Cover
Cover - USD ($) | 12 Months Ended | ||
Jan. 02, 2021 | Jan. 30, 2021 | Jun. 27, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jan. 2, 2021 | ||
Current Fiscal Year End Date | --01-02 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 669,244,000 | ||
Entity Common Stock, Shares Outstanding | 25,375,000 | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s proxy statement to be furnished to shareholders in connection with its 2021 Annual Meeting of Shareholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0000827187 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 4,243 | $ 1,593 |
Accounts receivable, net of allowances of $1,046 and $898, respectively | 31,871 | 19,978 |
Inventories | 81,362 | 87,065 |
Prepaid expenses | 20,839 | 15,335 |
Other current assets | 43,489 | 36,397 |
Total current assets | 181,804 | 160,368 |
Non-current assets: | ||
Property and equipment, net | 175,223 | 197,421 |
Operating lease right-of-use assets | 314,226 | 327,017 |
Goodwill and intangible assets, net | 72,871 | 73,226 |
Other non-current assets | 56,012 | 48,011 |
Total assets | 800,136 | 806,043 |
Current liabilities: | ||
Borrowings under revolving credit facility | 244,200 | 231,000 |
Accounts payable | 91,904 | 134,594 |
Customer prepayments | 72,017 | 34,248 |
Accrued sales returns | 24,765 | 19,809 |
Compensation and benefits | 76,786 | 40,321 |
Taxes and withholding | 23,339 | 22,171 |
Operating lease liabilities | 62,077 | 59,561 |
Other current liabilities | 60,856 | 53,070 |
Total current liabilities | 655,944 | 594,774 |
Non-current liabilities: | ||
Deferred income taxes | 242 | 3,808 |
Operating lease liabilities | 283,084 | 298,090 |
Other non-current liabilities | 84,844 | 68,802 |
Total liabilities | 1,024,114 | 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, 25,390 and 27,961 shares issued and outstanding, respectively | 254 | 280 |
Additional paid-in capital | 0 | 0 |
Accumulated deficit | (224,232) | (159,711) |
Total shareholders’ deficit | (223,978) | (159,431) |
Total liabilities and shareholders’ deficit | $ 800,136 | $ 806,043 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Current assets: | ||
Allowances | $ 1,046 | $ 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) | 25,390,000 | 27,961,000 |
Common stock, shares outstanding (in shares) | 25,390,000 | 27,961,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Income Statement [Abstract] | |||
Net sales | $ 1,856,555 | $ 1,698,352 | $ 1,531,575 |
Cost of sales | 700,555 | 646,429 | 603,614 |
Gross profit | 1,156,000 | 1,051,923 | 927,961 |
Operating expenses: | |||
Sales and marketing | 771,195 | 766,922 | 687,380 |
General and administrative | 158,999 | 137,956 | 119,378 |
Research and development | 40,910 | 34,950 | 28,775 |
Total operating expenses | 971,104 | 939,828 | 835,533 |
Operating income | 184,896 | 112,095 | 92,428 |
Interest expense, net | 8,924 | 11,587 | 5,907 |
Income before income taxes | 175,972 | 100,508 | 86,521 |
Income tax expense | 36,783 | 18,663 | 16,982 |
Net income | $ 139,189 | $ 81,845 | $ 69,539 |
Basic net income per share: | |||
Net income - basic (in dollars per share) | $ 5.03 | $ 2.78 | $ 1.97 |
Weighted-average shares - basic (in shares) | 27,665 | 29,472 | 35,256 |
Diluted net income per share: | |||
Net income - diluted (in dollars per share) | $ 4.90 | $ 2.70 | $ 1.92 |
Weighted-average shares (in shares) | 28,428 | 30,355 | 36,165 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' (Deficit) Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) |
Balance (in shares) at Dec. 31, 2017 | 38,813 | |||
Balance at Dec. 31, 2017 | $ 89,156 | $ 388 | $ 0 | $ 88,768 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 69,539 | 69,539 | ||
Exercise of common stock options (in shares) | 186 | |||
Exercise of common stock options | 2,788 | $ 2 | 2,786 | |
Stock-based compensation (in shares) | 271 | |||
Stock-based compensation | 11,412 | $ 3 | 11,409 | |
Repurchases of common stock (in shares) | (8,402) | |||
Repurchases of common stock | (282,445) | $ (84) | (14,195) | (268,166) |
Balance (in shares) at Dec. 29, 2018 | 30,868 | |||
Balance at Dec. 29, 2018 | (109,550) | $ 309 | 0 | (109,859) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 81,845 | 81,845 | ||
Exercise of common stock options (in shares) | 381 | |||
Exercise of common stock options | 7,190 | $ 4 | 7,186 | |
Stock-based compensation (in shares) | 480 | |||
Stock-based compensation | 16,657 | $ 5 | 16,652 | |
Repurchases of common stock (in shares) | (3,768) | |||
Repurchases of common stock | $ (155,573) | $ (38) | (23,838) | (131,697) |
Balance (in shares) at Dec. 28, 2019 | 27,961 | 27,961 | ||
Balance at Dec. 28, 2019 | $ (159,431) | $ 280 | 0 | (159,711) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | $ 139,189 | 139,189 | ||
Exercise of common stock options (in shares) | 420 | 420 | ||
Exercise of common stock options | $ 9,602 | $ 4 | 9,598 | |
Stock-based compensation (in shares) | 620 | |||
Stock-based compensation | 21,813 | $ 6 | 21,807 | |
Repurchases of common stock (in shares) | (3,611) | |||
Repurchases of common stock | $ (235,151) | $ (36) | (31,405) | (203,710) |
Balance (in shares) at Jan. 02, 2021 | 25,390 | 25,390 | ||
Balance at Jan. 02, 2021 | $ (223,978) | $ 254 | $ 0 | $ (224,232) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Cash flows from operating activities: | |||
Net income | $ 139,189 | $ 81,845 | $ 69,539 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 61,563 | 61,866 | 61,966 |
Stock-based compensation | 21,813 | 16,657 | 11,412 |
Net loss (gain) on disposals and impairments of assets | 247 | (430) | (51) |
Deferred income taxes | (3,566) | (1,014) | 7,447 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (11,893) | 4,817 | (5,483) |
Inventories | 5,703 | (2,183) | (584) |
Income taxes | 1,057 | 3,066 | (6,561) |
Prepaid expenses and other assets | (13,717) | (13,959) | 5,551 |
Accounts payable | (16,755) | 10,661 | (9,894) |
Customer prepayments | 37,769 | 7,182 | (701) |
Accrued compensation and benefits | 36,825 | 12,920 | (6,872) |
Other taxes and withholding | 111 | 725 | 707 |
Other accruals and liabilities | 21,315 | 7,007 | 5,064 |
Net cash provided by operating activities | 279,661 | 189,160 | 131,540 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (37,100) | (59,239) | (45,515) |
Proceeds from sales of property and equipment | 55 | 2,615 | 272 |
Purchase of intangible assets | (1,973) | 0 | 0 |
Net cash used in investing activities | (39,018) | (56,624) | (45,243) |
Cash flows from financing activities: | |||
Repurchases of common stock | (235,644) | (165,079) | (272,446) |
Net (decrease) increase in short-term borrowings | (11,639) | 26,357 | 182,336 |
Proceeds from issuance of common stock | 9,602 | 7,190 | 2,788 |
Debt issuance costs | (312) | (1,023) | (1,014) |
Net cash used in financing activities | (237,993) | (132,555) | (88,336) |
Net increase (decrease) in cash and cash equivalents | 2,650 | (19) | (2,039) |
Cash and cash equivalents, at beginning of period | 1,593 | 1,612 | 3,651 |
Cash and cash equivalents, at end of period | 4,243 | 1,593 | 1,612 |
Non-cash financing transactions: | |||
Change in unsettled repurchases of common stock | (493) | (9,506) | 9,999 |
Supplemental Disclosure of Cash Flow Information | |||
Income taxes paid, net of refunds | 38,698 | 17,182 | 15,031 |
Interest paid | 9,053 | 10,656 | 5,086 |
Finance lease obligations incurred | 0 | 0 | 943 |
Purchases of property and equipment included in accounts payable | $ 5,015 | $ 5,725 | $ 12,123 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Business and Summary of Significant Accounting Policies | Business and Summary of Significant Accounting Policies Business & Basis of Presentation Sleep Number Corporation and our 100%-owned subsidiaries (Sleep Number or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of Sleep Number beds which allows us to offer consumers high-quality, individualized sleep solutions and services. Sleep Number also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. We generate revenue by marketing our innovations to new and existing customers, and selling products through Total Retail and Wholesale/Other. Total Retail, which includes Stores, Online, Phone and Chat, sells directly to consumers. Wholesale/Other sells to and through selected wholesale customers in the United States. The consolidated financial statements include the accounts of Sleep Number Corporation and our subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. Fiscal Year Our fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2020 ended January 2, 2021; fiscal 2019 ended December 28, 2019; and fiscal 2018 ended December 29, 2018. Fiscal 2020 had 53 weeks, 2019 and 2018 each had 52 weeks. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (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 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. Changes in these estimates will be reflected in the financial statements in future periods. 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. Our critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. Cash and Cash Equivalents Cash and cash equivalents include highly-liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in our consolidated balance sheets and in net increase in short-term borrowings in the financing activities section of our consolidated statements of cash flows. Book overdrafts totaled $8 million and $33 million at January 2, 2021 and December 28, 2019, respectively. Accounts Receivable Accounts receivable are recorded net of an allowance for expected credit losses and consist primarily of receivables from third-party financiers for customer credit card purchases. The allowance is recognized in an amount equal to anticipated future write-offs. We estimate future write-offs based on delinquencies, aging trends, industry risk trends, our historical experience and current trends. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. Inventories Inventories include materials, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We review inventory quantities on hand and record reserves for obsolescence based on historical selling prices, current market conditions and forecasted product demand, to reduce inventory to net realizable value. Property and Equipment Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net income in our consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable. Estimated useful lives of our property and equipment by major asset category are as follows: Leasehold improvements 5 to 15 years Furniture and equipment 3 to 15 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years Goodwill and Intangible Assets, Net Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net identifiable assets. Our intangible assets include developed technologies and trade names/trademarks. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 8-10 years. Asset Impairment Charges Long-lived Assets and Definite-lived Intangible Assets - we review our long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When we recognize an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If we recognize an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The Financial Accounting Standards Board’s (FASB) guidance allows us to perform either a quantitative assessment or a qualitative assessment before calculating the fair value of a reporting unit. We have elected to perform the quantitative assessment. The quantitative goodwill impairment test is a two-step process. The first step is a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. If this step reflects impairment, then the loss would be measured as the excess of recorded goodwill over its implied fair value. Implied fair value is the excess of fair value of the reporting unit over the fair value of all identified assets and liabilities. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and our market capitalization. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. Based on our 2020 assessments, we determined there was no impairment. Warranty Liabilities We provide a limited warranty on most of the products we sell. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by us and are adjusted for any current trends as appropriate. The majority of our warranty claims are incurred within the first year. Our warranty liability contains uncertainties because our warranty obligations cover an extended period of time and require management to make estimates for claim rates and the projected cost of materials and freight associated with sending replacement parts to customers. We regularly assess and adjust the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. We classify as non-current those estimated warranty costs expected to be paid out in greater than one year. The activity in the accrued warranty liabilities account was as follows (in thousands): 2020 2019 2018 Balance at beginning of period $ 11,345 $ 10,389 $ 9,320 Additions charged to costs and expenses for current-year sales 13,387 10,949 12,385 Deductions from reserves (12,158) (11,007) (11,743) Change in liabilities for pre-existing warranties during the current (422) 1,014 427 Balance at end of period $ 12,152 $ 11,345 $ 10,389 Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: • Level 1 – observable inputs such as quoted prices in active markets; • Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. We generally estimate fair value of long-lived assets, including our retail stores, using the income approach, which we base on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date. Shareholders’ Deficit Dividends We are not restricted from paying cash dividends under our Credit Agreement so long as we are not in default under the Credit Agreement , our leverage ratio (as defined in our Credit Agreement) after giving effect to such restricted payments (as defined in our Credit Agreement) would not exceed 3.75:1.00 and no default or event of default (as defined in our Credit Agreement) would result therefrom. However, we have not historically paid, and have no current plans to pay, cash dividends on our common stock. Share Repurchases At January 2, 2021, we had $247 million remaining authorization under our $500 million board-approved share repurchase program. There is no expiration date governing the period over which we can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to accumulated deficit. Revenue Recognition We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenue recognized excludes sales taxes. Amounts billed to customers for delivery and setup are included in net sales. For most products, we receive payment before or promptly after, the products or services are delivered to the customer. We accept sales returns of most products during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that we do not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period we remeasure the liability to reflect changes in the estimate, with a corresponding adjustment to net sales. Our beds sold with SleepIQ technology contain multiple performance obligations including the bed, and SleepIQ hardware and software. We analyze our multiple performance obligation(s) to determine whether they are distinct and can be separated or whether they must be accounted for as a single performance obligation. We determined that the beds sold with the SleepIQ technology have two performance obligations consisting of: (i) the bed; and (ii) SleepIQ hardware and software. SleepIQ hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. We determine the transaction price for multiple performance obligations based on their relative standalone selling prices. The performance obligation related to the bed is satisfied at a point in time. The performance obligation related to SleepIQ technology is satisfied over time based on the ongoing access and usage by the customer of software essential to the functionality of SleepIQ technology. The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the product’s estimated life of four years because our inputs are generally expended evenly throughout the performance period. See Note 9, Revenue Recognition , for additional information on revenue recognition and sales returns. Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within our industry): Cost of Sales Sales & Marketing • Costs associated with purchasing, manufacturing, shipping, handling and delivering our products to our retail stores and customers; • Advertising, marketing and media production; • Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage; • Physical inventory losses, scrap and obsolescence; • Payroll and benefits for sales and customer service staff; • Related occupancy and depreciation expenses; • Store occupancy costs; • Costs associated with returns and exchanges; and • Store depreciation expense; • Estimated costs to service customer warranty claims. • Credit card processing fees; and • Promotional financing costs. G&A R&D (1) • Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management; • Internal labor and benefits related to research and development activities; • Outside consulting services related to research and development activities; and • Testing equipment related to research and development activities. • Occupancy costs of corporate facilities; • Depreciation related to corporate assets; __________ (1) Costs incurred in connection with R&D are charged to expense as incurred. • Information hardware, software and maintenance; • Insurance; • Investor relations costs; and • Other overhead costs. Leases We determine if an arrangement is a lease at inception. Right-of-use (ROU) assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of future lease payments over the lease term. We elected the option to not separate lease and non-lease components for all of our leases. Most of our leases do not provide an implicit interest rate nor is the rate available to us from our lessors. As an alternative, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet as an ROU asset or operating lease liability. We recognize operating lease costs for these short-term leases, primarily small equipment leases, on a straight-line basis over the lease term. At January 2, 2021, our finance ROU assets and associated lease liabilities were not significant. See Note 1, Business and Summary of Significant Accounting Policies, New Accounting Pronouncements , Recently Adopted Accounting Guidance, below, and Note 7, Leases , for further information on our recent adoption of Financial Accounting Standards Board (FASB) Staff Q&A, Topic 840 and 842: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic . Leases in fiscal 2018 were accounted for under ASC 840, Leases . Rent expense in fiscal 2018 was as follows (in thousands): 2018 Facility Rents: Minimum rents $ 71,851 Contingent rents 1,847 Total $ 73,698 Equipment Rents $ 5,692 Pre-Opening Costs Costs associated with the start-up and promotion of new retail store openings are expensed as incurred. Advertising Costs We incur advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs. Advertising expense was $253 million, $242 million and $210 million in 2020, 2019 and 2018, respectively. Advertising costs deferred and included in prepaid expenses in our consolidated balance sheet were not significant at January 2, 2021 and December 28, 2019, respectively. Insurance We are self-insured for certain losses related to health and workers’ compensation claims, although we obtain third-party insurance coverage to limit exposure to these claims. We estimate our self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. Our self-insurance liability was $11 million and $9 million at January 2, 2021 and December 28, 2019, respectively. At January 2, 2021 and December 28, 2019, $7 million and $6 million, respectively, were included in current liabilities: compensation and benefits in our consolidated balance sheets and $4 million and $3 million, respectively, were included in other non-current liabilities in our consolidated balance sheets. Software Capitalization For software developed or obtained for internal use, we capitalize direct external costs associated with developing or obtaining internal-use software. In addition, we capitalize certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. We expense any data conversion or training costs as incurred. Capitalized software costs are included in property and equipment, net in our consolidated balance sheet. We capitalize costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with our policy for software developed or obtained for internal use. The capitalized implementation costs of cloud computing arrangements are expensed over the term of the cloud computing arrangement in the same line item in the statement of operations as the associated hosting fees. Capitalized costs incurred with the implementation of a cloud computing arrangement are included in prepaid expenses and other non-current assets in our consolidated balance sheet, and in operating cash flows in our consolidated statement of cash flows. Stock-Based Compensation We compensate officers, directors and key employees with stock-based compensation under stock plans approved by our shareholders and administered under the supervision of our Board of Directors (Board). At January 2, 2021, a total of 2.4 million shares were available for future grant. These plans include non-qualified stock options and stock awards. We record stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. We recognize stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. We reduce compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. We include, as part of cash flows from operating activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. In addition, excess tax benefits or deficiencies are recorded as discrete adjustments to income tax expense. Stock Options - stock option awards are granted at exercise prices equal to the closing price of our stock on the grant date. Generally, options vest proportionally over three years and expire after 10 years. Compensation expense is recognized ratably over the vesting period. We determine the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows: Expected Volatility – expected volatility was determined based on implied volatility of our traded options and historical volatility of our stock price. Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Expected Term – expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. Stock Awards - we issue stock awards to certain employees in conjunction with our stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time-based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of our common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options. In April 2020, we took actions to maintain liquidity and cut costs in response to the COVID-19 pandemic, including offering a salary for stock program. Under that program, certain employees elected to forego a percentage of their cash salary for the remainder of the year in exchange for time-based stock awards that represented the value of the cash salary foregone. Subject to continuing employment, these awards vested in December 2020. Certain time-based stock awards have a performance condition (performance-based). The final number of shares earned for performance-based stock awards and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2020, 2019 and 2018 awards. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2020, 2019 and 2018, the performance targets are based on growth in net sales and in operating profit, and the performance periods are fiscal 2020 through 2022, 2019 through 2021, and fiscal 2018 through 2020, respectively. See Note 8, Shareholders’ Deficit , for additional information on stock-based compensation. Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. We evaluate all available positive and negative evidence, including our forecast of future taxable income, to assess the need for a valuation allowance on our deferred tax assets. We record a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in our tax returns. We follow a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes. We classify net interest and penalties related to income taxes as a component of income tax expense in our consolidated statements of operations. Net Income Per Share We calculate basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the period. We calculate diluted net income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards. Sources of Supply We currently obtain materials and components used to produce our beds from outside sources. As a result, we are dependent upon suppliers that in some instances, are our sole source of supply, or supply the vast majority of the particular component or material. We continuously evaluate opportunities to dual-source key components and materials. The failure of one or more of our suppliers to provide us with materials or components on a timely basis could significantly impact our consolidated results of operations and net income per share. While we believe that these materials and components, or suitable replacements, could be obtained from other sources in the event of a disruption or loss of supply, we may not be able to find alternative sources of supply or alternative sources of supply on comparable terms and an unexpected loss of supply over a short period of time may not allow us to replace these sources in the ordinary course of business. Recently Adopted Accounting Guidance New Accounting Pronouncements In April 2020, the FASB issued a Staff Q&A, Topic 840 and 842: 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. At January 2, 2021, we had deferred cash rent payments of $3.1 million. See Note 7, Leases , for further information. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jan. 02, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value MeasurementsAt January 2, 2021 and December 28, 2019, we had $12 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 $12 million and $8 million at January 2, 2021 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 | 12 Months Ended |
Jan. 02, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): January 2, December 28, Raw materials $ 12,599 $ 6,231 Work in progress 103 31 Finished goods 68,660 80,803 $ 81,362 $ 87,065 Finished goods inventories consisted of the following (in thousands): January 2, December 28, Finished beds, including retail display beds and deliveries in-transit to those customers who have utilized home delivery services $ 21,442 $ 24,509 Finished components that were ready for assembly for the completion of beds 28,108 40,139 Retail accessories 19,110 16,155 $ 68,660 $ 80,803 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jan. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands): January 2, 2021 December 28, Leasehold improvements $ 115,901 $ 115,566 Furniture and equipment 125,292 123,161 Production machinery, computer equipment and software 233,249 245,175 Construction in progress 7,059 6,590 Less: Accumulated depreciation and amortization (306,278) (293,071) $ 175,223 $ 197,421 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Jan. 02, 2021 | |
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 January 2, 2021 and December 28, 2019. Indefinite-lived trade name/trademarks totaled $1.4 million at January 2, 2021 and December 28, 2019. Definite-lived Intangible Assets The gross carrying amount of our developed technologies was $19 million at January 2, 2021 and December 28, 2019. Accumulated amortization was $13 million and $11 million at January 2, 2021 and December 28, 2019, respectively. Amortization expense for our developed technologies was $2 million in each of 2020, 2019 and 2018. 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 year ended January 2, 2021 was $0.1 million. Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2021 $ 2,403 2022 2,403 2023 1,431 2024 222 2025 226 Thereafter 743 Total future amortization for definite-lived intangible assets $ 7,428 |
Credit Agreement
Credit Agreement | 12 Months Ended |
Jan. 02, 2021 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement As of January 2, 2021, our credit facility had a total commitment amount of $450 million. The credit facility is for general corporate purposes, to meet our seasonal working capital requirements and to repurchase our stock. The credit agreement includes an accordion feature which allows us to increase the amount of the credit facility from $450 million to $600 million, subject to lenders’ approval. The credit agreement provides the lenders with a collateral security interest in substantially all of our assets and those of our subsidiaries and requires us to comply with, among other things, a maximum leverage ratio (4.5x) and a minimum interest coverage ratio (3.0x). Under the terms of the credit agreement, we pay a variable rate of interest and a commitment fee based on our leverage ratio. The credit agreement matures in February 2024. We were in compliance with all financial covenants as of January 2, 2021. The following tables summarizes our borrowings under the credit facility ($ in thousands): January 2, 2021 December 28, 2019 Outstanding borrowings $ 244,200 $ 231,000 Outstanding letters of credit $ 3,997 $ 3,497 Additional borrowing capacity $ 201,803 $ 215,503 Weighted-average interest rate 1.5 % 3.5 % |
Leases
Leases | 12 Months Ended |
Jan. 02, 2021 | |
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 January 2, 2021, our finance right-of-use assets and lease liabilities were not significant. Lease costs were as follows (in thousands): 2020 2019 Operating lease costs (1) $ 90,311 $ 86,026 Variable lease costs $ 1,147 $ 1,809 ___________________ (1) Includes short-term lease costs which are not significant. The maturities of operating lease liabilities as of January 2, 2021, were as follows (1) (in thousands): 2021 $ 83,856 2022 75,516 2023 65,527 2024 53,669 2025 44,750 Thereafter 103,817 Total operating lease payments (2) 427,135 Less: Interest 81,909 Present value of operating lease liabilities (3) $ 345,226 ___________________ (1) During 2020, we deferred certain cash lease payments to future periods. At January 2, 2021, we had deferred cash rent payments of $3.1 million which 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 operating lease payments exclude $91 million of legally binding minimum lease payments for leases signed but not yet commenced. (3) Includes the current portion of $62 million for operating lease liabilities. Other information related to operating leases was as follows: January 2, December 28, Weighted-average remaining lease term (years) 6.3 6.6 Weighted-average discount rate 6.9 % 7.2 % (in thousands) 2020 2019 Cash paid for amounts included in present value of operating lease liabilities $ 85,497 $ 81,718 Right-of-use assets obtained in exchange for operating lease liabilities $ 43,860 $ 75,384 |
Shareholders' Deficit
Shareholders' Deficit | 12 Months Ended |
Jan. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Shareholders’ Deficit | Shareholders’ Deficit Stock-Based Compensation Expense Total stock-based compensation expense was as follows (in thousands): 2020 2019 2018 Stock awards $ 19,435 $ 14,265 $ 8,930 Stock options 2,378 2,392 2,482 Total stock-based compensation expense (1) 21,813 16,657 11,412 Income tax benefit 5,126 3,998 2,750 Total stock-based compensation expense, net of tax $ 16,687 $ 12,659 $ 8,662 ___________________ (1) Changes in annual stock-based compensation expense reflects the cumulative impact of the change in the expected achievements of certain performance targets. Stock Options A summary of our stock option activity was as follows (in thousands, except per share amounts and years): Stock Weighted- Weighted- Aggregate Intrinsic Value (1) Outstanding at December 28, 2019 1,068 $ 26.87 6.0 $ 24,274 Granted 184 36.11 Exercised (420) 22.87 Canceled/Forfeited (19) 38.78 Outstanding at January 2, 2021 813 $ 30.74 6.5 $ 41,568 Exercisable at January 2, 2021 520 $ 26.27 5.3 $ 28,913 Vested and expected to vest at January 2, 2021 790 $ 30.53 6.4 $ 40,553 ___________________ (1) Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant. Other information pertaining to options was as follows (in thousands, except per share amounts): 2020 2019 2018 Weighted-average grant date fair value of stock options granted $ 15.10 $ 18.97 $ 13.96 Total intrinsic value (at exercise) of stock options exercised $ 14,357 $ 9,636 $ 3,459 Cash received from the exercise of stock options for the fiscal year ended January 2, 2021 was $9.6 million. Our tax benefit related to the exercise of stock options for the fiscal year ended January 2, 2021 was $3.5 million. At January 2, 2021, there was $2.9 million of total stock option compensation expense related to non-vested stock options not yet recognized, which is expected to be recognized over a weighted-average period of 1.8 years. The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows: Valuation Assumptions 2020 2019 2018 Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 46 % 43 % 43 % Risk-free interest rate 0.7 % 2.2 % 2.7 % Expected term (years) 5.4 5.4 5.0 Stock Awards Stock award activity was as follows (in thousands, except per share amounts): Time- Weighted-Average Performance- Weighted-Average Outstanding at December 28, 2019 330 $ 38.09 592 $ 33.30 Granted 309 30.80 291 32.28 Vested (297) 29.55 (326) 23.66 Canceled/Forfeited (40) 37.08 (37) 25.91 Outstanding at January 2, 2021 302 $ 38.96 520 $ 38.52 At January 2, 2021, there was $6.8 million of unrecognized compensation expense related to non-vested time-based stock awards, which is expected to be recognized over a weighted-average period of 1.7 years, and $13.5 million of unrecognized compensation expense related to non-vested performance-based and market-based stock awards, which is expected to be recognized over a weighted-average period of 1.8 years. During 2018, 5,027 performance-based stock awards with a market condition were granted and had a weighted-average grant date fair value of $35.97 per award. There were no performance-based stock awards with a market condition issued in 2020 or 2019. The assumptions used to calculate the fair value of the 2018 performance-based stock awards with a market condition, using the Monte Carlo simulation model, were as follows: Valuation Assumptions 2018 Expected dividend yield 0 % Expected volatility 43 % Risk-free interest rate 2.6 % Repurchases of Common Stock Repurchases of our common stock were as follows (in thousands): 2020 2019 2018 Amount repurchased under Board-approved share repurchase program $ 228,111 $ 145,900 $ 279,101 Amount repurchased in connection with the vesting of employee restricted 7,040 9,673 3,344 Total amount repurchased (based on trade dates) $ 235,151 $ 155,573 $ 282,445 As of January 2, 2021, the remaining authorization under our Board-approved share repurchase program was $247 million. Net Income per Common Share The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): 2020 2019 2018 Net income $ 139,189 $ 81,845 $ 69,539 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 27,665 29,472 35,256 Dilutive effect of stock-based awards 763 883 909 Diluted weighted-average shares outstanding 28,428 30,355 36,165 Net income per share – basic $ 5.03 $ 2.78 $ 1.97 Net income per share – diluted $ 4.90 $ 2.70 $ 1.92 Additional potential dilutive stock options totaling 0.2 million for each of fiscal years 2020, 2019 and 2018 have been excluded from our diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of our common stock). |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Jan. 02, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Deferred contract assets and deferred contract liabilities are included in our consolidated balance sheets as follows (in thousands): January 2, 2021 December 28, 2019 Deferred Contract Assets included in: Other current assets $ 26,593 $ 23,568 Other non-current assets 37,976 33,782 $ 64,569 $ 57,350 January 2, 2021 December 28, 2019 Deferred Contract Liabilities included in: Other current liabilities $ 35,288 $ 34,204 Other non-current liabilities 49,689 44,970 $ 84,977 $ 79,174 During the years ended January 2, 2021 and December 28, 2019, we recognized revenue of $34 million and $32 million, respectively, that was included in the deferred contract liability balance at the beginning of the year. Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of our revenues for 2020, 2019 and 2018. Net sales consisted of follows (in thousands): 2020 2019 2018 Retail $ 1,582,266 $ 1,558,638 $ 1,401,991 Online, Phone and Chat 269,236 129,257 115,831 Total Retail 1,851,502 1,687,895 1,517,822 Wholesale/Other 5,053 10,457 13,753 Total Company $ 1,856,555 $ 1,698,352 $ 1,531,575 Obligation for Sales Returns The activity in the sales returns liability account for 2020 and 2019 was as follows (in thousands): 2020 2019 Balance at beginning of year $ 19,809 $ 19,907 Additions that reduce net sales 81,513 79,138 Deduction from reserves (76,557) (79,236) Balance at end of period $ 24,765 $ 19,809 |
Profit Sharing and 401(k) Plan
Profit Sharing and 401(k) Plan | 12 Months Ended |
Jan. 02, 2021 | |
Retirement Benefits [Abstract] | |
Profit Sharing and 401(k) Plan | Profit Sharing and 401(k) PlanUnder 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 year, we may make a discretionary contribution equal to a percentage of the employee’s contribution. During 2020, 2019 and 2018, our contributions, net of forfeitures, were $6 million, $6 million and $5 million, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense consisted of the following (in thousands): 2020 2019 2018 Current: Federal $ 29,762 $ 12,299 $ 12,483 State 6,528 3,293 2,871 36,290 15,592 15,354 Deferred: Federal 584 2,591 708 State (91) 480 920 493 3,071 1,628 Income tax expense $ 36,783 $ 18,663 $ 16,982 The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate: 2020 2019 2018 Statutory federal income tax 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 2.4 3.6 3.3 Stock-based compensation (2.4) (4.3) (1.1) R&D tax credits (1.4) (2.2) (2.0) Non-deductible compensation 1.0 — — Changes in unrecognized tax benefits 0.3 (0.5) 1.2 Tax Cuts and Jobs Act effects — — (3.9) Other — 1.0 1.1 Effective income tax rate 20.9 % 18.6 % 19.6 % We file income tax returns with the U.S. federal government and various state jurisdictions. In the normal course of business, we are subject to examination by federal and state taxing authorities. We are no longer subject to federal income tax examinations for years prior to 2017 or state income tax examinations prior to 2016. On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted. The TCJA reduced the statutory federal tax rate from 35% to 21% starting in 2018. In addition, there were various other tax law changes that impacted us. In connection with the reduction of the federal tax rate, we recognized a provisional tax benefit of $1.7 million for the year ended December 30, 2017. This provisional tax benefit was related to the re-measurement of U.S. deferred tax assets and liabilities using a federal tax rate of 21%, which, under the TCJA, is expected to be in place when such deferred assets and liabilities reverse in future periods. During 2018, we updated our provisional tax benefit based on new information, including a tax planning analysis, and recorded an additional $2.9 million tax benefit. Deferred Income Taxes The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands): 2020 2019 Deferred tax assets: Stock-based compensation $ 7,518 $ 8,342 Operating lease liabilities 86,692 90,059 Warranty and returns liabilities 8,496 7,215 Net operating loss carryforwards and credits 2,027 1,987 Compensation and benefits 6,045 4,698 Other 7,440 3,953 Total gross deferred tax assets 118,218 116,254 Valuation allowance (615) (615) Total gross deferred tax assets after valuation allowance 117,603 115,639 Deferred tax liabilities: Property and equipment 31,881 30,274 Operating lease right-of-use assets 78,824 82,340 Deferred revenue 4,987 3,859 Other 2,153 2,974 Total gross deferred tax liabilities 117,845 119,447 Net deferred tax liabilities $ (242) $ (3,808) At January 2, 2021, we had net operating loss carryforwards for federal purposes of $0.6 million, which will expire between 2025 and 2027. We evaluate our deferred income taxes quarterly to determine if valuation allowances are required. As part of this evaluation, we assess whether valuation allowances should be established for any deferred tax assets that are not considered more likely than not to be realized, using all available evidence, both positive and negative. This assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. We have provided a $0.6 million valuation allowance resulting primarily from our inability to utilize certain foreign net operating losses, and federal net operating losses associated with our 2015 acquisition of BAM Labs, Inc. Unrecognized Tax Benefits Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands): Federal and State Tax 2020 2019 2018 Beginning balance $ 3,337 $ 3,866 $ 2,839 Increases related to current-year tax positions 860 638 778 Increases related to prior-year tax positions 27 134 595 Decreases related to prior-year tax positions — (363) — Lapse of statute of limitations (312) (663) (333) Settlements with taxing authorities — (275) (13) Ending balance $ 3,912 $ 3,337 $ 3,866 At both January 2, 2021 and December 28, 2019, we had $3 million of unrecognized tax benefits, which if recognized, would affect our effective tax rate. The amount of unrecognized tax benefits is not expected to change materially within the next 12 months. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 02, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies 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 final Court approval on January 8, 2021 and is proceeding through the final administrative and appeal processes. 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. Consumer Credit Arrangements We refer customers seeking extended financing to certain third-party financiers (Card Servicers). The Card Servicers, if credit is granted, establish the interest rates, fees, and all other terms and conditions of the customer’s account based on their evaluation of the creditworthiness of the customer. As the accounts are owned by the Card Servicers, at no time are the accounts purchased or acquired from us. We are not liable to the Card Servicers for our customers’ credit defaults. Commitments As of January 2, 2021, we had $53 million of inventory purchase commitments. As part of the normal course of business, there are a limited number of inventory supply contracts that contain penalty provisions for failure to purchase contracted quantities. We do not currently expect any payments under these provisions. At January 2, 2021, we had entered into 52 lease commitments primarily for future retail store locations. These lease commitments provide for total lease payments over the next three |
COVID-19 Pandemic
COVID-19 Pandemic | 12 Months Ended |
Jan. 02, 2021 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 Pandemic | COVID-19 Pandemic At the onset of the COVID-19 pandemic in mid-March, government restrictions resulted in the temporary closure of most of our retail stores. 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. In 2020, net sales increased 9% and net income increased by 70% 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 99% of our stores were open on average during the six months ended January 2, 2021. While we have generated strong financial performance during 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 I: Item 1A. Risk Factors for additional discussion on the COVID-19 pandemic and the impact on our business. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Jan. 02, 2021 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Description 2020 2019 2018 Allowances for credit losses Balance at beginning of period $ 898 $ 699 $ 714 Additions charged to costs and expenses 1,541 1,391 815 Deductions from reserves (1,393) (1,192) (830) Balance at end of period $ 1,046 $ 898 $ 699 |
Business and Summary of Signi_2
Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business & Basis of Presentation Sleep Number Corporation and our 100%-owned subsidiaries (Sleep Number or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of Sleep Number beds which allows us to offer consumers high-quality, individualized sleep solutions and services. Sleep Number also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. We generate revenue by marketing our innovations to new and existing customers, and selling products through Total Retail and Wholesale/Other. Total Retail, which includes Stores, Online, Phone and Chat, sells directly to consumers. Wholesale/Other sells to and through selected wholesale customers in the United States. The consolidated financial statements include the accounts of Sleep Number Corporation and our subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. |
Fiscal Year | Fiscal Year Our fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2020 ended January 2, 2021; fiscal 2019 ended December 28, 2019; and fiscal 2018 ended December 29, 2018. Fiscal 2020 had 53 weeks, 2019 and 2018 each had 52 weeks. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (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 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. Changes in these estimates will be reflected in the financial statements in future periods. 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. Our critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents include highly-liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in our consolidated balance sheets and in net increase in short-term borrowings in the financing activities section of our consolidated statements of cash flows. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded net of an allowance for expected credit losses and consist primarily of receivables from third-party financiers for customer credit card purchases. The allowance is recognized in an amount equal to anticipated future write-offs. We estimate future write-offs based on delinquencies, aging trends, industry risk trends, our historical experience and current trends. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. |
Inventories | Inventories Inventories include materials, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We review inventory quantities on hand and record reserves for obsolescence based on historical selling prices, current market conditions and forecasted product demand, to reduce inventory to net realizable value. |
Property and Equipment | Property and Equipment Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net income in our consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable. Estimated useful lives of our property and equipment by major asset category are as follows: Leasehold improvements 5 to 15 years Furniture and equipment 3 to 15 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net identifiable assets. Our intangible assets include developed technologies and trade names/trademarks. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 8-10 years. |
Asset Impairment Charges | Asset Impairment Charges Long-lived Assets and Definite-lived Intangible Assets - we review our long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When we recognize an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If we recognize an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The Financial Accounting Standards Board’s (FASB) guidance allows us to perform either a quantitative assessment or a qualitative assessment before calculating the fair value of a reporting unit. We have elected to perform the quantitative assessment. The quantitative goodwill impairment test is a two-step process. The first step is a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. If this step reflects impairment, then the loss would be measured as the excess of recorded goodwill over its implied fair value. Implied fair value is the excess of fair value of the reporting unit over the fair value of all identified assets and liabilities. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and our market capitalization. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. Based on our 2020 assessments, we determined there was no impairment. |
Warranty Liabilities | Warranty Liabilities We provide a limited warranty on most of the products we sell. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by us and are adjusted for any current trends as appropriate. The majority of our warranty claims are incurred within the first year. Our warranty liability contains uncertainties because our warranty obligations cover an extended period of time and require management to make estimates for claim rates and the projected cost of materials and freight associated with sending replacement parts to customers. We regularly assess and adjust the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. |
Fair Value Measurements | Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: • Level 1 – observable inputs such as quoted prices in active markets; • Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. We generally estimate fair value of long-lived assets, including our retail stores, using the income approach, which we base on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date. |
Shareholders’ Deficit | Shareholders’ Deficit Dividends We are not restricted from paying cash dividends under our Credit Agreement so long as we are not in default under the Credit Agreement , our leverage ratio (as defined in our Credit Agreement) after giving effect to such restricted payments (as defined in our Credit Agreement) would not exceed 3.75:1.00 and no default or event of default (as defined in our Credit Agreement) would result therefrom. However, we have not historically paid, and have no current plans to pay, cash dividends on our common stock. Share Repurchases At January 2, 2021, we had $247 million remaining authorization under our $500 million board-approved share repurchase program. There is no expiration date governing the period over which we can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to accumulated deficit. |
Revenue Recognition | Revenue Recognition We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenue recognized excludes sales taxes. Amounts billed to customers for delivery and setup are included in net sales. For most products, we receive payment before or promptly after, the products or services are delivered to the customer. We accept sales returns of most products during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that we do not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period we remeasure the liability to reflect changes in the estimate, with a corresponding adjustment to net sales. Our beds sold with SleepIQ technology contain multiple performance obligations including the bed, and SleepIQ hardware and software. We analyze our multiple performance obligation(s) to determine whether they are distinct and can be separated or whether they must be accounted for as a single performance obligation. We determined that the beds sold with the SleepIQ technology have two performance obligations consisting of: (i) the bed; and (ii) SleepIQ hardware and software. SleepIQ hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. We determine the transaction price for multiple performance obligations based on their relative standalone selling prices. The performance obligation related to the bed is satisfied at a point in time. The performance obligation related to SleepIQ technology is satisfied over time based on the ongoing access and usage by the customer of software essential to the functionality of SleepIQ technology. The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the product’s estimated life of four years because our inputs are generally expended evenly throughout the performance period. |
Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses | The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within our industry): Cost of Sales Sales & Marketing • Costs associated with purchasing, manufacturing, shipping, handling and delivering our products to our retail stores and customers; • Advertising, marketing and media production; • Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage; • Physical inventory losses, scrap and obsolescence; • Payroll and benefits for sales and customer service staff; • Related occupancy and depreciation expenses; • Store occupancy costs; • Costs associated with returns and exchanges; and • Store depreciation expense; • Estimated costs to service customer warranty claims. • Credit card processing fees; and • Promotional financing costs. G&A R&D (1) • Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management; • Internal labor and benefits related to research and development activities; • Outside consulting services related to research and development activities; and • Testing equipment related to research and development activities. • Occupancy costs of corporate facilities; • Depreciation related to corporate assets; __________ (1) Costs incurred in connection with R&D are charged to expense as incurred. • Information hardware, software and maintenance; • Insurance; • Investor relations costs; and • Other overhead costs. |
Leases | Leases We determine if an arrangement is a lease at inception. Right-of-use (ROU) assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of future lease payments over the lease term. We elected the option to not separate lease and non-lease components for all of our leases. Most of our leases do not provide an implicit interest rate nor is the rate available to us from our lessors. As an alternative, we use our estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet as an ROU asset or operating lease liability. We recognize operating lease costs for these short-term leases, primarily small equipment leases, on a straight-line basis over the lease term. At January 2, 2021, our finance ROU assets and associated lease liabilities were not significant. See Note 1, Business and Summary of Significant Accounting Policies, New Accounting Pronouncements , Recently Adopted Accounting Guidance, below, and Note 7, Leases , for further information on our recent adoption of Financial Accounting Standards Board (FASB) Staff Q&A, Topic 840 and 842: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic . Leases in fiscal 2018 were accounted for under ASC 840, Leases |
Pre-Opening Costs | Pre-Opening Costs Costs associated with the start-up and promotion of new retail store openings are expensed as incurred. |
Advertising Costs | Advertising CostsWe incur advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs. |
Insurance | InsuranceWe are self-insured for certain losses related to health and workers’ compensation claims, although we obtain third-party insurance coverage to limit exposure to these claims. We estimate our self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. |
Software Capitalization | Software Capitalization For software developed or obtained for internal use, we capitalize direct external costs associated with developing or obtaining internal-use software. In addition, we capitalize certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. We expense any data conversion or training costs as incurred. Capitalized software costs are included in property and equipment, net in our consolidated balance sheet. |
Share-Based Compensation | Stock-Based Compensation We compensate officers, directors and key employees with stock-based compensation under stock plans approved by our shareholders and administered under the supervision of our Board of Directors (Board). At January 2, 2021, a total of 2.4 million shares were available for future grant. These plans include non-qualified stock options and stock awards. We record stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. We recognize stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. We reduce compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. We include, as part of cash flows from operating activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. In addition, excess tax benefits or deficiencies are recorded as discrete adjustments to income tax expense. Stock Options - stock option awards are granted at exercise prices equal to the closing price of our stock on the grant date. Generally, options vest proportionally over three years and expire after 10 years. Compensation expense is recognized ratably over the vesting period. We determine the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows: Expected Volatility – expected volatility was determined based on implied volatility of our traded options and historical volatility of our stock price. Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Expected Term – expected term represents the period that our stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. Stock Awards - we issue stock awards to certain employees in conjunction with our stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time-based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of our common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options. In April 2020, we took actions to maintain liquidity and cut costs in response to the COVID-19 pandemic, including offering a salary for stock program. Under that program, certain employees elected to forego a percentage of their cash salary for the remainder of the year in exchange for time-based stock awards that represented the value of the cash salary foregone. Subject to continuing employment, these awards vested in December 2020. Certain time-based stock awards have a performance condition (performance-based). The final number of shares earned for performance-based stock awards and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2020, 2019 and 2018 awards. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2020, 2019 and 2018, the performance targets are based on growth in net sales and in operating profit, and the performance periods are fiscal 2020 through 2022, 2019 through 2021, and fiscal 2018 through 2020, respectively. |
Income Taxes | Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. We evaluate all available positive and negative evidence, including our forecast of future taxable income, to assess the need for a valuation allowance on our deferred tax assets. We record a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in our tax returns. We follow a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes. We classify net interest and penalties related to income taxes as a component of income tax expense in our consolidated statements of operations. |
Net Income Per Share | Net Income Per Share We calculate basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the period. We calculate diluted net income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards. |
Sources of Supply | Sources of Supply We currently obtain materials and components used to produce our beds from outside sources. As a result, we are dependent upon suppliers that in some instances, are our sole source of supply, or supply the vast majority of the particular component or material. We continuously evaluate opportunities to dual-source key components and materials. The failure of one or more of our suppliers to provide us with materials or components on a timely basis could significantly impact our consolidated results of operations and net income per share. While we believe that these materials and components, or suitable replacements, could be obtained from other sources in the event of a disruption or loss of supply, we may not be able to find alternative sources of supply or alternative sources of supply on comparable terms and an unexpected loss of supply over a short period of time may not allow us to replace these sources in the ordinary course of business. |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance New Accounting Pronouncements In April 2020, the FASB issued a Staff Q&A, Topic 840 and 842: 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. At January 2, 2021, we had deferred cash rent payments of $3.1 million. See Note 7, Leases , for further information. |
Business and Summary of Signi_3
Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Estimated Useful Lives of Property and Equipment | Estimated useful lives of our property and equipment by major asset category are as follows: Leasehold improvements 5 to 15 years Furniture and equipment 3 to 15 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years |
Warranty Liabilities | The activity in the accrued warranty liabilities account was as follows (in thousands): 2020 2019 2018 Balance at beginning of period $ 11,345 $ 10,389 $ 9,320 Additions charged to costs and expenses for current-year sales 13,387 10,949 12,385 Deductions from reserves (12,158) (11,007) (11,743) Change in liabilities for pre-existing warranties during the current (422) 1,014 427 Balance at end of period $ 12,152 $ 11,345 $ 10,389 |
Schedule of Rent Expense | Rent expense in fiscal 2018 was as follows (in thousands): 2018 Facility Rents: Minimum rents $ 71,851 Contingent rents 1,847 Total $ 73,698 Equipment Rents $ 5,692 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): January 2, December 28, Raw materials $ 12,599 $ 6,231 Work in progress 103 31 Finished goods 68,660 80,803 $ 81,362 $ 87,065 |
Schedule of Finished Goods Inventories | Finished goods inventories consisted of the following (in thousands): January 2, December 28, Finished beds, including retail display beds and deliveries in-transit to those customers who have utilized home delivery services $ 21,442 $ 24,509 Finished components that were ready for assembly for the completion of beds 28,108 40,139 Retail accessories 19,110 16,155 $ 68,660 $ 80,803 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property and equipment consisted of the following (in thousands): January 2, 2021 December 28, Leasehold improvements $ 115,901 $ 115,566 Furniture and equipment 125,292 123,161 Production machinery, computer equipment and software 233,249 245,175 Construction in progress 7,059 6,590 Less: Accumulated depreciation and amortization (306,278) (293,071) $ 175,223 $ 197,421 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Annual Amortization for Definite-Lived Intangible Assets | Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2021 $ 2,403 2022 2,403 2023 1,431 2024 222 2025 226 Thereafter 743 Total future amortization for definite-lived intangible assets $ 7,428 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Borrowings Under Credit Facility | The following tables summarizes our borrowings under the credit facility ($ in thousands): January 2, 2021 December 28, 2019 Outstanding borrowings $ 244,200 $ 231,000 Outstanding letters of credit $ 3,997 $ 3,497 Additional borrowing capacity $ 201,803 $ 215,503 Weighted-average interest rate 1.5 % 3.5 % |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Leases [Abstract] | |
Schedule of Operating Lease Costs | Lease costs were as follows (in thousands): 2020 2019 Operating lease costs (1) $ 90,311 $ 86,026 Variable lease costs $ 1,147 $ 1,809 ___________________ (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 January 2, 2021, were as follows (1) (in thousands): 2021 $ 83,856 2022 75,516 2023 65,527 2024 53,669 2025 44,750 Thereafter 103,817 Total operating lease payments (2) 427,135 Less: Interest 81,909 Present value of operating lease liabilities (3) $ 345,226 ___________________ (1) During 2020, we deferred certain cash lease payments to future periods. At January 2, 2021, we had deferred cash rent payments of $3.1 million which 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 operating lease payments exclude $91 million of legally binding minimum lease payments for leases signed but not yet commenced. (3) Includes the current portion of $62 million for operating lease liabilities. |
Schedule of Other Information Related Operating Leases | Other information related to operating leases was as follows: January 2, December 28, Weighted-average remaining lease term (years) 6.3 6.6 Weighted-average discount rate 6.9 % 7.2 % (in thousands) 2020 2019 Cash paid for amounts included in present value of operating lease liabilities $ 85,497 $ 81,718 Right-of-use assets obtained in exchange for operating lease liabilities $ 43,860 $ 75,384 |
Shareholders' Deficit (Tables)
Shareholders' Deficit (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | Total stock-based compensation expense was as follows (in thousands): 2020 2019 2018 Stock awards $ 19,435 $ 14,265 $ 8,930 Stock options 2,378 2,392 2,482 Total stock-based compensation expense (1) 21,813 16,657 11,412 Income tax benefit 5,126 3,998 2,750 Total stock-based compensation expense, net of tax $ 16,687 $ 12,659 $ 8,662 ___________________ (1) Changes in annual stock-based compensation expense reflects the cumulative impact of the change in the expected achievements of certain performance targets. |
Summary of Stock Option Activity | A summary of our stock option activity was as follows (in thousands, except per share amounts and years): Stock Weighted- Weighted- Aggregate Intrinsic Value (1) Outstanding at December 28, 2019 1,068 $ 26.87 6.0 $ 24,274 Granted 184 36.11 Exercised (420) 22.87 Canceled/Forfeited (19) 38.78 Outstanding at January 2, 2021 813 $ 30.74 6.5 $ 41,568 Exercisable at January 2, 2021 520 $ 26.27 5.3 $ 28,913 Vested and expected to vest at January 2, 2021 790 $ 30.53 6.4 $ 40,553 ___________________ (1) Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant. |
Other Information Pertaining to Options | Other information pertaining to options was as follows (in thousands, except per share amounts): 2020 2019 2018 Weighted-average grant date fair value of stock options granted $ 15.10 $ 18.97 $ 13.96 Total intrinsic value (at exercise) of stock options exercised $ 14,357 $ 9,636 $ 3,459 |
Assumptions Used to Calculate Fair Value of Options Granted Using Black-Scholes-Merton Option-Pricing Model | The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows: Valuation Assumptions 2020 2019 2018 Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 46 % 43 % 43 % Risk-free interest rate 0.7 % 2.2 % 2.7 % Expected term (years) 5.4 5.4 5.0 |
Stock Award Activity | Stock award activity was as follows (in thousands, except per share amounts): Time- Weighted-Average Performance- Weighted-Average Outstanding at December 28, 2019 330 $ 38.09 592 $ 33.30 Granted 309 30.80 291 32.28 Vested (297) 29.55 (326) 23.66 Canceled/Forfeited (40) 37.08 (37) 25.91 Outstanding at January 2, 2021 302 $ 38.96 520 $ 38.52 |
Assumptions Used to Calculate Fair Value of Performance-based Stock Awards Using Monte Carlo Simulation Model | Valuation Assumptions 2018 Expected dividend yield 0 % Expected volatility 43 % Risk-free interest rate 2.6 % |
Schedule of Repurchase of Common Stock | Repurchases of our common stock were as follows (in thousands): 2020 2019 2018 Amount repurchased under Board-approved share repurchase program $ 228,111 $ 145,900 $ 279,101 Amount repurchased in connection with the vesting of employee restricted 7,040 9,673 3,344 Total amount repurchased (based on trade dates) $ 235,151 $ 155,573 $ 282,445 |
Net Income per Common Share | The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): 2020 2019 2018 Net income $ 139,189 $ 81,845 $ 69,539 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 27,665 29,472 35,256 Dilutive effect of stock-based awards 763 883 909 Diluted weighted-average shares outstanding 28,428 30,355 36,165 Net income per share – basic $ 5.03 $ 2.78 $ 1.97 Net income per share – diluted $ 4.90 $ 2.70 $ 1.92 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
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 consolidated balance sheets as follows (in thousands): January 2, 2021 December 28, 2019 Deferred Contract Assets included in: Other current assets $ 26,593 $ 23,568 Other non-current assets 37,976 33,782 $ 64,569 $ 57,350 January 2, 2021 December 28, 2019 Deferred Contract Liabilities included in: Other current liabilities $ 35,288 $ 34,204 Other non-current liabilities 49,689 44,970 $ 84,977 $ 79,174 |
Disaggregation of Revenue | Net sales consisted of follows (in thousands): 2020 2019 2018 Retail $ 1,582,266 $ 1,558,638 $ 1,401,991 Online, Phone and Chat 269,236 129,257 115,831 Total Retail 1,851,502 1,687,895 1,517,822 Wholesale/Other 5,053 10,457 13,753 Total Company $ 1,856,555 $ 1,698,352 $ 1,531,575 |
Schedule of Sales Return Liability | The activity in the sales returns liability account for 2020 and 2019 was as follows (in thousands): 2020 2019 Balance at beginning of year $ 19,809 $ 19,907 Additions that reduce net sales 81,513 79,138 Deduction from reserves (76,557) (79,236) Balance at end of period $ 24,765 $ 19,809 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jan. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Expense (Benefit) | Income tax expense consisted of the following (in thousands): 2020 2019 2018 Current: Federal $ 29,762 $ 12,299 $ 12,483 State 6,528 3,293 2,871 36,290 15,592 15,354 Deferred: Federal 584 2,591 708 State (91) 480 920 493 3,071 1,628 Income tax expense $ 36,783 $ 18,663 $ 16,982 |
Reconciliation of Income Tax Expense (Benefit) at the Statutory Federal Rate | The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate: 2020 2019 2018 Statutory federal income tax 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 2.4 3.6 3.3 Stock-based compensation (2.4) (4.3) (1.1) R&D tax credits (1.4) (2.2) (2.0) Non-deductible compensation 1.0 — — Changes in unrecognized tax benefits 0.3 (0.5) 1.2 Tax Cuts and Jobs Act effects — — (3.9) Other — 1.0 1.1 Effective income tax rate 20.9 % 18.6 % 19.6 % |
Summary of Deferred Income Taxes | The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands): 2020 2019 Deferred tax assets: Stock-based compensation $ 7,518 $ 8,342 Operating lease liabilities 86,692 90,059 Warranty and returns liabilities 8,496 7,215 Net operating loss carryforwards and credits 2,027 1,987 Compensation and benefits 6,045 4,698 Other 7,440 3,953 Total gross deferred tax assets 118,218 116,254 Valuation allowance (615) (615) Total gross deferred tax assets after valuation allowance 117,603 115,639 Deferred tax liabilities: Property and equipment 31,881 30,274 Operating lease right-of-use assets 78,824 82,340 Deferred revenue 4,987 3,859 Other 2,153 2,974 Total gross deferred tax liabilities 117,845 119,447 Net deferred tax liabilities $ (242) $ (3,808) |
Summary of Reconciliations Unrecognized Tax Benefits | Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands): Federal and State Tax 2020 2019 2018 Beginning balance $ 3,337 $ 3,866 $ 2,839 Increases related to current-year tax positions 860 638 778 Increases related to prior-year tax positions 27 134 595 Decreases related to prior-year tax positions — (363) — Lapse of statute of limitations (312) (663) (333) Settlements with taxing authorities — (275) (13) Ending balance $ 3,912 $ 3,337 $ 3,866 |
Business and Summary of Signi_4
Business and Summary of Significant Accounting Policies - Cash and Cash Equivalents - Additional Information (Details) - USD ($) $ in Millions | Jan. 02, 2021 | Dec. 28, 2019 |
Accounts Payable | ||
Cash and Cash Equivalents [Line Items] | ||
Book overdrafts | $ 8 | $ 33 |
Business and Summary of Signi_5
Business and Summary of Significant Accounting Policies Property and Equipment - Estimated Useful Lives of Property and Equipment (Details) | 12 Months Ended |
Jan. 02, 2021 | |
Leasehold improvements | Minimum | |
Property and equipment [Line Items] | |
Estimated useful lives | 5 years |
Leasehold improvements | Maximum | |
Property and equipment [Line Items] | |
Estimated useful lives | 15 years |
Furniture and equipment | Minimum | |
Property and equipment [Line Items] | |
Estimated useful lives | 3 years |
Furniture and equipment | Maximum | |
Property and equipment [Line Items] | |
Estimated useful lives | 15 years |
Production machinery | Minimum | |
Property and equipment [Line Items] | |
Estimated useful lives | 3 years |
Production machinery | Maximum | |
Property and equipment [Line Items] | |
Estimated useful lives | 7 years |
Computer equipment and software | Minimum | |
Property and equipment [Line Items] | |
Estimated useful lives | 3 years |
Computer equipment and software | Maximum | |
Property and equipment [Line Items] | |
Estimated useful lives | 12 years |
Business and Summary of Signi_6
Business and Summary of Significant Accounting Policies - Goodwill and Intangible Assets, Net - Additional Information (Details) | 12 Months Ended |
Jan. 02, 2021 | |
Minimum | |
Definite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 8 years |
Maximum | |
Definite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 10 years |
Business and Summary of Signi_7
Business and Summary of Significant Accounting Policies - Asset Impairment Charges - Additional Information (Details) | 12 Months Ended |
Jan. 02, 2021USD ($) | |
Accounting Policies [Abstract] | |
Impairment of goodwill and intangible assets | $ 0 |
Business and Summary of Signi_8
Business and Summary of Significant Accounting Policies - Warranty Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Warranty Liabilities [Roll Forward] | |||
Balance at beginning of period | $ 11,345 | $ 10,389 | $ 9,320 |
Additions charged to costs and expenses for current-year sales | 13,387 | 10,949 | 12,385 |
Deductions from reserves | (12,158) | (11,007) | (11,743) |
Change in liabilities for pre-existing warranties during the current year, including expirations | (422) | 1,014 | 427 |
Balance at end of period | $ 12,152 | $ 11,345 | $ 10,389 |
Business and Summary of Signi_9
Business and Summary of Significant Accounting Policies - Dividends - Additional Information (Details) | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Leverage ratio | 375.00% |
Business and Summary of Sign_10
Business and Summary of Significant Accounting Policies - Share Repurchases - Additional Information (Details) | Jan. 02, 2021USD ($) |
Accounting Policies [Abstract] | |
Remaining authorized stock purchase plan | $ 247,000,000 |
Approved share repurchase program | $ 500,000,000 |
Business and Summary of Sign_11
Business and Summary of Significant Accounting Policies - Revenue Recognition - Additional Information (Details) | 12 Months Ended |
Jan. 02, 2021 | |
Accounting Policies [Abstract] | |
Revenue, Performance Obligation, Description of Timing | The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the product’s estimated life of four years because our inputs are generally expended evenly throughout the performance period. |
Business and Summary of Sign_12
Business and Summary of Significant Accounting Policies - Rent Expense (Details) - ASC 840 $ in Thousands | 12 Months Ended |
Dec. 29, 2018USD ($) | |
Facility Rents | |
Property and equipment [Line Items] | |
Minimum rents | $ 71,851 |
Contingent rents | 1,847 |
Total rents | 73,698 |
Equipment Rents | |
Property and equipment [Line Items] | |
Total rents | $ 5,692 |
Business and Summary of Sign_13
Business and Summary of Significant Accounting Policies - Advertising Costs - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Accounting Policies [Abstract] | |||
Advertising expense | $ 253 | $ 242 | $ 210 |
Business and Summary of Sign_14
Business and Summary of Significant Accounting Policies - Insurance - Additional Information (Details) - USD ($) $ in Millions | Jan. 02, 2021 | Dec. 28, 2019 |
Self-insurance liability | $ 11 | $ 9 |
Current liabilities, compensation and benefits | ||
Self-insurance liability, current | 7 | 6 |
Other non-current liabilities | ||
Self-insurance liability, noncurrent | $ 4 | $ 3 |
Business and Summary of Sign_15
Business and Summary of Significant Accounting Policies - Stock-Based Compensation - Additional Information (Details) - shares shares in Millions | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares available for grant (in shares) | 2.4 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award option vesting period | 3 years | ||
Award expiration period | 10 years | ||
Stock Award | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award option vesting period | 3 years | ||
Performance-Based Stock Award | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock awards - shares awarded (as a percent) | 0.00% | 0.00% | 0.00% |
Performance-Based Stock Award | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock awards - shares awarded (as a percent) | 200.00% | 200.00% | 200.00% |
Business and Summary of Sign_16
Business and Summary of Significant Accounting Policies - New Accounting Pronouncements - Additional Information (Details) $ in Millions | 12 Months Ended |
Jan. 02, 2021USD ($) | |
Accounting Policies [Abstract] | |
Amount of lease payments deferred due to COVID-19 | $ 3.1 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - Level 1 - USD ($) $ in Millions | Jan. 02, 2021 | 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 | $ 12 | $ 8 |
Other non-current liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan liability | $ 12 | $ 8 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 12,599 | $ 6,231 |
Work in progress | 103 | 31 |
Finished goods | 68,660 | 80,803 |
Inventories | $ 81,362 | $ 87,065 |
Inventories - Schedule of Finis
Inventories - Schedule of Finished Goods Inventories (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Inventory Disclosure [Abstract] | ||
Finished beds, including retail display beds and deliveries in-transit to those customers who have utilized home delivery services | $ 21,442 | $ 24,509 |
Finished components that were ready for assembly for the completion of beds | 28,108 | 40,139 |
Retail accessories | 19,110 | 16,155 |
Finished goods inventory | $ 68,660 | $ 80,803 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Property and equipment [Line Items] | ||
Less: Accumulated depreciation and amortization | $ (306,278) | $ (293,071) |
Property and equipment, net | 175,223 | 197,421 |
Leasehold improvements | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 115,901 | 115,566 |
Furniture and equipment | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 125,292 | 123,161 |
Production machinery, computer equipment and software | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | 233,249 | 245,175 |
Construction in progress | ||
Property and equipment [Line Items] | ||
Property and equipment, gross | $ 7,059 | $ 6,590 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Goodwill And Intangible Assets [Line Items] | ||||
Goodwill | $ 64 | $ 64 | ||
Developed Technologies | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Gross carrying amount | 19 | 19 | ||
Accumulated amortization | 13 | 11 | ||
Amortization expense definite-lived intangible assets | 2 | 2 | $ 2 | |
Other Intangible Assets | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Amortization expense definite-lived intangible assets | 0.1 | |||
Finite-lived intangible assets acquired | $ 2 | |||
Acquired finite-lived assets, weighted average useful life | 9 years | |||
Trade Names | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Indefinite-lived trade name/trademarks | $ 1.4 | $ 1.4 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Schedule of Annual Amortization for Definite-Lived Intangible Assets (Details) $ in Thousands | Jan. 02, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 | $ 2,403 |
2022 | 2,403 |
2023 | 1,431 |
2024 | 222 |
2025 | 226 |
Thereafter | 743 |
Total future amortization for definite-lived intangible assets | $ 7,428 |
Credit Agreement - Additional I
Credit Agreement - Additional Information (Details) | Jan. 02, 2021USD ($) |
Debt Disclosure [Abstract] | |
Current borrowing capacity | $ 450,000,000 |
Maximum borrowing capacity | $ 600,000,000 |
Maximum leverage ratio | 450.00% |
Minimum interest coverage ratio | 300.00% |
Credit Agreement - Schedule of
Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Debt Disclosure [Abstract] | ||
Outstanding borrowings | $ 244,200 | $ 231,000 |
Outstanding letters of credit | 3,997 | 3,497 |
Additional borrowing capacity | $ 201,803 | $ 215,503 |
Weighted-average interest rate | 1.50% | 3.50% |
Leases - Additional Information
Leases - Additional Information (Details) | Jan. 02, 2021 |
Retail Store Leases | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Retail Store Leases | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 10 years |
Office and Manufacturing Leases | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 15 years |
Lease Vehicles and Certain Equipment Under Operating Leases | Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 3 years |
Lease Vehicles and Certain Equipment Under Operating Leases | Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 90,311 | $ 86,026 |
Variable lease costs | $ 1,147 | $ 1,809 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Leases [Abstract] | ||
2021 | $ 83,856 | |
2022 | 75,516 | |
2023 | 65,527 | |
2024 | 53,669 | |
2025 | 44,750 | |
Thereafter | 103,817 | |
Total operating lease payments | 427,135 | |
Less: Interest | 81,909 | |
Present value of operating lease liabilities | 345,226 | |
Amount of lease payments deferred due to COVID-19 | 3,100 | |
Amount leases executed, not yet commenced, excluded from table | 91,000 | |
Operating lease liabilities | $ 62,077 | $ 59,561 |
Leases - Schedule of Other Info
Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Leases [Abstract] | ||
Weighted-average remaining lease term (years) | 6 years 3 months 18 days | 6 years 7 months 6 days |
Weighted-average discount rate | 6.90% | 7.20% |
Cash paid for amounts included in present value of operating lease liabilities | $ 85,497 | $ 81,718 |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 43,860 | $ 75,384 |
Shareholders' Deficit - Schedul
Shareholders' Deficit - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 21,813 | $ 16,657 | $ 11,412 |
Income tax benefit | 5,126 | 3,998 | 2,750 |
Total stock-based compensation expense, net of tax | 16,687 | 12,659 | 8,662 |
Stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 19,435 | 14,265 | 8,930 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 2,378 | $ 2,392 | $ 2,482 |
Shareholders' Deficit - Summary
Shareholders' Deficit - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Stock Options | ||
Beginning balance, outstanding (in shares) | 1,068 | |
Granted (in shares) | 184 | |
Exercised (in shares) | (420) | |
Canceled/Forfeited (in shares) | (19) | |
Ending balance, outstanding (in shares) | 813 | 1,068 |
Ending balance, exercisable (in shares) | 520 | |
Vested and expected to vest, ending balance (in shares) | 790 | |
Weighted- Average Exercise Price per Share | ||
Outstanding, beginning balance (in dollars per share) | $ 26.87 | |
Granted (in dollars per share) | 36.11 | |
Exercised (in dollars per share) | 22.87 | |
Canceled/Forfeited (in dollars per share) | 38.78 | |
Outstanding, ending balance (in dollars per share) | 30.74 | $ 26.87 |
Exercisable, ending balance (in dollars per share) | 26.27 | |
Vested and expected to vest, ending balance (in dollars per share) | $ 30.53 | |
Weighted- Average Remaining Contractual Term | ||
Weighted-average remaining contractual term - outstanding (years) | 6 years 6 months | 6 years |
Weighted-average remaining contractual term - exercisable (years) | 5 years 3 months 18 days | |
Weighted-average remaining contractual term - vested and expected to vest (years) | 6 years 4 months 24 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value - outstanding | $ 41,568 | $ 24,274 |
Aggregate intrinsic Value - exercisable | 28,913 | |
Aggregate intrinsic value - vested and expected to vest | $ 40,553 |
Shareholders' Deficit - Other I
Shareholders' Deficit - Other Information Pertaining to Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Share-based Payment Arrangement [Abstract] | |||
Weighted-average grant date fair value of stock options granted (in dollars per share) | $ 15.10 | $ 18.97 | $ 13.96 |
Total intrinsic value (at exercise) of stock options exercised | $ 14,357 | $ 9,636 | $ 3,459 |
Shareholders' Deficit - Additio
Shareholders' Deficit - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Jan. 02, 2021 | Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Proceeds from stock options exercised | $ 9.6 | |
Tax benefit from exercise of stock options | 3.5 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense related to non-vested awards | $ 2.9 | |
Weighted average period to recognize remaining expense over | 1 year 9 months 18 days | |
Time- Based Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense related to non-vested awards | $ 6.8 | |
Weighted average period to recognize remaining expense over | 1 year 8 months 12 days | |
Performance-based stock award, granted (in shares) | 309,000 | |
Weighted-average grant date fair value (in dollars per share) | $ 30.80 | |
Performance- Based Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense related to non-vested awards | $ 13.5 | |
Weighted average period to recognize remaining expense over | 1 year 9 months 18 days | |
Performance-based stock award, granted (in shares) | 291,000 | |
Weighted-average grant date fair value (in dollars per share) | $ 32.28 | |
Performance-Based Stock Award with a Market Condition | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance-based stock award, granted (in shares) | 5,027 | |
Weighted-average grant date fair value (in dollars per share) | $ 35.97 |
Shareholders' Deficit - Assumpt
Shareholders' Deficit - Assumptions Used to Calculate Fair Value of Options Granted Using Black-Scholes-Merton Option-Pricing Model (Details) - Stock options | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 46.00% | 43.00% | 43.00% |
Risk-free interest rate | 0.70% | 2.20% | 2.70% |
Expected term (years) | 5 years 4 months 24 days | 5 years 4 months 24 days | 5 years |
Shareholders' Deficit - Stock A
Shareholders' Deficit - Stock Award Activity (Details) shares in Thousands | 12 Months Ended |
Jan. 02, 2021$ / sharesshares | |
Time- Based Stock Awards | |
Stock awards [Roll Forward] | |
Outstanding at beginning of period (in shares) | shares | 330 |
Granted (in shares) | shares | 309 |
Vested (in shares) | shares | (297) |
Canceled/Forfeited (in shares) | shares | (40) |
Outstanding at end of period (in shares) | shares | 302 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 38.09 |
Granted (in dollars per share) | $ / shares | 30.80 |
Vested (in dollars per share) | $ / shares | 29.55 |
Canceled/Forfeited (in dollars per share) | $ / shares | 37.08 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 38.96 |
Performance- Based Stock Awards | |
Stock awards [Roll Forward] | |
Outstanding at beginning of period (in shares) | shares | 592 |
Granted (in shares) | shares | 291 |
Vested (in shares) | shares | (326) |
Canceled/Forfeited (in shares) | shares | (37) |
Outstanding at end of period (in shares) | shares | 520 |
Weighted-Average Grant Date Fair Value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 33.30 |
Granted (in dollars per share) | $ / shares | 32.28 |
Vested (in dollars per share) | $ / shares | 23.66 |
Canceled/Forfeited (in dollars per share) | $ / shares | 25.91 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 38.52 |
Shareholders' Deficit - Assum_2
Shareholders' Deficit - Assumptions Used to Calculate Fair Value of Performance-based Stock Awards Using Monte Carlo Simulation Model (Details) - Performance-Based Stock Award with a Market Condition | 12 Months Ended |
Dec. 29, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield (as a percent) | 0.00% |
Expected volatility (as a percent) | 43.00% |
Risk-free interest rate | 2.60% |
Shareholders' Deficit - Sched_2
Shareholders' Deficit - Schedule of Repurchase of Common Stock (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Share-based Payment Arrangement [Abstract] | |||
Amount repurchased under Board-approved share repurchase program | $ 228,111 | $ 145,900 | $ 279,101 |
Amount repurchased in connection with the vesting of employee restricted stock grants | 7,040 | 9,673 | 3,344 |
Total amount repurchased (based on trade dates) | $ 235,151 | $ 155,573 | $ 282,445 |
Shareholders' Deficit - Repurch
Shareholders' Deficit - Repurchase of Common Stock - Additional Information (Details) $ in Millions | Jan. 02, 2021USD ($) |
Share-based Payment Arrangement [Abstract] | |
Remaining authorized stock purchase plan | $ 247 |
Shareholders' Deficit - Compone
Shareholders' Deficit - Components of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Share-based Payment Arrangement [Abstract] | |||
Net income | $ 139,189 | $ 81,845 | $ 69,539 |
Basic weighted-average shares outstanding (in shares) | 27,665 | 29,472 | 35,256 |
Dilutive effect of stock-based awards (in shares) | 763 | 883 | 909 |
Diluted weighted-average shares outstanding (in shares) | 28,428 | 30,355 | 36,165 |
Net income - basic (in dollars per share) | $ 5.03 | $ 2.78 | $ 1.97 |
Net income - diluted (in dollars per share) | $ 4.90 | $ 2.70 | $ 1.92 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share, amount | 200 | 200 | 200 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Deferred Contract Liabilities and Deferred Contract Assets (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Deferred Contract Assets included in: | ||
Deferred contract assets | $ 64,569 | $ 57,350 |
Deferred Contract Liabilities included in: | ||
Deferred contract liabilities | 84,977 | 79,174 |
Other current assets | ||
Deferred Contract Assets included in: | ||
Other current assets | 26,593 | 23,568 |
Other non-current assets | ||
Deferred Contract Assets included in: | ||
Other non-current assets | 37,976 | 33,782 |
Other current liabilities | ||
Deferred Contract Liabilities included in: | ||
Other current liabilities | 35,288 | 34,204 |
Other non-current liabilities | ||
Deferred Contract Liabilities included in: | ||
Other non-current liabilities | $ 49,689 | $ 44,970 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Revenue recognized, included in beginning deferred contract liability balance | $ 34 | $ 32 | |
Transferred at Point in Time | Revenue from Contract with Customer Benchmark | |||
Disaggregation of Revenue [Line Items] | |||
Revenue recognized at a point in time (as a percent) | 98.00% | 98.00% | 98.00% |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 1,856,555 | $ 1,698,352 | $ 1,531,575 |
Retail | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 1,582,266 | 1,558,638 | 1,401,991 |
Online, Phone and Chat | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 269,236 | 129,257 | 115,831 |
Total Retail | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 1,851,502 | 1,687,895 | 1,517,822 |
Wholesale/Other | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 5,053 | $ 10,457 | $ 13,753 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2021 | Dec. 28, 2019 | |
Sales Return Liability [Roll Forward] | ||
Balance at beginning of year | $ 19,809 | $ 19,907 |
Additions that reduce net sales | 81,513 | 79,138 |
Deduction from reserves | (76,557) | (79,236) |
Balance at end of period | $ 24,765 | $ 19,809 |
Profit Sharing and 401(k) Plan
Profit Sharing and 401(k) Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Retirement Benefits [Abstract] | |||
Employee compensation deferral (as a percent) | 50.00% | ||
Employer contributions | $ 6 | $ 6 | $ 5 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Current: | |||
Federal | $ 29,762 | $ 12,299 | $ 12,483 |
State | 6,528 | 3,293 | 2,871 |
Current income tax expense | 36,290 | 15,592 | 15,354 |
Deferred: | |||
Federal | 584 | 2,591 | 708 |
State | (91) | 480 | 920 |
Deferred income tax expense | 493 | 3,071 | 1,628 |
Income tax expense | $ 36,783 | $ 18,663 | $ 16,982 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax Expense (Benefit) at the Statutory Federal Rate (Details) | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax | 21.00% | 21.00% | 21.00% |
State income taxes, net of federal benefit | 2.40% | 3.60% | 3.30% |
Stock-based compensation | (2.40%) | (4.30%) | (1.10%) |
R&D tax credits | (1.40%) | (2.20%) | (2.00%) |
Non-deductible compensation | 1.00% | 0.00% | 0.00% |
Changes in unrecognized tax benefits | 0.30% | (0.50%) | 1.20% |
Tax Cuts and Jobs Act effects | 0 | 0 | (0.039) |
Other | 0.00% | 1.00% | 1.10% |
Effective income tax rate | 20.90% | 18.60% | 19.60% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 29, 2018 | Dec. 30, 2017 | Jan. 02, 2021 | Dec. 28, 2019 | |
Income Taxes [Line Items] | ||||
Provisional tax benefit | $ 2,900 | $ 1,700 | ||
Valuation allowance | $ 615 | $ 615 | ||
Unrecognized tax benefits that would impact effective tax rate | 3,000 | $ 3,000 | ||
Federal | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | $ 600 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Income Taxes (Details) - USD ($) $ in Thousands | Jan. 02, 2021 | Dec. 28, 2019 |
Deferred tax assets: | ||
Stock-based compensation | $ 7,518 | $ 8,342 |
Operating lease liabilities | 86,692 | 90,059 |
Warranty and returns liabilities | 8,496 | 7,215 |
Net operating loss carryforwards and credits | 2,027 | 1,987 |
Compensation and benefits | 6,045 | 4,698 |
Other | 7,440 | 3,953 |
Total gross deferred tax assets | 118,218 | 116,254 |
Valuation allowance | (615) | (615) |
Total gross deferred tax assets after valuation allowance | 117,603 | 115,639 |
Deferred tax liabilities: | ||
Property and equipment | 31,881 | 30,274 |
Operating lease right-of-use assets | 78,824 | 82,340 |
Deferred revenue | 4,987 | 3,859 |
Other | 2,153 | 2,974 |
Total gross deferred tax liabilities | 117,845 | 119,447 |
Net deferred tax liabilities | $ (242) | $ (3,808) |
Income Taxes - Summary of Recon
Income Taxes - Summary of Reconciliations Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 3,337 | $ 3,866 | $ 2,839 |
Increases related to current-year tax positions | 860 | 638 | 778 |
Increases related to prior-year tax positions | 27 | 134 | 595 |
Decreases related to prior-year tax positions | 0 | (363) | 0 |
Lapse of statute of limitations | (312) | (663) | (333) |
Settlements with taxing authorities | 0 | (275) | (13) |
Ending balance | $ 3,912 | $ 3,337 | $ 3,866 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended |
Jan. 02, 2021USD ($)lease_commitment | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Inventory purchase commitments | $ 53 |
Purchase Commitment | Future Retail Sites | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Number of future retail store and other lease commitments | lease_commitment | 52 |
Future retail store and other leases, total lease payments | $ 87 |
Purchase Commitment | Future Retail Sites | Minimum | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Future retail store and other lease commitments term | 3 years |
Purchase Commitment | Future Retail Sites | Maximum | |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |
Future retail store and other lease commitments term | 10 years |
COVID-19 Pandemic (Details)
COVID-19 Pandemic (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 27, 2020 | Jan. 02, 2021 | Jan. 02, 2021 | |
Unusual or Infrequent Item, or Both [Line Items] | |||
Increase (decrease) in net sales (as a percent) | (20.00%) | 9.00% | |
Increase in net income (as a percent) | 70.00% | ||
Average | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Percentage of stores that are closed | 47.00% | ||
Average percentage of stores that are open (more than) | 99.00% |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2021 | Dec. 28, 2019 | Dec. 29, 2018 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | $ 898 | $ 699 | $ 714 |
Additions charged to costs and expenses | 1,541 | 1,391 | 815 |
Deductions from reserves | (1,393) | (1,192) | (830) |
Balance at end of period | $ 1,046 | $ 898 | $ 699 |