Cover Page
Cover Page | 9 Months Ended |
Oct. 01, 2022 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Oct. 01, 2022 |
Document Transition Report | false |
Entity File Number | 000-25121 |
Entity Registrant Name | SLEEP NUMBER CORPORATION |
Entity Incorporation, State or Country Code | MN |
Entity Tax Identification Number | 41-1597886 |
Entity Address, Address Line One | 1001 Third Avenue South |
Entity Address, City or Town | Minneapolis, |
Entity Address, State or Province | MN |
Entity Address, Postal Zip Code | 55404 |
City Area Code | 763 |
Local Phone Number | 551-7000 |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | SNBR |
Security Exchange Name | NASDAQ |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 22,001,000 |
Entity Central Index Key | 0000827187 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 1,348 | $ 2,389 |
Accounts receivable, net of allowances of $1,508 and $924, respectively | 26,747 | 25,718 |
Inventories | 113,554 | 105,644 |
Prepaid expenses | 21,214 | 18,953 |
Other current assets | 34,803 | 54,917 |
Total current assets | 197,666 | 207,621 |
Non-current assets: | ||
Property and equipment, net | 199,917 | 195,128 |
Operating lease right-of-use assets | 389,524 | 371,133 |
Goodwill and intangible assets, net | 68,666 | 70,468 |
Deferred income taxes | 6,267 | 0 |
Other non-current assets | 78,741 | 75,190 |
Total assets | 940,781 | 919,540 |
Current liabilities: | ||
Borrowings under revolving credit facility | 406,300 | 382,500 |
Accounts payable | 199,154 | 162,547 |
Customer prepayments | 95,274 | 129,499 |
Accrued sales returns | 25,651 | 22,368 |
Compensation and benefits | 27,339 | 51,240 |
Taxes and withholding | 31,361 | 22,087 |
Operating lease liabilities | 77,243 | 72,360 |
Other current liabilities | 60,949 | 64,177 |
Total current liabilities | 923,271 | 906,778 |
Non-current liabilities: | ||
Deferred income taxes | 0 | 688 |
Operating lease liabilities | 350,370 | 336,192 |
Other non-current liabilities | 104,611 | 100,835 |
Total liabilities | 1,378,252 | 1,344,493 |
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, 22,001 and 22,683 shares issued and outstanding, respectively | 220 | 227 |
Additional paid-in capital | 458 | 3,971 |
Accumulated deficit | (438,149) | (429,151) |
Total shareholders’ deficit | (437,471) | (424,953) |
Total liabilities and shareholders’ deficit | $ 940,781 | $ 919,540 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Current assets: | ||
Allowances | $ 1,508 | $ 924 |
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) | 22,001,000 | 22,683,000 |
Common stock, shares outstanding (in shares) | 22,001,000 | 22,683,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Income Statement [Abstract] | ||||
Net sales | $ 540,566 | $ 640,393 | $ 1,616,769 | $ 1,692,965 |
Cost of sales | 237,479 | 250,039 | 686,439 | 653,842 |
Gross profit | 303,087 | 390,354 | 930,330 | 1,039,123 |
Operating expenses: | ||||
Sales and marketing | 239,656 | 255,512 | 700,405 | 685,123 |
General and administrative | 36,003 | 47,676 | 116,049 | 131,488 |
Research and development | 14,786 | 14,431 | 46,908 | 43,633 |
Total operating expenses | 290,445 | 317,619 | 863,362 | 860,244 |
Operating income | 12,642 | 72,735 | 66,968 | 178,879 |
Interest expense, net | 5,606 | 1,816 | 11,352 | 4,400 |
Income before income taxes | 7,036 | 70,919 | 55,616 | 174,479 |
Income tax expense | 2,003 | 17,198 | 13,576 | 31,874 |
Net income | $ 5,033 | $ 53,721 | $ 42,040 | $ 142,605 |
Basic net income per share: | ||||
Net income per share – basic (in dollars per share) | $ 0.23 | $ 2.29 | $ 1.87 | $ 5.84 |
Weighted-average shares – basic (in shares) | 22,218,000 | 23,464,000 | 22,444,000 | 24,404,000 |
Diluted net income per share: | ||||
Net income per share – diluted (in dollars per share) | $ 0.22 | $ 2.22 | $ 1.83 | $ 5.63 |
Weighted-average shares – diluted (in shares) | 22,573,000 | 24,233,000 | 22,959,000 | 25,324,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Deficit - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance (in shares) at Jan. 02, 2021 | 25,390 | |||
Beginning balance at Jan. 02, 2021 | $ (223,978) | $ 254 | $ 0 | $ (224,232) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 66,634 | 66,634 | ||
Exercise of common stock options (in shares) | 106 | |||
Exercise of common stock options | 2,460 | $ 1 | 2,459 | |
Stock-based compensation (in shares) | 314 | |||
Stock-based compensation | 6,416 | $ 3 | 6,413 | |
Repurchases of common stock (in shares) | (1,346) | |||
Repurchases of common stock | (184,182) | $ (13) | (8,872) | (175,297) |
Ending balance (in shares) at Apr. 03, 2021 | 24,464 | |||
Ending balance at Apr. 03, 2021 | (332,650) | $ 245 | 0 | (332,895) |
Beginning balance (in shares) at Jan. 02, 2021 | 25,390 | |||
Beginning balance at Jan. 02, 2021 | (223,978) | $ 254 | 0 | (224,232) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 142,605 | |||
Ending balance (in shares) at Oct. 02, 2021 | 22,647 | |||
Ending balance at Oct. 02, 2021 | (440,066) | $ 226 | 0 | (440,292) |
Beginning balance (in shares) at Apr. 03, 2021 | 24,464 | |||
Beginning balance at Apr. 03, 2021 | (332,650) | $ 245 | 0 | (332,895) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 22,250 | 22,250 | ||
Exercise of common stock options (in shares) | 35 | |||
Exercise of common stock options | 1,075 | 1,075 | ||
Stock-based compensation (in shares) | 22 | |||
Stock-based compensation | 5,969 | 5,969 | ||
Repurchases of common stock (in shares) | (899) | |||
Repurchases of common stock | (100,302) | $ (9) | (7,044) | (93,249) |
Ending balance (in shares) at Jul. 03, 2021 | 23,622 | |||
Ending balance at Jul. 03, 2021 | (403,658) | $ 236 | 0 | (403,894) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 53,721 | 53,721 | ||
Exercise of common stock options (in shares) | 10 | |||
Exercise of common stock options | 312 | 312 | ||
Stock-based compensation (in shares) | 19 | |||
Stock-based compensation | 7,316 | 7,316 | ||
Repurchases of common stock (in shares) | (1,004) | |||
Repurchases of common stock | (97,757) | $ (10) | (7,628) | (90,119) |
Ending balance (in shares) at Oct. 02, 2021 | 22,647 | |||
Ending balance at Oct. 02, 2021 | $ (440,066) | $ 226 | 0 | (440,292) |
Beginning balance (in shares) at Jan. 01, 2022 | 22,683 | 22,683 | ||
Beginning balance at Jan. 01, 2022 | $ (424,953) | $ 227 | 3,971 | (429,151) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 2,074 | 2,074 | ||
Exercise of common stock options (in shares) | 21 | |||
Exercise of common stock options | 531 | 531 | ||
Stock-based compensation (in shares) | 341 | |||
Stock-based compensation | 4,133 | $ 3 | 4,130 | |
Repurchases of common stock (in shares) | (813) | |||
Repurchases of common stock | (50,998) | $ (8) | (8,632) | (42,358) |
Ending balance (in shares) at Apr. 02, 2022 | 22,232 | |||
Ending balance at Apr. 02, 2022 | $ (469,213) | $ 222 | 0 | (469,435) |
Beginning balance (in shares) at Jan. 01, 2022 | 22,683 | 22,683 | ||
Beginning balance at Jan. 01, 2022 | $ (424,953) | $ 227 | 3,971 | (429,151) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | $ 42,040 | |||
Ending balance (in shares) at Oct. 01, 2022 | 22,001 | 22,001 | ||
Ending balance at Oct. 01, 2022 | $ (437,471) | $ 220 | 458 | (438,149) |
Beginning balance (in shares) at Apr. 02, 2022 | 22,232 | |||
Beginning balance at Apr. 02, 2022 | (469,213) | $ 222 | 0 | (469,435) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 34,933 | 34,933 | ||
Exercise of common stock options (in shares) | 2 | |||
Exercise of common stock options | 54 | 54 | ||
Stock-based compensation (in shares) | 26 | |||
Stock-based compensation | 3,910 | $ 1 | 3,909 | |
Repurchases of common stock (in shares) | (296) | |||
Repurchases of common stock | (12,646) | $ (3) | (3,963) | (8,680) |
Ending balance (in shares) at Jul. 02, 2022 | 21,964 | |||
Ending balance at Jul. 02, 2022 | (442,962) | $ 220 | 0 | (443,182) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | 5,033 | 5,033 | ||
Exercise of common stock options (in shares) | 19 | |||
Exercise of common stock options | 413 | 413 | ||
Stock-based compensation (in shares) | 30 | |||
Stock-based compensation | 542 | 542 | ||
Repurchases of common stock (in shares) | (12) | |||
Repurchases of common stock | $ (497) | (497) | ||
Ending balance (in shares) at Oct. 01, 2022 | 22,001 | 22,001 | ||
Ending balance at Oct. 01, 2022 | $ (437,471) | $ 220 | $ 458 | $ (438,149) |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 42,040 | $ 142,605 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 49,342 | 44,786 |
Stock-based compensation | 8,585 | 19,701 |
Net loss (gain) on disposals and impairments of assets | 274 | (20) |
Deferred income taxes | (6,955) | 291 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,029) | (1,517) |
Inventories | (11,080) | (4,767) |
Income taxes | 4,530 | 5,615 |
Prepaid expenses and other assets | 20,082 | (13,879) |
Accounts payable | 28,889 | 51,543 |
Customer prepayments | (34,225) | 35,785 |
Accrued compensation and benefits | (23,735) | (12,725) |
Other taxes and withholding | 4,744 | 7,636 |
Other accruals and liabilities | (1,340) | 17,630 |
Net cash provided by operating activities | 80,122 | 292,684 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (52,808) | (49,370) |
Proceeds from sales of property and equipment | 49 | 257 |
Net cash used in investing activities | (52,759) | (49,113) |
Cash flows from financing activities: | ||
Repurchases of common stock | (64,141) | (381,496) |
Net increase in short-term borrowings | 34,781 | 132,222 |
Proceeds from issuance of common stock | 998 | 3,847 |
Debt issuance costs | (42) | (557) |
Net cash used in financing activities | (28,404) | (245,984) |
Net decrease in cash and cash equivalents | (1,041) | (2,413) |
Cash and cash equivalents, at beginning of period | 2,389 | 4,243 |
Cash and cash equivalents, at end of period | $ 1,348 | $ 1,830 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 01, 2022 | |
Accounting Policies [Abstract] | |
Business and Summary of Significant Accounting Policies | Business and Summary of Significant Accounting Policies Business & Basis of Presentation We prepared the condensed consolidated financial statements as of and for the three and nine months ended October 1, 2022 of Sleep Number Corporation and our 100%-owned subsidiaries (Sleep Number or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position as of October 1, 2022 and January 1, 2022, and the consolidated results of operations and cash flows for the periods presented. Our historical and quarterly consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future period. In addition, based on the duration and severity of the current global situation involving the COVID-19 pandemic, the war in Ukraine, historic low consumer sentiment and other external factors, including but not limited to general economic conditions, inflation, consumer sentiment, store restrictions mandated by federal, state or local authorities and global supply chain disruptions (especially disruptive supply and flow of semiconductor chips and other electronic components), the extent to which these external factors will impact our business and our consolidated financial results will depend on future developments, which are highly uncertain and cannot be predicted. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with our most recent audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2022 and other recent filings with the SEC. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. In addition, during the current environment involving external factors such as COVID-19, historic low consumer sentiment and the war in Ukraine, predicting future events will be especially challenging for management. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. Our critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. The condensed consolidated financial statements include the accounts of Sleep Number Corporation and our 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Oct. 01, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value MeasurementsAt October 1, 2022 and January 1, 2022, we had $16 million and $19 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 $16 million and $19 million at October 1, 2022 and January 1, 2022, respectively, which are included in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. Unrealized gains/(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan liabilities. |
Inventories
Inventories | 9 Months Ended |
Oct. 01, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): October 1, January 1, Raw materials $ 6,763 $ 11,752 Work in progress 92 83 Finished goods 106,699 93,809 $ 113,554 $ 105,644 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 9 Months Ended |
Oct. 01, 2022 | |
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 October 1, 2022 and January 1, 2022. Indefinite-lived trade name/trademarks totaled $1.4 million at October 1, 2022 and January 1, 2022. Definite-lived Intangible Assets The gross carrying amount of our developed technologies was $18.4 million at October 1, 2022 and January 1, 2022. Accumulated amortization was $16.7 million and $15.5 million at October 1, 2022 and January 1, 2022. Amortization expense for both the three months ended October 1, 2022 and October 2, 2021, was $0.5 million. Amortization expense for both the nine months ended October 1, 2022 and October 2, 2021, was $1.6 million. The gross carrying amount of our patents was $2.0 million at October 1, 2022 and January 1, 2022. Accumulated amortization was $0.5 million and $0.3 million at October 1, 2022 and January 1, 2022, respectively. Amortization expense for both the three months ended October 1, 2022 and October 2, 2021, was $55 thousand. Amortization expense for both the nine months ended October 1, 2022 and October 2, 2021, was $0.2 million. Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2022 (excluding the nine months ended October 1, 2022) $ 601 2023 1,431 2024 222 2025 226 2026 222 2027 222 Thereafter 300 Total future amortization for definite-lived intangible assets $ 3,224 |
Credit Agreement
Credit Agreement | 9 Months Ended |
Oct. 01, 2022 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit AgreementAs of October 1, 2022, our credit facility had a total commitment amount of $825 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 $825 million to $1.2 billion, subject to lenders’ approval. The credit agreement provides the lenders with a collateral security interest in substantially all of our assets and those of our subsidiaries and requires us to comply with, among other things, a maximum net leverage ratio (4.5x) and a minimum interest coverage ratio (3.0x). Under the terms of the credit agreement, we pay a variable rate of interest and a commitment fee based on our leverage ratio. The credit agreement matures in December 2026. We were in compliance with all financial covenants as of October 1, 2022. We amended the credit agreement on October 26, 2022. The amendment, among other things, (a) provides relief from the requirement that the net leverage ratio not exceed 3.75x for certain corporate actions including Permitted Capital Distributions for Performance or Taxes (as defined in the Credit Agreement) and certain acquisition activity; (b) increases the permissible net leverage ratio to 5.0x for the three consecutive quarterly reporting periods ending July 1, 2023; (c) increases the commitment fee rate to 50 basis points and the margin applicable to interest rates for all borrowings by an additional 50 basis points, in each case if the net leverage ratio is greater than or equal to 4.5x; and (d) replaces the option to borrow at an interest rate based on London Interbank Offered Rate (LIBOR) to one based on a Term SOFR Rate. The Term SOFR Rate equals the sum of (x) the Term SOFR Screen Rate (as defined in the Credit Agreement) for the applicable interest period (but in no event less than zero), plus (y) 0.10%, plus (z) the margin based on Sleep Number’s net leverage ratio. A fee for the amendment is payable to the lenders in an amount equal to 7.5 basis points multiplied by the sum of the Revolving Credit Commitment and the outstanding amount of Term Loans (as each is defined in the Credit Agreement). The following table summarizes our borrowings under the credit facility ($ in thousands): October 1, January 1, Outstanding borrowings $ 406,300 $ 382,500 Outstanding letters of credit $ 5,947 $ 3,997 Additional borrowing capacity $ 412,753 $ 438,503 Weighted-average interest rate 5.1 % 1.6 % |
Leases
Leases | 9 Months Ended |
Oct. 01, 2022 | |
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 October 1, 2022, our finance right-of-use assets and lease liabilities were not significant. Lease costs were as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Operating lease costs (1) $ 27,821 $ 24,352 $ 81,925 $ 73,623 Variable lease costs $ 54 $ 840 $ 647 $ 2,181 ___________________________ (1) Includes short-term lease costs which are not significant. The maturities of operating lease liabilities as of October 1, 2022, were as follows (1) (in thousands): 2022 (excluding the nine months ended October 1, 2022) $ 25,605 2023 99,133 2024 87,684 2025 77,399 2026 65,885 2027 50,511 Thereafter 105,869 Total operating lease payments (2) 512,086 Less: Interest 84,473 Present value of operating lease liabilities $ 427,613 ___________________________ (1) Total operating lease payments exclude $89 million of legally binding minimum lease payments for leases signed but not yet commenced. (2) Includes the current portion of $77 million for operating lease liabilities. Other information related to operating leases was as follows: October 1, January 1, Weighted-average remaining lease term (in years) 6.2 6.4 Weighted-average discount rate 6.1 % 6.1 % Nine Months Ended (in thousands) October 1, October 2, Cash paid for amounts included in present value of operating lease liabilities $ 74,189 $ 66,561 Right-of-use assets obtained in exchange for operating lease liabilities $ 56,048 $ 78,192 |
Repurchases of Common Stock
Repurchases of Common Stock | 9 Months Ended |
Oct. 01, 2022 | |
Repurchases Of Common Stock [Abstract] | |
Repurchases of Common Stock | Repurchases of Common Stock Repurchases of our common stock were as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Amount repurchased under Board-approved share repurchase program $ — $ 97,046 $ 54,868 $ 364,478 Amount repurchased in connection with the vesting of employee restricted stock grants 497 711 9,273 17,763 Total amount repurchased (based on trade dates) $ 497 $ 97,757 $ 64,141 $ 382,241 As of October 1, 2022, the remaining authorization under the $600 million share repurchase program was $348 million. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Oct. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Deferred contract assets and deferred contract liabilities are included in our condensed consolidated balance sheets as follows (in thousands): October 1, January 1, Deferred contract assets included in: Other current assets $ 27,894 $ 28,048 Other non-current assets 55,095 49,343 $ 82,989 $ 77,391 October 1, January 1, Deferred contract liabilities included in: Other current liabilities $ 36,160 $ 36,490 Other non-current liabilities 70,676 63,680 $ 106,836 $ 100,170 The deferred revenue and costs related to SleepIQ ® technology are currently recognized on a straight-line basis over the product's estimated life of 4.5 to 5.0 years because our inputs are generally expended evenly throughout the performance period. During the three months ended October 1, 2022 and October 2, 2021, we recognized revenue of $9 million and $8 million, respectively, that were included in the deferred contract liability balances at the beginning of the respective periods. During the nine months ended October 1, 2022 and October 2, 2021, we recognized revenue of $26 million and $22 million, respectively, that were included in the deferred contract liability balances at the beginning of the respective periods. Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of our revenues for the three and nine months ended October 1, 2022 and 99% and 98% for the three and nine months ended October 2, 2021, respectively. Net sales were as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Retail stores $ 466,632 $ 565,939 $ 1,401,789 $ 1,481,780 Online, phone, chat and other 73,934 74,454 214,980 211,185 Total Company $ 540,566 $ 640,393 $ 1,616,769 $ 1,692,965 Obligation for Sales Returns The activity in the sales returns liability account was as follows (in thousands): Nine Months Ended October 1, October 2, Balance at beginning of year $ 22,368 $ 24,765 Additions that reduce net sales 79,353 69,877 Deductions from reserves (76,070) (66,124) Balance at end of period $ 25,651 $ 28,518 |
Stock-based Compensation Expens
Stock-based Compensation Expense | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation Expense | Stock-based Compensation Expense Total stock-based compensation expense (benefit) was as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Stock awards (1) $ (435) $ 6,506 5,778 $ 17,533 Stock options 977 810 2,807 2,168 Total stock-based compensation expense (1) 542 7,316 8,585 19,701 Income tax benefit 133 1,835 2,112 4,906 Total stock-based compensation expense, net of tax $ 409 $ 5,481 $ 6,473 $ 14,795 ___________________________ (1) Changes in stock-based compensation expense reflect the cumulative impact of the change in the expected achievements of certain performance targets. |
Profit Sharing and 401(k) Plan
Profit Sharing and 401(k) Plan | 9 Months Ended |
Oct. 01, 2022 | |
Profit Sharing And 401 (k) Plan [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 pay period, we may make a discretionary contribution equal to a percentage of the employee’s contribution. During the three months ended October 1, 2022 and October 2, 2021, our contributions, net of forfeitures, were $2.3 million and $2.0 million, respectively. During the nine months ended October 1, 2022 and October 2, 2021, our contributions, net of forfeitures, were $7.6 million and $5.7 million, respectively. |
Net Income per Common Share
Net Income per Common Share | 9 Months Ended |
Oct. 01, 2022 | |
Earnings Per Share [Abstract] | |
Net Income per Common Share | Net Income per Common Share The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Net income $ 5,033 $ 53,721 $ 42,040 $ 142,605 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 22,218 23,464 22,444 24,404 Dilutive effect of stock-based awards 355 769 515 920 Diluted weighted-average shares outstanding 22,573 24,233 22,959 25,324 Net income per share – basic $ 0.23 $ 2.29 $ 1.87 $ 5.84 Net income per share – diluted $ 0.22 $ 2.22 $ 1.83 $ 5.63 For the three and nine months ended October 1, 2022 and October 2, 2021, anti-dilutive stock-based awards excluded from the diluted net income per share calculations were 0.5 million and 0.1 million for the three months ended October 1, 2022 and October 2, 2021, respectively, and 0.5 million and 0.1 million for the nine months ended October 1, 2022 and October 2, 2021, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 01, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Warranty Liabilities The activity in the accrued warranty liabilities account was as follows (in thousands): Nine Months Ended October 1, October 2, Balance at beginning of year $ 10,069 $ 12,152 Additions charged to costs and expenses for current-year sales 13,093 12,780 Deductions from reserves (13,210) (13,489) Changes in liability for pre-existing warranties during the current year, including expirations (546) (380) Balance at end of period $ 9,406 $ 11,063 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. Shareholder Class Action Complaints On December 14, 2021, purported Sleep Number shareholder, Steamfitters Local 449 Pension & Retirement Security Funds (Steamfitters), filed a putative class action complaint in the United States District Court for the District of Minnesota (the District of Minnesota) on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021, inclusive, against Sleep Number, Shelly Ibach and David Callen. Steamfitters alleges material misstatements and omissions in certain of Sleep Number’s public disclosures during the purported class period, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The complaint seeks, among other things, unspecified monetary damages, reasonable costs and expenses and equitable/injunctive or other relief as deemed appropriate by the District of Minnesota. On February 14, 2022, a second purported Sleep Number shareholder, Ricardo Dario Schammas, moved for appointment as lead plaintiff in the action. On March 24, 2022, the District of Minnesota heard argument on Schammas’s motion, and subsequently appointed Steamfitters and Schammas as Co-Lead Plaintiffs (together, Co-Lead Plaintiffs). On July 19, 2022, Co-Lead Plaintiffs filed a consolidated amended complaint, which, like the predecessor complaint, asserts claims against Sleep Number, Shelly Ibach, and David Callen under Sections 10(b) and 20(a) of the Exchange Act. Co-Lead Plaintiffs purport to assert these claims on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021. Defendants moved to dismiss the consolidated complaint on September 19, 2022, which motion remains pending. Shareholder Derivative Complaint On May 12, 2022, Gwendolyn Calla Moore, as the appointed representative of purported Sleep Number shareholder Matthew Gelb, filed a derivative action (the Derivative Action) in the District of Minnesota against Jean-Michel Valette, Shelly Ibach, Barbara Matas, Brenda Lauderback, Daniel Alegre, Deborah Kilpatrick, Julie Howard, Kathleen Nedorostek, Michael Harrison, Stephen Gulis, Jr., David Callen, and Kevin Brown. Moore purports to assert claims on behalf of Sleep Number for breaches of fiduciary duty, waste, and contribution under Sections 10(b) and 21(d) of the Exchange Act. Moore’s allegations generally mirror those asserted in the securities complaint described above. The Moore complaint seeks damages in an unspecified amount, disgorgement, interest, and costs and expenses, including attorneys’ and experts’ fees. On September 13, 2022, the District of Minnesota entered a joint stipulation staying all proceedings in the Derivative Action pending the outcome of any motion to dismiss the Steamfitters consolidated amended complaint. Stockholder Demand On March 25, 2022, Sleep Number received a shareholder litigation demand (the “Demand”), requesting that the Board investigate the allegations in the securities class action complaint and pursue claims on Sleep Number’s behalf based on those allegations. On May 12, 2022, the Board established a special litigation committee to investigate the demand. On October 5 and October 12, 2022, Sleep Number received two additional shareholder litigation demands, which adopted and incorporated the allegations and requests in the Demand. Both of these additional litigation demands were referred to the special litigation committee. The special litigation committee has concluded that it would not be in the best interests of Sleep Number and its shareholders to take any of the actions requested in the demands at this time. |
COVID-19 Pandemic
COVID-19 Pandemic | 9 Months Ended |
Oct. 01, 2022 | |
Unusual or Infrequent Items, or Both [Abstract] | |
COVID-19 Pandemic | COVID-19 Pandemic The COVID-19 pandemic impacted our 2021 and 2022 financial performance. In the first nine months of 2021, even with the COVID-19 challenges, we generated strong demand and financial performance. In the first nine months of 2022, our financial performance was impacted by: (i) the disruptive flow of semiconductor chips which affected our ability to deliver products to our customers; (ii) incremental costs from labor and material inflation, and expediting costs resulting from current-period global supply chain shortages; and (iii) record low consumer sentiment. The pandemic's future effects on our global supply chain and the potential for supply disruption (e.g., the lack or slowing of critical components caused by labor shortages or government-mandated work closures), effects on consumer demand and effects on our ongoing financial performance remains uncertain. See Part II, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional discussion on the COVID-19 pandemic and the impact on our business. |
Business and Summary of Signi_2
Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 01, 2022 | |
Accounting Policies [Abstract] | |
Business & Basis of Presentation | Business & Basis of Presentation We prepared the condensed consolidated financial statements as of and for the three and nine months ended October 1, 2022 of Sleep Number Corporation and our 100%-owned subsidiaries (Sleep Number or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position as of October 1, 2022 and January 1, 2022, and the consolidated results of operations and cash flows for the periods presented. Our historical and quarterly consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future period. In addition, based on the duration and severity of the current global situation involving the COVID-19 pandemic, the war in Ukraine, historic low consumer sentiment and other external factors, including but not limited to general economic conditions, inflation, consumer sentiment, store restrictions mandated by federal, state or local authorities and global supply chain disruptions (especially disruptive supply and flow of semiconductor chips and other electronic components), the extent to which these external factors will impact our business and our consolidated financial results will depend on future developments, which are highly uncertain and cannot be predicted. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with our most recent audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2022 and other recent filings with the SEC. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. In addition, during the current environment involving external factors such as COVID-19, historic low consumer sentiment and the war in Ukraine, predicting future events will be especially challenging for management. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. Our critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. |
Consolidation | The condensed consolidated financial statements include the accounts of Sleep Number Corporation and our 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. |
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. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): October 1, January 1, Raw materials $ 6,763 $ 11,752 Work in progress 92 83 Finished goods 106,699 93,809 $ 113,554 $ 105,644 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Annual Amortization of Definite-Lived Tangible Assets | Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2022 (excluding the nine months ended October 1, 2022) $ 601 2023 1,431 2024 222 2025 226 2026 222 2027 222 Thereafter 300 Total future amortization for definite-lived intangible assets $ 3,224 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Borrowings Under Credit Facility | The following table summarizes our borrowings under the credit facility ($ in thousands): October 1, January 1, Outstanding borrowings $ 406,300 $ 382,500 Outstanding letters of credit $ 5,947 $ 3,997 Additional borrowing capacity $ 412,753 $ 438,503 Weighted-average interest rate 5.1 % 1.6 % |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Leases [Abstract] | |
Schedule of Operating Lease Costs | Lease costs were as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Operating lease costs (1) $ 27,821 $ 24,352 $ 81,925 $ 73,623 Variable lease costs $ 54 $ 840 $ 647 $ 2,181 ___________________________ (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 October 1, 2022, were as follows (1) (in thousands): 2022 (excluding the nine months ended October 1, 2022) $ 25,605 2023 99,133 2024 87,684 2025 77,399 2026 65,885 2027 50,511 Thereafter 105,869 Total operating lease payments (2) 512,086 Less: Interest 84,473 Present value of operating lease liabilities $ 427,613 ___________________________ (1) Total operating lease payments exclude $89 million of legally binding minimum lease payments for leases signed but not yet commenced. (2) Includes the current portion of $77 million for operating lease liabilities. |
Schedule of Other Information Related Operating Leases | Other information related to operating leases was as follows: October 1, January 1, Weighted-average remaining lease term (in years) 6.2 6.4 Weighted-average discount rate 6.1 % 6.1 % Nine Months Ended (in thousands) October 1, October 2, Cash paid for amounts included in present value of operating lease liabilities $ 74,189 $ 66,561 Right-of-use assets obtained in exchange for operating lease liabilities $ 56,048 $ 78,192 |
Repurchases of Common Stock (Ta
Repurchases of Common Stock (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Repurchases Of Common Stock [Abstract] | |
Schedule of Repurchases of Common Stock | Repurchases of our common stock were as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Amount repurchased under Board-approved share repurchase program $ — $ 97,046 $ 54,868 $ 364,478 Amount repurchased in connection with the vesting of employee restricted stock grants 497 711 9,273 17,763 Total amount repurchased (based on trade dates) $ 497 $ 97,757 $ 64,141 $ 382,241 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Deferred Contract Liabilities and Deferred Contract Assets | Deferred contract assets and deferred contract liabilities are included in our condensed consolidated balance sheets as follows (in thousands): October 1, January 1, Deferred contract assets included in: Other current assets $ 27,894 $ 28,048 Other non-current assets 55,095 49,343 $ 82,989 $ 77,391 October 1, January 1, Deferred contract liabilities included in: Other current liabilities $ 36,160 $ 36,490 Other non-current liabilities 70,676 63,680 $ 106,836 $ 100,170 |
Disaggregation of Revenue | Net sales were as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Retail stores $ 466,632 $ 565,939 $ 1,401,789 $ 1,481,780 Online, phone, chat and other 73,934 74,454 214,980 211,185 Total Company $ 540,566 $ 640,393 $ 1,616,769 $ 1,692,965 |
Schedule of Sales Return Liability | The activity in the sales returns liability account was as follows (in thousands): Nine Months Ended October 1, October 2, Balance at beginning of year $ 22,368 $ 24,765 Additions that reduce net sales 79,353 69,877 Deductions from reserves (76,070) (66,124) Balance at end of period $ 25,651 $ 28,518 |
Stock-based Compensation Expe_2
Stock-based Compensation Expense (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | Total stock-based compensation expense (benefit) was as follows (in thousands): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Stock awards (1) $ (435) $ 6,506 5,778 $ 17,533 Stock options 977 810 2,807 2,168 Total stock-based compensation expense (1) 542 7,316 8,585 19,701 Income tax benefit 133 1,835 2,112 4,906 Total stock-based compensation expense, net of tax $ 409 $ 5,481 $ 6,473 $ 14,795 ___________________________ (1) Changes in stock-based compensation expense reflect the cumulative impact of the change in the expected achievements of certain performance targets. |
Net Income per Common Share (Ta
Net Income per Common Share (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Net (Loss) Income per Share | The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended October 1, October 2, October 1, October 2, Net income $ 5,033 $ 53,721 $ 42,040 $ 142,605 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 22,218 23,464 22,444 24,404 Dilutive effect of stock-based awards 355 769 515 920 Diluted weighted-average shares outstanding 22,573 24,233 22,959 25,324 Net income per share – basic $ 0.23 $ 2.29 $ 1.87 $ 5.84 Net income per share – diluted $ 0.22 $ 2.22 $ 1.83 $ 5.63 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Oct. 01, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty Liabilities | The activity in the accrued warranty liabilities account was as follows (in thousands): Nine Months Ended October 1, October 2, Balance at beginning of year $ 10,069 $ 12,152 Additions charged to costs and expenses for current-year sales 13,093 12,780 Deductions from reserves (13,210) (13,489) Changes in liability for pre-existing warranties during the current year, including expirations (546) (380) Balance at end of period $ 9,406 $ 11,063 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Level 1 - USD ($) $ in Millions | Oct. 01, 2022 | Jan. 01, 2022 |
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 | $ 16 | $ 19 |
Other non-current liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred compensation plan liability | $ 16 | $ 19 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 6,763 | $ 11,752 |
Work in progress | 92 | 83 |
Finished goods | 106,699 | 93,809 |
Inventories | $ 113,554 | $ 105,644 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | Jan. 01, 2022 | |
Goodwill And Intangible Assets [Line Items] | |||||
Goodwill | $ 64,000 | $ 64,000 | $ 64,000 | ||
Developed Technologies | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Gross carrying amount | 18,400 | 18,400 | 18,400 | ||
Accumulated amortization | 16,700 | 16,700 | 15,500 | ||
Amortization expense | 500 | $ 500 | 1,600 | $ 1,600 | |
Patents | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Gross carrying amount | 2,000 | 2,000 | 2,000 | ||
Accumulated amortization | 500 | 500 | 300 | ||
Amortization expense | 55 | $ 55 | 200 | $ 200 | |
Trade Names | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Indefinite-lived trade name/trademarks | $ 1,400 | $ 1,400 | $ 1,400 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Annual Amortization for Definite-Lived Intangible (Details) $ in Thousands | Oct. 01, 2022 USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2022 (excluding the nine months ended October 1, 2022) | $ 601 |
2023 | 1,431 |
2024 | 222 |
2025 | 226 |
2026 | 222 |
2027 | 222 |
Thereafter | 300 |
Total future amortization for definite-lived intangible assets | $ 3,224 |
Credit Agreement - Narrative (D
Credit Agreement - Narrative (Details) - Revolving Credit Facility - Line of Credit $ in Millions | Oct. 26, 2022 | Oct. 25, 2022 | Oct. 01, 2022 USD ($) |
Line of Credit Facility [Line Items] | |||
Current borrowing capacity | $ 825 | ||
Total commitment amount | $ 1,200 | ||
Maximum leverage ratio | 4.5 | ||
Minimum interest coverage ratio | 3 | ||
Subsequent Event | |||
Line of Credit Facility [Line Items] | |||
Net leverage ratio, maximum threshold | 4.5 | 3.75 | |
Net leverage ratio, maximum threshold for three consecutive quarterly reporting periods | 5 | ||
Commitment fee rate | 0.50% | ||
Variable rate | 0.50% | ||
Amendment fee rate | 0.075% | ||
Secured Overnight Financing Rate (SOFR) | Subsequent Event | |||
Line of Credit Facility [Line Items] | |||
Variable rate | 0.10% |
Credit Agreement - Schedule of
Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Debt Disclosure [Abstract] | ||
Outstanding borrowings | $ 406,300 | $ 382,500 |
Outstanding letters of credit | 5,947 | 3,997 |
Additional borrowing capacity | $ 412,753 | $ 438,503 |
Weighted-average interest rate | 5.10% | 1.60% |
Leases - Additional Information
Leases - Additional Information (Details) | Oct. 01, 2022 |
Minimum | Retail Store Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Minimum | Lease Vehicles and Certain Equipment Under Operating Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 3 years |
Maximum | Retail Store Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 10 years |
Maximum | Office and Manufacturing Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 15 years |
Maximum | Lease Vehicles and Certain Equipment Under Operating Leases | |
Lessee, Lease, Description [Line Items] | |
Lease term | 5 years |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Leases [Abstract] | ||||
Operating lease costs | $ 27,821 | $ 24,352 | $ 81,925 | $ 73,623 |
Variable lease costs | $ 54 | $ 840 | $ 647 | $ 2,181 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Leases [Abstract] | ||
2022 (excluding the nine months ended October 1, 2022) | $ 25,605 | |
2023 | 99,133 | |
2024 | 87,684 | |
2025 | 77,399 | |
2026 | 65,885 | |
2027 | 50,511 | |
Thereafter | 105,869 | |
Total operating lease payments | 512,086 | |
Less: Interest | 84,473 | |
Present value of operating lease liabilities | 427,613 | |
Amount leases executed, not yet commenced, excluded from table. | 89,000 | |
Operating lease liabilities, current | $ 77,243 | $ 72,360 |
Leases - Schedule of Other Info
Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Jan. 01, 2022 | |
Leases [Abstract] | |||
Weighted-average remaining lease term (in years) | 6 years 2 months 12 days | 6 years 4 months 24 days | |
Weighted-average discount rate | 6.10% | 6.10% | |
Cash paid for amounts included in present value of operating lease liabilities | $ 74,189 | $ 66,561 | |
Right-of-use assets obtained in exchange for operating lease liabilities | $ 56,048 | $ 78,192 |
Repurchases of Common Stock - S
Repurchases of Common Stock - Schedule of Repurchase of Common Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Repurchases Of Common Stock [Abstract] | ||||
Amount repurchased under Board-approved share repurchase program | $ 0 | $ 97,046 | $ 54,868 | $ 364,478 |
Amount repurchased in connection with the vesting of employee restricted stock grants | 497 | 711 | 9,273 | 17,763 |
Total amount repurchased (based on trade dates) | $ 497 | $ 97,757 | $ 64,141 | $ 382,241 |
Repurchases of Common Stock - A
Repurchases of Common Stock - Additional Information (Details) $ in Millions | Oct. 01, 2022 USD ($) |
Repurchases Of Common Stock [Abstract] | |
Authorized share repurchase program | $ 600 |
Remaining authorized stock purchase plan | $ 348 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Deferred Contract Assets and Deferred Contract Liabilities (Details) - USD ($) $ in Thousands | Oct. 01, 2022 | Jan. 01, 2022 |
Deferred contract assets included in: | ||
Deferred contract assets | $ 82,989 | $ 77,391 |
Deferred contract liabilities included in: | ||
Deferred contract liabilities | 106,836 | 100,170 |
Other current assets | ||
Deferred contract assets included in: | ||
Other current assets | 27,894 | 28,048 |
Other non-current assets | ||
Deferred contract assets included in: | ||
Other non-current assets | 55,095 | 49,343 |
Other current liabilities | ||
Deferred contract liabilities included in: | ||
Other current liabilities | 36,160 | 36,490 |
Other non-current liabilities | ||
Deferred contract liabilities included in: | ||
Other non-current liabilities | $ 70,676 | $ 63,680 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized, included in beginning deferred contract liability balance | $ 9 | $ 8 | $ 26 | $ 22 |
Transferred at Point in Time | Revenue from Contract with Customer Benchmark | Timing of Transfer of Goods or Services Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue recognized at a point in time | 98% | 99% | 98% | 98% |
SleepIQ Technology | Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Estimated product life | 4 years 6 months | |||
SleepIQ Technology | Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Estimated product life | 5 years |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 540,566 | $ 640,393 | $ 1,616,769 | $ 1,692,965 |
Retail stores | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 466,632 | 565,939 | 1,401,789 | 1,481,780 |
Online, phone, chat and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 73,934 | $ 74,454 | $ 214,980 | $ 211,185 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Sales Return Liability [Roll Forward] | ||
Balance at beginning of year | $ 22,368 | $ 24,765 |
Additions that reduce net sales | 79,353 | 69,877 |
Deductions from reserves | (76,070) | (66,124) |
Balance at end of period | $ 25,651 | $ 28,518 |
Stock-based Compensation Expe_3
Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 542 | $ 7,316 | $ 8,585 | $ 19,701 |
Income tax benefit | 133 | 1,835 | 2,112 | 4,906 |
Total stock-based compensation expense, net of tax | 409 | 5,481 | 6,473 | 14,795 |
Stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | (435) | 6,506 | 5,778 | 17,533 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 977 | $ 810 | $ 2,807 | $ 2,168 |
Profit Sharing and 401(k) Plan
Profit Sharing and 401(k) Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Profit Sharing And 401 (k) Plan [Abstract] | ||||
Employee compensation deferral (as a percent) | 50% | |||
Employer contributions | $ 2.3 | $ 2 | $ 7.6 | $ 5.7 |
Net Income per Common Share - C
Net Income per Common Share - Components of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Oct. 01, 2022 | Jul. 02, 2022 | Apr. 02, 2022 | Oct. 02, 2021 | Jul. 03, 2021 | Apr. 03, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 5,033 | $ 34,933 | $ 2,074 | $ 53,721 | $ 22,250 | $ 66,634 | $ 42,040 | $ 142,605 |
Reconciliation of weighted-average shares outstanding: | ||||||||
Basic weighted-average shares outstanding (in shares) | 22,218,000 | 23,464,000 | 22,444,000 | 24,404,000 | ||||
Dilutive effect of stock-based awards (in shares) | 355,000 | 769,000 | 515,000 | 920,000 | ||||
Diluted weighted-average shares outstanding (in shares) | 22,573,000 | 24,233,000 | 22,959,000 | 25,324,000 | ||||
Net income per share – basic (in dollars per share) | $ 0.23 | $ 2.29 | $ 1.87 | $ 5.84 | ||||
Net income per share – diluted (in dollars per share) | $ 0.22 | $ 2.22 | $ 1.83 | $ 5.63 |
Net Income per Common Share - N
Net Income per Common Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2022 | Oct. 02, 2021 | Oct. 01, 2022 | Oct. 02, 2021 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0.5 | 0.1 | 0.5 | 0.1 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 01, 2022 | Oct. 02, 2021 | |
Warranty Liabilities [Roll Forward] | ||
Balance at beginning of year | $ 10,069 | $ 12,152 |
Additions charged to costs and expenses for current-year sales | 13,093 | 12,780 |
Deductions from reserves | (13,210) | (13,489) |
Changes in liability for pre-existing warranties during the current year, including expirations | (546) | (380) |
Balance at end of period | $ 9,406 | $ 11,063 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | Oct. 12, 2022 litigationDemand |
Pending Litigation | Subsequent Event | |
Loss Contingencies [Line Items] | |
Number of litigation demands | 2 |