Customer prepayments | 40,795 | 12,758 |
Accrued compensation and benefits | 21,376 | 11,763 |
Other taxes and withholding | 4,756 | 5,784 |
Other accruals and liabilities | 18,877 | 9,629 |
Net cash provided by operating activities | 287,282 | 189,832 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (28,074) | (46,757) |
Proceeds from sales of property and equipment | 53 | 2,577 |
Purchase of intangible assets | (945) | 0 |
Net cash used in investing activities | (28,966) | (44,180) |
Cash flows from financing activities: | ||
Repurchases of common stock | (41,923) | (139,178) |
Net decrease in short-term borrowings | (220,968) | (11,270) |
Proceeds from issuance of common stock | 4,650 | 5,752 |
Debt issuance costs | (303) | (1,023) |
Net cash used in financing activities | (258,544) | (145,719) |
Net decrease in cash and cash equivalents | (228) | (67) |
Cash and cash equivalents, at beginning of period | 1,593 | 1,612 |
Cash and cash equivalents, at end of period | $ 1,365 | $ 1,545 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 26, 2020 | |
Accounting Policies [Abstract] | |
Business and Summary of Significant Accounting Policies | Business and Summary of Significant Accounting Policies Business & Basis of Presentation We prepared the condensed consolidated financial statements as of and for the three and nine months ended September 26, 2020 of Sleep Number Corporation and our 100%-owned subsidiaries (Sleep Number or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position as of September 26, 2020 and December 28, 2019, and the consolidated results of operations and cash flows for the periods presented. Our historical and quarterly consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future period. Additionally, based on the duration and severity of the current global situation involving the novel coronavirus (COVID-19) pandemic, including but not limited to general economic conditions, consumer confidence, store closings mandated by federal, state or local authorities and possible supply chain disruptions, the extent to which COVID-19 will impact our business and our consolidated financial results will depend on future developments, which are highly uncertain and cannot be predicted. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with our most recent audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and other recent filings with the SEC. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. In addition, during the current environment involving COVID-19, predicting future events will be especially challenging for management. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. Our critical accounting policies consist of stock-based compensation, goodwill and indefinite-lived intangible assets, warranty liabilities and revenue recognition. The condensed consolidated financial statements include the accounts of Sleep Number Corporation and our 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. New Accounting Pronouncements Recently Adopted Accounting Guidance In April 2020, the Financial Accounting Standards Board (FASB) issued a Staff Q&A, Topic 842 and 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic . To provide clarity in response to the COVID-19 pandemic crisis, the FASB staff believes that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, we are not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or our obligations as the lessee. For example, this election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. The FASB staff expects that reasonable judgment will be exercised in making those determinations. Some concessions will provide a deferral of payments with no substantive changes to the consideration in the original contract. A deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original contract. The staff expects that there will be multiple ways to account for those deferrals, none of which the staff believes are more preferable than the others. Two of those methods are: a. Account for the concessions as if no changes to the lease contract were made. Under that accounting, a lessor would increase its lease receivable, and a lessee would increase its accounts payable as receivables/payments accrue. In its income statement, a lessor would continue to recognize income, and a lessee would continue to recognize expense during the deferral period. b. Account for the deferred payments as variable lease payments. We adopted option a. above and continue to recognize rent expense on a straight-line basis. We have deferred approximately $3.7 million in rent cash payments from the second and third quarter of fiscal 2020 to future periods, including $3.6 million of rent payments related to leases where we have a signed agreement related to the deferrals and the remainder related to leases we are still in the process of negotiating with the lessors. See Note 6. Leases , for further information. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 26, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value MeasurementsAt September 26, 2020 and December 28, 2019, we had $11 million and $8 million, respectively, of debt and equity securities that fund our deferred compensation plan and are classified in other non-current assets. We also had corresponding deferred compensation plan liabilities of $11 million and $8 million at September 26, 2020 and December 28, 2019, respectively, which are included in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. Unrealized gains/(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan liabilities. |
Inventories
Inventories | 9 Months Ended |
Sep. 26, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): September 26, December 28, Raw materials $ 8,197 $ 6,231 Work in progress 103 31 Finished goods 74,958 80,803 $ 83,258 $ 87,065 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 9 Months Ended |
Sep. 26, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill and Indefinite-Lived Intangible Assets Goodwill was $64 million at September 26, 2020 and December 28, 2019. Indefinite-lived trade name/trademarks totaled $1.4 million at September 26, 2020 and December 28, 2019. Definite-Lived Intangible Assets Developed Technologies The gross carrying amount of our developed technologies was $19 million at September 26, 2020 and December 28, 2019. Accumulated amortization was $13 million and $11 million at September 26, 2020 and December 28, 2019, respectively. Amortization expense for the three months ended September 26, 2020 and September 28, 2019, was $0.6 million and $0.5 million, respectively. Amortization expense for the nine months ended September 26, 2020 and September 28, 2019, was $1.7 million and $1.6 million, respectively. Other In June 2020, we purchased certain other definite-lived intangible assets for a total purchase price of $2 million and will amortize them over an average of nine years. Amortization expense for the three and nine months ended September 26, 2020 was $55 thousand. Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2020 (excluding the nine months ended September 26, 2020) $ 638 2021 2,403 2022 2,403 2023 1,431 2024 222 2025 226 Thereafter 743 Total future amortization for definite-lived intangible assets $ 8,066 |
Credit Agreement
Credit Agreement | 9 Months Ended |
Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement Our credit facility as of September 26, 2020, had a total commitment amount of $450 million. The credit facility is for general corporate purposes and to meet our seasonal working capital requirements. The credit agreement provides the lenders with a collateral security interest in substantially all of our assets and those of our subsidiaries and requires us to comply with, among other things, a maximum leverage ratio (4.5x) and a minimum interest coverage ratio (3.0x). The credit agreement includes an accordion feature which allows us to increase the amount of the credit facility from $450 million to $600 million, subject to lenders' approval. Under the terms of the credit agreement, we pay a variable rate of interest and a commitment fee based on our leverage ratio. The credit agreement matures in February 2024. We were in compliance with all financial covenants as of September 26, 2020. On April 3, 2020, we amended the credit agreement to add a 364-day term loan facility up to an aggregate commitment of $75 million under our credit agreement for a total commitment amount of $525 million, with an additional $75 million remaining available under our accordion (subject to lenders' approval). The additional borrowings were undertaken as a precautionary measure to provide increased liquidity and preserve financial flexibility in light of disruption and uncertainty resulting from the COVID-19 pandemic. On September 24, 2020, we repaid the 364-day, $75 million term loan. On October 5, 2020, we further amended the credit agreement to remove the share repurchase restriction and eliminate the floor based on LIBOR of at least 0.75% from our $450 million credit agreement that were added in the April 3, 2020 amendment. The following table summarizes our borrowings under the credit facility ($ in thousands): September 26, December 28, Outstanding borrowings $ 33,500 $ 231,000 Outstanding letters of credit $ 3,997 $ 3,497 Additional borrowing capacity $ 412,503 $ 215,503 Weighted-average interest rate 2.5 % 3.5 % |
Leases
Leases | 9 Months Ended |
Sep. 26, 2020 | |
Leases [Abstract] | |
Leases | Leases We lease our retail, office and manufacturing space under operating leases which, in addition to the minimum lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating expenses. While our local market development approach generally results in long-term participation in given markets, our retail store leases generally provide for an initial lease term of five three Our operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date we take possession of the property. During lease renewal negotiations that extend beyond the original lease term, we estimate straight-line rent expense based on current market conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be reasonably estimated. Future payments for real estate taxes and certain building operating expenses for which we are obligated are not included in operating lease costs. At September 26, 2020, our finance right-of-use assets and lease liabilities were not significant. Operating lease costs were as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Operating lease costs (1) $ 22,512 $ 21,583 $ 67,815 $ 63,719 Variable lease costs $ 333 $ 466 $ 608 $ 1,387 ___________________________ (1) Includes short-term lease costs which are not significant. The maturities of operating lease liabilities as of September 26, 2020, were as follows (1) (in thousands): 2020 (excluding the nine months ended September 26, 2020) 21,175 2021 80,946 2022 72,566 2023 62,641 2024 50,846 2025 41,941 Thereafter 96,068 Total lease payments (2) 426,183 Less: Interest 83,889 Present value of operating lease liabilities (3) $ 342,294 ___________________________ (1) We have deferred certain lease payments initially due in the second and third quarters of fiscal 2020 to future periods. These deferred rent payments of $3.7 million are excluded from this table and are included in Other current liabilities and Other non-current liabilities. See Note 1, Business and Summary of Significant Accounting Policies, New Accounting Pronouncements , Recently Adopted Accounting Guidance . (2) Total lease payments exclude $56 million of legally binding minimum lease payments for leases signed but not yet commenced. (3) Includes the current portion of $61 million for operating lease liabilities. Other information related to operating leases was as follows: September 26, December 28, Weighted-average remaining lease term (years) 6.4 6.6 Weighted-average discount rate 7.0 % 7.2 % Nine Months Ended (in thousands) September 26, September 28, Cash paid for amounts included in present value of operating lease liabilities $ 64,208 $ 60,512 Right-of-use assets obtained in exchange for operating lease liabilities $ 28,772 $ 53,230 |
Repurchases of Common Stock
Repurchases of Common Stock | 9 Months Ended |
Sep. 26, 2020 | |
Repurchases Of Common Stock [Abstract] | |
Repurchases of Common Stock | Repurchases of Common Stock Repurchases of our common stock were as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Amount repurchased under Board-approved share repurchase program $ — $ 40,000 $ 38,111 $ 120,900 Amount repurchased in connection with the vesting of employee restricted stock grants 149 142 3,319 9,575 Total amount repurchased (based on trade dates) $ 149 $ 40,142 $ 41,430 $ 130,475 As of September 26, 2020, the remaining authorization under our Board-approved share repurchase program was $437 million. In light of the uncertainty surrounding the impact of COVID-19, we temporarily suspended all share repurchases under our Board-approved share repurchase program. In October 2020, we resumed our share repurchase program. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 26, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Deferred contract assets and deferred contract liabilities are included in our condensed consolidated balance sheets as follows (in thousands): September 26, December 28, Deferred Contract Assets included in: Other current assets $ 25,454 $ 23,568 Other non-current assets 35,836 33,782 $ 61,290 $ 57,350 September 26, December 28, Deferred Contract Liabilities included in: Other current liabilities $ 34,369 $ 34,204 Other non-current liabilities 47,103 44,970 $ 81,472 $ 79,174 During both the three months ended September 26, 2020 and September 28, 2019, we recognized revenue of $9 million, that were included in the deferred contract liability balances at the beginning of the respective periods. During the nine months ended September 26, 2020 and September 28, 2019, we recognized revenue of $27 million and $25 million, respectively, that were included in the deferred contract liability balances at the beginning of the respective periods. Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of our revenues for the three and nine months ended September 26, 2020 and September 28, 2019. Net sales were as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Retail $ 456,756 $ 437,871 $ 1,097,872 $ 1,158,096 Online and phone 72,688 34,520 187,067 89,695 Total Retail 529,444 472,391 1,284,939 1,247,791 Wholesale/Other 1,711 2,387 3,720 9,395 Total Company $ 531,155 $ 474,778 $ 1,288,659 $ 1,257,186 Obligation for Sales Returns The activity in the sales returns liability account was as follows (in thousands): Nine Months Ended September 26, September 28, Balance at beginning of year $ 19,809 $ 19,907 Additions that reduce net sales 55,086 60,962 Deductions from reserves (50,810) (57,036) Balance at end of period $ 24,085 $ 23,833 |
Stock-Based Compensation Expens
Stock-Based Compensation Expense | 9 Months Ended |
Sep. 26, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation Expense | Stock-Based Compensation Expense Total stock-based compensation expense was as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Stock awards $ 7,930 $ 3,527 13,776 $ 10,256 Stock options 540 619 1,778 1,778 Total stock-based compensation expense (1) 8,470 4,146 15,554 12,034 Income tax benefit 2,081 984 3,795 2,948 Total stock-based compensation expense, net of tax $ 6,389 $ 3,162 $ 11,759 $ 9,086 ___________________________ (1) Changes in 2020 stock-based compensation expense reflect the cumulative impact of the change in the expected achievements of certain performance targets. |
Profit Sharing and 401(k) Plan
Profit Sharing and 401(k) Plan | 9 Months Ended |
Sep. 26, 2020 | |
Profit Sharing And 401 (k) Plan [Abstract] | |
Profit Sharing and 401(k) Plan | Profit Sharing and 401(k) Plan Under our profit sharing and 401(k) plan, eligible employees may defer up to 50% of their compensation on a pre-tax basis, subject to Internal Revenue Service limitations. Each pay period, we may make a discretionary contribution equal to a percentage of the employee’s contribution. During the three months ended September 26, 2020 and September 28, 2019, our contributions, net of forfeitures, were $2.1 million and $1.5 million, respectively. During the nine months ended September 26, 2020 and September 28, 2019, our contributions, net of forfeitures, were $4.2 million and $4.5 million, respectively. Effective May 2020, due to the business impact of the COVID-19 pandemic, we temporarily suspended making discretionary 401(k) plan contributions. In September 2020, we reinstated the discretionary 401(k) plan contributions for 2020. |
Net Income per Common Share
Net Income per Common Share | 9 Months Ended |
Sep. 26, 2020 | |
Earnings Per Share [Abstract] | |
Net Income per Common Share | Net Income per Common Share The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Net income $ 51,320 $ 28,054 $ 77,830 $ 57,752 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 27,973 29,085 27,918 29,859 Dilutive effect of stock-based awards 661 711 642 829 Diluted weighted-average shares outstanding 28,634 29,796 28,560 30,688 Net income per share – basic $ 1.83 $ 0.96 $ 2.79 $ 1.93 Net income per share – diluted $ 1.79 $ 0.94 $ 2.73 $ 1.88 For the three and nine months ended September 26, 2020 and September 28, 2019, anti-dilutive stock-based awards excluded from the diluted net income per share calculations were immaterial. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 26, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Warranty Liabilities The activity in the accrued warranty liabilities account was as follows (in thousands): Nine Months Ended September 26, 2020 September 28, 2019 Balance at beginning of year $ 11,345 $ 10,389 Additions charged to costs and expenses for current-year sales 9,111 8,033 Deductions from reserves (8,034) (8,159) Changes in liability for pre-existing warranties during the current year, including expirations (381) 1,189 Balance at end of period $ 12,041 $ 11,452 Legal Proceedings We are involved from time to time in various legal proceedings arising in the ordinary course of our business, including primarily commercial, product liability, employment and intellectual property claims. In accordance with U.S. generally accepted accounting principles, we record a liability in our consolidated financial statements with respect to any of these matters when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. If a material loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. With respect to currently pending legal proceedings, we have not established an estimated range of reasonably possible material losses either because we believe that we have valid defenses to claims asserted against us, the proceeding has not advanced to a stage of discovery that would enable us to establish an estimate, or the potential loss is not material. We currently do not expect the outcome of pending legal proceedings to have a material effect on our consolidated results of operations, financial position or cash flows. Litigation, however, is inherently unpredictable, and it is possible that the ultimate outcome of one or more claims asserted against us could adversely impact our consolidated results of operations, financial position or cash flows. We expense legal costs as incurred. On September 18, 2018, two former Home Delivery team members filed suit, now venued in San Diego County Superior Court, California, alleging representative claims on a purported class action basis under the California Labor Code Private Attorney General Act. While the two representative plaintiffs were in the Home Delivery workforce, the Complaint does not limit the purported plaintiff class to that group. The plaintiffs allege that Sleep Number failed or refused to adopt adequate practices, policies and procedures relating to wage payments, record keeping, employment disclosures, meal and rest breaks, among other claims, under California law. The Complaint sought damages in the form of civil penalties and plaintiffs’ attorneys’ fees. The parties have executed a settlement agreement, including the settlement and release of certain additional related claims that are contained in a consolidated complaint, which received preliminary Court approval on July 29, 2020 and is proceeding through final administrative processes. We intend to continue vigorously defending this matter in the event the settlement is not ultimately finalized. On March 27, 2018, Level Sleep, LLC (Level Sleep) filed a patent infringement lawsuit against Sleep Number in the Federal District Court for the Eastern District of Texas. In its Complaint, Level Sleep claims that Sleep Number infringed two patents owned by Level Sleep, U.S. Patent Nos. 6,807,698 and 7,036,172 (the Patents), by, among other things, making, using, offering for sale, or selling within the United States, and/or importing into the United States, beds with sleep surfaces having foam with multiple zones in the longitudinal direction. Level Sleep has asserted that five non-360 ® beds no longer sold and two current non-360 beds infringe the Patents. Level Sleep seeks damages in the form of a reasonable royalty. Sleep Number has asserted that the Patents are invalid and that our products do not infringe the Patents. On January 14, 2020, the Court granted summary judgment in favor of Sleep Number, finding that Sleep Number’s products do not infringe the Patents. Level Sleep has filed an appeal of the Court’s summary judgment order, which is currently pending with the Federal Circuit Court of Appeals. We intend to continue vigorously defending this matter. |
COVID-19 Pandemic
COVID-19 Pandemic | 9 Months Ended |
Sep. 26, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 Pandemic | COVID-19 Pandemic The COVID-19 pandemic and ensuing government restrictions resulted in the temporary closure of most of our retail stores starting in mid-March. While prioritizing the safety of our team, serving our customers and ensuring business continuity, we swiftly took decisive actions to strengthen our liquidity, cash flows and financial position, and mitigate the future impact on our operations and financial performance. For the nine months ended September 26, 2020, net sales increased 3% and net income increased by 35% compared with the same period one year ago, despite a 20% decline in net sales during the three months ended June 27, 2020 when 47% of our stores were closed on average. Approximately 98% of our stores were open on average during the three months ended September 26, 2020. While we have generated strong financial performance during the first nine months of 2020, the volatility, length and severity of the pandemic's impact on consumer demand and the resulting impact on our future financial performance remains uncertain. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II: Item 1A. Risk Factors for additional discussion on the COVID-19 pandemic and the impact on our business. |
Business and Summary of Signi_2
Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 26, 2020 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business & Basis of Presentation We prepared the condensed consolidated financial statements as of and for the three and nine months ended September 26, 2020 of Sleep Number Corporation and our 100%-owned subsidiaries (Sleep Number or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position as of September 26, 2020 and December 28, 2019, and the consolidated results of operations and cash flows for the periods presented. Our historical and quarterly consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future period. Additionally, based on the duration and severity of the current global situation involving the novel coronavirus (COVID-19) pandemic, including but not limited to general economic conditions, consumer confidence, store closings mandated by federal, state or local authorities and possible supply chain disruptions, the extent to which COVID-19 will impact our business and our consolidated financial results will depend on future developments, which are highly uncertain and cannot be predicted. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with our most recent audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and other recent filings with the SEC. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. In addition, during the current environment involving COVID-19, predicting future events will be especially challenging for management. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. Our critical accounting policies consist of stock-based compensation, goodwill and indefinite-lived intangible assets, warranty liabilities and revenue recognition. |
Consolidation | The condensed consolidated financial statements include the accounts of Sleep Number Corporation and our 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Guidance In April 2020, the Financial Accounting Standards Board (FASB) issued a Staff Q&A, Topic 842 and 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic . To provide clarity in response to the COVID-19 pandemic crisis, the FASB staff believes that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, we are not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in Topic 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or our obligations as the lessee. For example, this election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. The FASB staff expects that reasonable judgment will be exercised in making those determinations. Some concessions will provide a deferral of payments with no substantive changes to the consideration in the original contract. A deferral affects the timing, but the amount of the consideration is substantially the same as that required by the original contract. The staff expects that there will be multiple ways to account for those deferrals, none of which the staff believes are more preferable than the others. Two of those methods are: a. Account for the concessions as if no changes to the lease contract were made. Under that accounting, a lessor would increase its lease receivable, and a lessee would increase its accounts payable as receivables/payments accrue. In its income statement, a lessor would continue to recognize income, and a lessee would continue to recognize expense during the deferral period. b. Account for the deferred payments as variable lease payments. |
Leases | We lease our retail, office and manufacturing space under operating leases which, in addition to the minimum lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating expenses. While our local market development approach generally results in long-term participation in given markets, our retail store leases generally provide for an initial lease term of five three Our operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date we take possession of the property. During lease renewal negotiations that extend beyond the original lease term, we estimate straight-line rent expense based on current market conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be reasonably |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): September 26, December 28, Raw materials $ 8,197 $ 6,231 Work in progress 103 31 Finished goods 74,958 80,803 $ 83,258 $ 87,065 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Annual Amortization of Definite-Lived Tangible Assets | Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2020 (excluding the nine months ended September 26, 2020) $ 638 2021 2,403 2022 2,403 2023 1,431 2024 222 2025 226 Thereafter 743 Total future amortization for definite-lived intangible assets $ 8,066 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Borrowings Under Credit Facility | The following table summarizes our borrowings under the credit facility ($ in thousands): September 26, December 28, Outstanding borrowings $ 33,500 $ 231,000 Outstanding letters of credit $ 3,997 $ 3,497 Additional borrowing capacity $ 412,503 $ 215,503 Weighted-average interest rate 2.5 % 3.5 % |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Leases [Abstract] | |
Schedule of Operating Lease Costs | Operating lease costs were as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Operating lease costs (1) $ 22,512 $ 21,583 $ 67,815 $ 63,719 Variable lease costs $ 333 $ 466 $ 608 $ 1,387 ___________________________ (1) Includes short-term lease costs which are not significant. |
Schedule of Maturities of Operating Lease Liabilities | The maturities of operating lease liabilities as of September 26, 2020, were as follows (1) (in thousands): 2020 (excluding the nine months ended September 26, 2020) 21,175 2021 80,946 2022 72,566 2023 62,641 2024 50,846 2025 41,941 Thereafter 96,068 Total lease payments (2) 426,183 Less: Interest 83,889 Present value of operating lease liabilities (3) $ 342,294 ___________________________ (1) We have deferred certain lease payments initially due in the second and third quarters of fiscal 2020 to future periods. These deferred rent payments of $3.7 million are excluded from this table and are included in Other current liabilities and Other non-current liabilities. See Note 1, Business and Summary of Significant Accounting Policies, New Accounting Pronouncements , Recently Adopted Accounting Guidance . (2) Total lease payments exclude $56 million of legally binding minimum lease payments for leases signed but not yet commenced. (3) Includes the current portion of $61 million for operating lease liabilities. |
Schedule of Other Information Related Operating Leases | Other information related to operating leases was as follows: September 26, December 28, Weighted-average remaining lease term (years) 6.4 6.6 Weighted-average discount rate 7.0 % 7.2 % Nine Months Ended (in thousands) September 26, September 28, Cash paid for amounts included in present value of operating lease liabilities $ 64,208 $ 60,512 Right-of-use assets obtained in exchange for operating lease liabilities $ 28,772 $ 53,230 |
Repurchases of Common Stock (Ta
Repurchases of Common Stock (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Repurchases Of Common Stock [Abstract] | |
Schedule of Repurchases of Common Stock | Repurchases of our common stock were as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Amount repurchased under Board-approved share repurchase program $ — $ 40,000 $ 38,111 $ 120,900 Amount repurchased in connection with the vesting of employee restricted stock grants 149 142 3,319 9,575 Total amount repurchased (based on trade dates) $ 149 $ 40,142 $ 41,430 $ 130,475 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Deferred Contract Liabilities and Deferred Contract Assets | Deferred contract assets and deferred contract liabilities are included in our condensed consolidated balance sheets as follows (in thousands): September 26, December 28, Deferred Contract Assets included in: Other current assets $ 25,454 $ 23,568 Other non-current assets 35,836 33,782 $ 61,290 $ 57,350 September 26, December 28, Deferred Contract Liabilities included in: Other current liabilities $ 34,369 $ 34,204 Other non-current liabilities 47,103 44,970 $ 81,472 $ 79,174 |
Disaggregation of Revenue | Net sales were as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Retail $ 456,756 $ 437,871 $ 1,097,872 $ 1,158,096 Online and phone 72,688 34,520 187,067 89,695 Total Retail 529,444 472,391 1,284,939 1,247,791 Wholesale/Other 1,711 2,387 3,720 9,395 Total Company $ 531,155 $ 474,778 $ 1,288,659 $ 1,257,186 |
Schedule of Sales Return Liability | The activity in the sales returns liability account was as follows (in thousands): Nine Months Ended September 26, September 28, Balance at beginning of year $ 19,809 $ 19,907 Additions that reduce net sales 55,086 60,962 Deductions from reserves (50,810) (57,036) Balance at end of period $ 24,085 $ 23,833 |
Stock-Based Compensation Expe_2
Stock-Based Compensation Expense (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | Total stock-based compensation expense was as follows (in thousands): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Stock awards $ 7,930 $ 3,527 13,776 $ 10,256 Stock options 540 619 1,778 1,778 Total stock-based compensation expense (1) 8,470 4,146 15,554 12,034 Income tax benefit 2,081 984 3,795 2,948 Total stock-based compensation expense, net of tax $ 6,389 $ 3,162 $ 11,759 $ 9,086 ___________________________ (1) Changes in 2020 stock-based compensation expense reflect the cumulative impact of the change in the expected achievements of certain performance targets. |
Net Income per Common Share (Ta
Net Income per Common Share (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Net (Loss) Income per Share | The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 26, September 28, September 26, September 28, Net income $ 51,320 $ 28,054 $ 77,830 $ 57,752 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 27,973 29,085 27,918 29,859 Dilutive effect of stock-based awards 661 711 642 829 Diluted weighted-average shares outstanding 28,634 29,796 28,560 30,688 Net income per share – basic $ 1.83 $ 0.96 $ 2.79 $ 1.93 Net income per share – diluted $ 1.79 $ 0.94 $ 2.73 $ 1.88 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 26, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty Liabilities | The activity in the accrued warranty liabilities account was as follows (in thousands): Nine Months Ended September 26, 2020 September 28, 2019 Balance at beginning of year $ 11,345 $ 10,389 Additions charged to costs and expenses for current-year sales 9,111 8,033 Deductions from reserves (8,034) (8,159) Changes in liability for pre-existing warranties during the current year, including expirations (381) 1,189 Balance at end of period $ 12,041 $ 11,452 |
Business and Summary of Signi_3
Business and Summary of Significant Accounting Policies (Details) $ in Millions | 6 Months Ended |
Sep. 26, 2020USD ($) | |
Accounting Policies [Abstract] | |
Amount of lease payments deferred due to COVID-19 | $ 3.7 |
Amount of lease payments deferred with a signed agreement due to COVID-19 | $ 3.6 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Level 1 - USD ($) $ in Millions | Sep. 26, 2020 | Dec. 28, 2019 |
Other non-current assets | Available-for-sale securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Marketable securities assets funding the deferred compensation plan | $ 11 | $ 8 |
Other non-current liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan liability | $ 11 | $ 8 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 8,197 | $ 6,231 |
Work in progress | 103 | 31 |
Finished goods | 74,958 | 80,803 |
Inventories | $ 83,258 | $ 87,065 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2020 | Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | Dec. 28, 2019 | |
Goodwill And Intangible Assets [Line Items] | ||||||
Goodwill | $ 64,000 | $ 64,000 | $ 64,000 | |||
Developed Technologies | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Gross carrying amount | 19,000 | 19,000 | 19,000 | |||
Accumulated amortization | 13,000 | 13,000 | 11,000 | |||
Amortization expense definite-lived intangible assets | 600 | $ 500 | 1,700 | $ 1,600 | ||
Other | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Amortization expense definite-lived intangible assets | 55 | 55 | ||||
Definite-lived intangibles acquired | $ 2,000 | |||||
Weighted-average amortization period of definite-lived intangibles acquired | 9 years | |||||
Trade Names | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Indefinite-lived trade name/trademarks | $ 1,400 | $ 1,400 | $ 1,400 |
Goodwill and Intangible Assets-
Goodwill and Intangible Assets- Annual Amortization for Definite-Lived Intangible (Details) $ in Thousands | Sep. 26, 2020USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2020 (excluding the nine months ended September 26, 2020) | $ 638 |
2021 | 2,403 |
2022 | 2,403 |
2023 | 1,431 |
2024 | 222 |
2025 | 226 |
Thereafter | 743 |
Total future amortization for definite-lived intangible assets | $ 8,066 |
Credit Agreement - Additional I
Credit Agreement - Additional Information (Details) - USD ($) | Oct. 05, 2020 | Sep. 24, 2020 | Apr. 03, 2020 | Sep. 26, 2020 |
Line of Credit Facility [Line Items] | ||||
Current borrowing capacity | $ 450,000,000 | |||
Maximum leverage ratio | 450.00% | |||
Minimum interest coverage ratio | 300.00% | |||
Total commitment amount | $ 525,000,000 | $ 600,000,000 | ||
Additional borrowing capacity under accordian feature | $ 75,000,000 | |||
London Interbank Offered Rate (LIBOR) [Member] | Minimum | Subsequent Event | ||||
Line of Credit Facility [Line Items] | ||||
Minimum floor based on LIBOR (as a percent) | 0.75% | |||
Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument term | 364 days | |||
Amount of debt retired | $ 75,000,000 | |||
Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument term | 364 days | |||
Term loan | $ 75,000,000 |
Credit Agreement - Schedule of
Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Line of Credit Facility [Line Items] | ||
Outstanding borrowings | $ 33,500 | $ 231,000 |
Outstanding letters of credit | 3,997 | 3,497 |
Additional borrowing capacity | $ 412,503 | $ 215,503 |
Weighted-average interest rate | 2.50% | 3.50% |
Leases - Additional Information
Leases - Additional Information (Details) | Sep. 26, 2020 |
Minimum | Retail Store Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Minimum | Lease Vehicles and Certain Equipment Under Operating Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 3 years |
Maximum | Retail Store Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 10 years |
Maximum | Office and Manufacturing Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 15 years |
Maximum | Lease Vehicles and Certain Equipment Under Operating Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Leases [Abstract] | ||||
Operating lease costs | $ 22,512 | $ 21,583 | $ 67,815 | $ 63,719 |
Variable lease costs | $ 333 | $ 466 | $ 608 | $ 1,387 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Sep. 26, 2020 | Dec. 28, 2019 | |
Leases [Abstract] | ||
2020 (excluding the nine months ended September 26, 2020) | $ 21,175 | |
2021 | 80,946 | |
2022 | 72,566 | |
2023 | 62,641 | |
2024 | 50,846 | |
2025 | 41,941 | |
Thereafter | 96,068 | |
Total lease payments | 426,183 | |
Less: Interest | 83,889 | |
Present value of operating lease liabilities | 342,294 | |
Amount of lease payments deferred due to COVID-19 | 3,700 | |
Amount leases executed, not yet commenced, excluded from table. | 56,000 | |
Operating lease liabilities, current | $ 60,561 | $ 59,561 |
Leases - Schedule of Other Info
Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Dec. 28, 2019 | |
Leases [Abstract] | |||
Weighted-average remaining lease term (years) | 6 years 4 months 24 days | 6 years 7 months 6 days | |
Weighted-average discount rate | 7.00% | 7.20% | |
Cash paid for amounts included in present value of operating lease liabilities | $ 64,208 | $ 60,512 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 28,772 | $ 53,230 |
Repurchases of Common Stock - S
Repurchases of Common Stock - Schedule of Repurchase of Common Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Repurchases Of Common Stock [Abstract] | ||||
Amount repurchased under Board-approved share repurchase program | $ 0 | $ 40,000 | $ 38,111 | $ 120,900 |
Amount repurchased in connection with the vesting of employee restricted stock grants | 149 | 142 | 3,319 | 9,575 |
Total amount repurchased | $ 149 | $ 40,142 | $ 41,430 | $ 130,475 |
Repurchases of Common Stock - A
Repurchases of Common Stock - Additional Information (Details) $ in Millions | Sep. 26, 2020USD ($) |
Repurchases Of Common Stock [Abstract] | |
Remaining authorized stock purchase plan | $ 437 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Deferred Contract Assets and Deferred Contract Liabilities (Details) - USD ($) $ in Thousands | Sep. 26, 2020 | Dec. 28, 2019 |
Deferred Contract Assets included in: | ||
Deferred contract assets | $ 61,290 | $ 57,350 |
Deferred Contract Liabilities included in: | ||
Deferred contract liabilities | 81,472 | 79,174 |
Other current assets | ||
Deferred Contract Assets included in: | ||
Other current assets | 25,454 | 23,568 |
Other non-current assets | ||
Deferred Contract Assets included in: | ||
Other non-current assets | 35,836 | 33,782 |
Other current liabilities | ||
Deferred Contract Liabilities included in: | ||
Other current liabilities | 34,369 | 34,204 |
Other non-current liabilities | ||
Deferred Contract Liabilities included in: | ||
Other non-current liabilities | $ 47,103 | $ 44,970 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized, included in beginning deferred contract liability balance | $ 9 | $ 9 | $ 27 | $ 25 |
Transferred at Point in Time | Revenue from Contract with Customer Benchmark | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized at a point in time | 98.00% | 98.00% | 98.00% | 98.00% |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 531,155 | $ 474,778 | $ 1,288,659 | $ 1,257,186 |
Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 456,756 | 437,871 | 1,097,872 | 1,158,096 |
Online and phone | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 72,688 | 34,520 | 187,067 | 89,695 |
Total Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 529,444 | 472,391 | 1,284,939 | 1,247,791 |
Wholesale/Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 1,711 | $ 2,387 | $ 3,720 | $ 9,395 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Sales Return Liability [Roll Forward] | ||
Balance at beginning of year | $ 19,809 | $ 19,907 |
Additions that reduce net sales | 55,086 | 60,962 |
Deductions from reserves | (50,810) | (57,036) |
Balance at end of period | $ 24,085 | $ 23,833 |
Stock-Based Compensation Expe_3
Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock based compensation expense | $ 8,470 | $ 4,146 | $ 15,554 | $ 12,034 |
Income tax benefit | 2,081 | 984 | 3,795 | 2,948 |
Total stock-based compensation expense, net of tax | 6,389 | 3,162 | 11,759 | 9,086 |
Stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock based compensation expense | 7,930 | 3,527 | 13,776 | 10,256 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock based compensation expense | $ 540 | $ 619 | $ 1,778 | $ 1,778 |
Profit Sharing and 401(k) Plan
Profit Sharing and 401(k) Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2020 | Sep. 28, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Profit Sharing And 401 (k) Plan [Abstract] | ||||
Employee compensation deferral (as a percent) | 50.00% | |||
Employer contributions | $ 2.1 | $ 1.5 | $ 4.2 | $ 4.5 |
Net Income per Common Share (De
Net Income per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 26, 2020 | Jun. 27, 2020 | Mar. 28, 2020 | Sep. 28, 2019 | Jun. 29, 2019 | Mar. 30, 2019 | Sep. 26, 2020 | Sep. 28, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 51,320 | $ (12,630) | $ 39,140 | $ 28,054 | $ 4,280 | $ 25,418 | $ 77,830 | $ 57,752 |
Reconciliation of weighted-average shares outstanding: | ||||||||
Basic weighted-average shares outstanding (in shares) | 27,973,000 | 29,085,000 | 27,918,000 | 29,859,000 | ||||
Dilutive effect of stock-based awards (in shares) | 661,000 | 711,000 | 642,000 | 829,000 | ||||
Diluted weighted-average shares outstanding (in shares) | 28,634,000 | 29,796,000 | 28,560,000 | 30,688,000 | ||||
Net income per share – basic (in dollars per share) | $ 1.83 | $ 0.96 | $ 2.79 | $ 1.93 | ||||
Net income per share – diluted (in dollars per share) | $ 1.79 | $ 0.94 | $ 2.73 | $ 1.88 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2020 | Sep. 28, 2019 | |
Warranty Liabilities [Roll Forward] | ||
Balance at beginning of year | $ 11,345 | $ 10,389 |
Additions charged to costs and expenses for current-year sales | 9,111 | 8,033 |
Deductions from reserves | (8,034) | (8,159) |
Changes in liability for pre-existing warranties during the current year, including expirations | (381) | 1,189 |
Balance at end of period | $ 12,041 | $ 11,452 |
COVID-19 Pandemic (Details)
COVID-19 Pandemic (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 26, 2020 | Jun. 27, 2020 | Sep. 26, 2020 | |
Unusual or Infrequent Item, or Both [Line Items] | |||
Increase (decrease) in net sales (as a percent) | (20.00%) | 3.00% | |
Increase in net income (as a percent) | 35.00% | ||
Average | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Average percentage of stores that are open (more than) | 98.00% | 47.00% |