SNBR - Earnings call transcript Q3 2019 | Sleep Number Corporation

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Operator

Welcome to the Sleep Number Q3 2019 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today's call is being recorded, if you have any objections you may disconnect at this time.

I would like to introduce Dave Schwantes, Vice President of Finance and Investor Relations. Thank you.

begin. may You

Dave Schwantes

Investor welcome Callen, XXXX and us. Sleep Corporation's and Finance Number am Shelly today Good our CFO. Ibach, Conference to Call. Quarter President and of President Earnings Schwantes, and joining With Thank Third me Dave are David afternoon CEO, Vice the Relations. our you I for

release replay. to be the may be website that at our also telephone is discussed the in our for This details on news conference the included measures or being certain a available recorded supplemental to our to this refer reconciliation in on news Please financial release information Please non-GAAP and refer access and will release news sleepnumber.com. financial of call.

call the results this discuss primary ended. purpose fiscal just is of of the to period The

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

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

Shelly Ibach

our third score Good afternoon thank earnings you for XX call. My and SleepIQ last quarter joining was night.

innovations As XXX smart the resonating and unique sleep leader bed with in differentiated our experience consumers. is clearly

completing to XXX all in since XXXX. transition demand our have growth double-digit We delivered smart beds mid

the quarter year. continued third double-digit initiatives in as momentum order lapped As the sales prior advanced this from we the expected and growth our

earnings share Operating up XX% XX%. included; million, income of with comp. $X.XX, record XX% results net per year up and sales up Third million quarter of XX% $XX $XXX against a prior of

transformation. of XX% is basis This capital the up past our months X% net XX.X%, included a outcome up XX% Operating of XX year with the points income an record invested and for results performance on versus up return ago. Year-to-date XXX sales of XX%, EPS comp. growth

where and would are doing we what are said expected We we to be do. we

share growth initiatives Our multi-year have resulted XXXX. since earnings per double-digit in

are journey, future to consumers as hub the nearly wellness. part We enables our the we our for become first strategic have growth completed health excited of and which

full-year a we of With the have $X.XX our to strength range our guidance to across $X.XX. business, increased EPS performance

and My quarter which by the comments on on sales will shift third on last The top QX call from not quarter five deliveries orders, order sales initiatives sales affected to of growth focus from our growth the earnings order XX% were to of unit second year. of third outlined XXXX. contributed we quarter in QX double-digit

actively are growth quarter catalysts We advancing the consumer in fourth beyond. these that proven in to relevant the integrated manner a is and

XXX record achieved of satisfaction bed. and This loyalty. drives retention with smart engagement, levels customer we customer First, our

their is they daily beds. understanding quality sleep powerful with use SleepIQ ongoing their Our reminder as brand a customers interact of of our the our data, value

XX% We've digital referral loyalty that approximately of is digital SleepIQ at our program core app experience, This our InnerCircle and integrated of communications. producing strengthens now account product the our our incremental sales individualized our repeat business. into for having

sales with traffic expanded and period. selling is order Labor of contributed the We we units. a growth a along our Second, mattress not This quarter evolution included growth. launched X% to campaign unit the Day The support brand through growth consideration. double-digit next reach in of which in our bed" digital strengthened the "This growth XX%

order QX unit of Notably, this XXXX. in was of on top and double-digit growth

improved traffic, quality quarter higher Our and media profit in investment higher also drove conversion, growth ROI significant the the third media in quarter.

We test, and continue our evolve processes. methodically learn to proprietary

of once again, year. fourth double-digit the on from build in learnings growth our the applying are order to top We quarter prior

players our the Adding Minnesota of on unprecedented deepening partnerships amplified productive and of relationships with X,XXX active we the second by Football Vikings Fame engagement with season our our involvement Cowboys to Chiefs. with Dallas Kansas Third, the City Pro beds. established Hall and in brand NFL our over we partnership the

featuring national a Dallas quarter-back Cowboys added highly ad Dak also We Prescott. new, persuasive

consumers broad and scale a amplifying We engaging the players partnerships. authentic are media stories by other further on NFL through

Fourth, XX we cohesive was mattress the progressed of combination Average in-store award-winning and X% was per innovations the experience. The quarter our up X% powerful store performance. continue revenue revenue best-in-class to in average months. per our selling processes for and digital trailing unit benefit-driven drive up

a productive in sales. as to Our ongoing further the will These development strategy XXX phone of online source advantages, store year-over-year of experience market growth. advanced we our local highly online national increase Continuous competitive our be surpassed improvement disciplined milestone our chat XX% contributed an and footprint. and

for have which are Finally, vertically of and XX% inventory, This quarter, more to improvement. mobile improving resulted increase including the profit a points and applications business Initiatives our operating routing in in logistics include, new efficient. basis we gross analytical results rate contributing our manufacturing, made in third integrated effectiveness. margin these XXX

our of on operation, will outbound over source coming improvement be years. track evolution The and which the logistics of is a

our are to we integrated advantages of as marketplace. leveraging vertically model the We the innovations bring new

and are upstream to ongoing tariff suppliers built effective actions with engineers and also working We've innovate on these to manufacturing gains. relationships productivity take pressures. to our for Specifically collective swift mitigate

our Number supply of to one of the was innovative chains digital country's operational admire. Sleep recognition recently leadership and In named

unique direct competitive We and to customer advantages our lifelong of strengthen proprietary sleep innovations, distribution relationships. continue exclusive

expected. innovation and the performance are competitive These consumer our generating strategy advantages we

world's one sleep smart brands in experience, prioritize revolutionary for effortless R&D. of ambitious unparalleled quality beds value investments our an most by provide ongoing a delivering XXX continue Our beloved to we of sleep creation. With foundation proven strong delivering the are and vision becoming

the SleepIQ experience in and insights. comfort, portfolio generation featuring the back evolved for an the sleep adjustability heart science, smart analytics These rhythm our beds and have XXX rate smart data addition XXXX. more this wellness. in next variability will half incorporate attributes and to in our and breakthroughs to beds temperature plan health of engineering circadian of We advancement superior design, will introduce hardware new software of With we

summary, Sleep In Number's about bullish remain trajectory. we

hub We with To XXX partners where our core from a consumers are be and the to future individualized borrow line business. will for as health the NFL, digital bed our to at health playing we win. creating wellness the our are smart

and supports innovation company of life-changing delivering strategy consumer our Our vision purpose sleep.

Our investments ensure relevance long-term. the profitable and growth over

is performance intensity that Our engaged, team highly demonstrating ranks best-in-class.

an requires you million operating and business of Thank vertically Building lives milestone for integrated the XX improved. important this enterprise. every level Number at execution across holistic exceeding Sleep team excellence

our and drive Your passionate performance and dedication important. with innovations teamwork courageous to is unsurpassed

David, additional the expectations remainder year. turn provide the to of now the quarter details and over call who will I'll on for the

David Callen

two Number and QX to execution are demand performance, believe teams excellence. our I Sleep Number Shelly. to sleep high words financial delivering for Sleep results. and embrace you. quality our describe performing at growth engaged and significant Thank proven superior driving year-to-date continue Consumers levels,

QX double-digit sales year-over-year back year year-to-date. approximately tables of the adjusted Remember on XXXX XX% Relations QX. up from Please QX in of that our this demand page grew XX% net last and Third reconciliation last grew QX are half non-GAAP year, the shifted the refer to net year-to-date. and net quarter the X% $XX XX% website. million sales year, deliveries in Investor to sales Compared to

grew up our growth Our year-to-date. are expected XX% XX% demand QX revenue to and for assumption year. X% the support in as continued as for Comp drivers delivering and reported, sales

of year-to-date. X quarter points added New to growth both and the stores

XX added plus last new stores. stores, During we've the months, XX XX relocated

to prioritized expect Combined, then We months end trailing prior we and our XXX across ended XXX XXXX more XX QX XX% this changing is approximately with actions, stores stores game the out with XXX states. when XX rolling beds. all smart

yet planful of been portfolio X% since growth have in-line By has to grown pace of opportunistic. we our XXXX previous with will per year X%. development assumption market an our average Our store long-range year-end, X% early

healthy Through shopping our Consumer online larger, portfolio preferences X% sales change growth evolve also we of XXXX, experiences. X% annual with average store shopping we advance and to retail our Today, expect including is approximately them. while continuing XX% to and will to all continue productive.

Let's the minute and approach. a interplay various our of local examine market outcome to development of take elements

profits, in preferences. above we shared portfolio shopping consumer address markets Woodbury, a We've stores and recent First average. Minnesota where within of example sales well relocate shifts our had store we the to

to lift retail beginning stores that dominate. led location was a to Within months us Our relocate in relocated sales. new a XX% approach disciplined nearby saw where X to

than Importantly, rather sales new from stores relocated from comp. like this stores reported as are growth

and Second, These when market. new average experience incremental XX% add grow actions, about sales, dollars by basis that units we XXX we share, units cannibalization stores but about comp stores within pressure market at and profits, points. our comp

selling we our unit innovate also products processes to comp continue Third, and and to ARU growth. our generate

just annual comp QX, sales over $X of years our Through million X had ago. XX% versus XX% stores

million including store comp per $X.X revenue annual average million then. online compared $X.X with QX back was Our

year-to-date. QX in lift ARU units year-over-year X% year-to-date, a growing in QX drove X% total X% while initiatives Our both and and

driving our business and sales from of both units model. a profit advantage and annual Consistently growth ARU distinct is

pricing So annual exclusive power our growth. points proprietary of ARU driven average and three is the which distribution has innovation from historically

drive Each meaningful market of share today. has and occupy including to we these our performance X% advancements potential of elements, meaningfully upside take online north -- the

Our delivering were the meant and inventory location busiest been and during accuracy This periods. item Predictive country. also operational across by tools results. improvement the our efficient we initiatives most are sales planning ever we've improving delivery are

teams and like handling product provide much in in efficiency better wins customer fulfillment for locations, these forward. our experiences. between delivering and customers minimized going capabilities our and We QX Investments opportunities significant expediting delivered

Our XXX expectation improvement point in of gross this lapped rate We prior-year about as margin improved XXX to confident now XXXX. for in XX.X% as XXX pressures. progress. our fully QX basis reflects Year-to-date, margin basis points remain points margin transition gross we've gross basis improvement in expected, the

in increases and our prioritized R&D. again near meaningful We drivers in with media and QX growth long-term

costs incentive XXX in QX a business in points and quarter. We comp, of improvement increase and XXX excellence medical also an the net basis absorbed drove point operating across profit tariff margin our Execution year-to-date. higher basis the

methodically year-to-date a capital to at It conservative bias increase of our quarter. EBITDAR XX% also We've and a in ratio the to leverage a our of and evolved EBITDA with support progressively times third the structure strategy. end X.X our led

range targeted year times leverage expect to to EBITDAR. within We debt the times end X X.X of our

the up X grew $X.XX EPS all employ XX% XX%. up bringing X QX growth this year our year to our QX EPS, times When EPS diluted grew for drivers. than prior the line year-to-date top year-over-year, adjusted of more The effectively shift as year-to-date we delivery increase of Both EPS XX%. EPS the with to is compared XX%

also XX.X% XX-month capital. investment our single-digit average an disciplined decisions weighted generated and more QX, cash cost of XX% year-to-date flow free trailing double excellence more ROIC than high a through on and Execution basis

guidance have raised $X.XX We a to full-year $X.XX. of our range again to EPS

year QX last delivery from approximately modeling this QX. $X.XX to shift year, moved of you're As that earnings please the remember QX

similar are that our rate other of QX. is and A assumptions of be to tax XX% income be G&A QX, and XX%. of and expenses approximately include will sales assumed net couple expenses Full-year to note sales R&D marketing QX

full-year of $X.XX growth The including EPS XX% adjusted against implies XX% QX year. of QX midpoint growth EPS EPS last guidance

While our expectations. we about guidance to early detailed some is in XXXX, here XXXX color plan our provide QX general on call

like a in high to XXXX, grow in Assuming that sales times with diluted X growth consumer environment we XXXX to net earnings single-digits per approximately mid expect share.

our of maintaining shareholders prioritize revolver with cash X.X and We in finally to including leverage plans times appropriate targeted through returning our and liquidity X will to support investing to times to EBITDAR repurchases. drivers, continue our profit share growth

balance to the operate support business is our for multiple expect million $XXX bias. with clear. repurchase share authorization to of conservative continue as our years renewal plans The a power this model of we sheet We

clean customer meant on we what strategy and stakeholders. by The is consumer when financial Number's we top XXXX. executing our future improving customers running is This in results. innovation said lives focus bright tier Sleep for relationships we're is Our delivering and

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

Operator

you. Thank

question first John Stifel. is with from Our Baugh

Your is open. line

John Baugh

you just you Could pricing provide well was that Thank either mix color? talked you drivers little the could inputs you. on color the -- various more and a as about and great clearly in on love evening of Thank gross about results. came it, talk kind good and and as efficiencies, which you if all better or margin, I'd perhaps

David Callen

points that had John. We combination Thanks, basis transition described that XXX prior absorbing offset basis the a also tariffs, about which impacts of and and mix elements we of more was was that points The pricing, -- about we're operating XXX labor you Yeah. basis the than the year, eliminated the that efficiencies, pressures of XX things from of highlighted, costs points from that improvement. remaining additional benefits nature.

John Baugh

price last took year, X, Okay, if mistaken, and on I'm not October a you increase. X%

increase this like-for-like We haven't items year. an seen on

something maybe missed products in your new First and you've is or if well. to were year? of me I'm you of I sales you're curious of some correct to and And just sort the SKU there? less that introduced at as than for then terms all, promotional lineup seeing mix quarter terms what last like the -- looks what in third it of you're as least

Shelly Ibach

John, for unit. average Yes, our revenue questions thanks ARU, per the around additional mattress

We about growth and you pricing we time, innovations. the attributed have along over is ARU accurate. when generally -- was characterize our a at ago year of about with the benefits That the look to pricing, X%

products speaks with and have We mission-driven selling calendar pricing our year year-over-year really continue Again, average this increases is and average to drive selling we customers team also to to not more ability connect process it also in reflective us -- of this to items innovative innovations unit. we between of the our to our per growth and consumer, revenue their price the It's mattress have. of not on broad is in had range and combination sales. this repeat it ARU price, like-for-like and but and speaks our

John Baugh

number stages tweaks there or sort 'XX And introduction year planned I gets your transition? next in is a you it it. one? my for sense to how two, is through Shelly, guess whenever make this and get a number it changed the big question, interesting. trying sounds I'm 'XX deal are of happen or guess, around I Got simply to and increments products last existing all it And does

Shelly Ibach

very put is really we are and it excited interesting bed place the smart mid and foundation in XXX to we that XXXX. speaks Well,

and and so we we new smart when have innovations our think the have you about about baseline transitioned than today past our we to XXX smart talked this bed, continue our If line, off line the evolve as required of a different of in as will ago, different build beds the to a that's our beds our our transformation Today place. the years full smart line we're large it. the to innovation of couple continue in company off and the change which a suppliers and baseline in will

evolve where is broadly it difference a continue making is sleep in meaningful and Importantly, way to to in and for stay will relevant quality we focused their consumers, a that's consumers. that

John Baugh

Okay.

there to be just involved? So of drops be summarizing re-launches I so but in not cost additional that, last will beds and major added disruption terms presume innovations that would or

Shelly Ibach

evolve. involve, does It our entire portfolio will

John Baugh

Okay.

David Callen

will guidance, I terms of but in provide the additional thinking just that into we're our XXXX. John on you call, we're of some how that color we of about color XXXX QX earlier about thinking it, how gave all we've the about incorporated

John Baugh

Thank it. you. Got

Operator

next with Raymond Griffin from Bobby James. is Our question

line Your is open.

Bobby Griffin

taking everybody. I questions. afternoon, appreciate Good you my

David Callen

Hey, Bobby.

Bobby Griffin

numbers in maybe the for color maybe what the of for hoping question driving $X.XX is and first range little the XXXX I range there around range on what's just our for just get leaves of to out was the guidance My bit more and -- the the a versus low-end the high-end full-year?

Shelly Ibach

me a start our fourth of is we're in up growth row with -- let in all, again of against raising the the second first this quarter quarter. double-digit Well, guidance, just

to confidence consumers that and We I great smart forward. business in initiatives evolve to and to of described XXX the have the our in my going how drive performance and remarks the continue our working are performance beds that respond

see as the headwinds, Looking top-quartile and the business And increase in put a great EPS guidance at overall to overall. appropriately the reflects a another we're of we performance the XX% excited up at midpoint, the with midpoint top-tier quarter. tailwinds

Bobby Griffin

typically -- you might range that. fourth is a that want you little give from bit us we have of quarter, driving but are? the to year? bit like help anticipating that pretty you just upon off what of we change keep to the make the little of about the that quarter into there one momentum little maybe when seems left range be expand just business a a a there the headwinds some other with what's in tailwinds Maybe quarter-to-quarter, talk have arise think of we uncertainties the or about seen Those and heading it Can to connect the tendency out wider to better Okay. strong a is not that

Shelly Ibach

fourth headwinds nothing one that's seeing, we've what other But that Yeah, is we're always new been are I'll quarter probably factor. with every different other and quarter consistent talking about. start, the than tailwinds

David Callen

I Yes, investments growth our hey we as Bobby headwinds, of fourth been the labor rate well and media as our in headwinds, into quarter. as both drivers, -- all I've have out well called managing as continue those the that will some R&D, tariff

be transition incurred elimination Of so impacts the course, had that margin year, of the -- And it point QX, thinking expecting full-year. rate lapped about it we what in while and about basis have we expansion hence, been are XXX year-to-date. all are seeing rate we fully through prior the less margin QX, gross now terms the will of we in we're than for we've gross improvement

Bobby Griffin

versus level what done been remodels at on be helpful, Dave, I Or they've going remodels again number over the And for you thank same total the When there's continue the less the that pace? future decline Should color growth. couple about that. number. years to X% the that's to actions think of we X% last and of store appreciate now? should Okay, of

David Callen

talked The about, total this we're capital will CapEx decline probably million expecting of we've like $XX year.

now, providing on million $X not million I'm guidance XXXX, over specifically period that while than million that $XX that less will be to it forward, or period. $XX right through through XXXX Going likely average

and relocations the new continue to and on. take see but all in an to see continuation would a in would less we remodels we As likelihood stores, -- the that would pertains increase stores or that

have do to continue stores stores high nice lifts we'll their preferences, see and move performing locations where we that from even to to we consumers continue as go forward. shifted We when

Bobby Griffin

one, Okay, the that. then I the what up quick deleverage you a or was us models? leverage me, And last quarter, or thing during was for appreciate us tune what media percentage to our can for just modeling tell the

Shelly Ibach

about the Yes, competitive go we the going to detail. and XX% double-digits sales up more on to you of year the we're for any not reasons Based for color provided expect and thinking year. media into should marketing be

Bobby Griffin

Shelly. on of Thank the appreciate in congrats I and it luck best and Okay. the fourth quarter. you, quarter

Shelly Ibach

you. Thank

Operator

Thomas Our next question from Markets. Capital with Brad is KeyBanc

open. is line Your

Brad Thomas

quarter and great everyone year. afternoon and momentum this a on good Hey, congratulations here nice

Shelly Ibach

Thank you, Brad.

Brad Thomas

on had had the shift all So did year, had the all this last to think shift that on that just from -- into you of XQ timing year. clarify you you XQ back

David Callen

Well we was fourth that a all quarter the that that worth the all year. shift and last quarter about didn't in related delivered week's year it get early delivered last deliveries in of to third got

nothing that performance do had this with So to our year.

this across more drove was year we've and performance strong line. efficient and profitability top-line the growth Our far as effective and that highlighted

Brad Thomas

thinking Got was But understanding you. and it's best about From year? it. you're worth then pretty more here your comparing normal this adjusting everything normalized

David Callen

XXX%.

Brad Thomas

Great.

ask shipments units total unit, to on by not the if then got that units, have the you about the just may and you negative, shift. for if helped so this potentially X% about in And slightly clocked

that you. is understand now for I Now, priority a

look we the quarter, ARU? about forward versus as seem lever pulling guess ARU but more going fantastic think right? is should does that that you to Your math guys this I you forward, units push how And

Shelly Ibach

is that business, so clear and our my aside have this shift. would that health comments Yes. you the be growth, clear underlying stated why sense the that a of of sales order real setting to I Brad reflect

that top a unit on And up mattress growth mind the and year. a quarter sales in in is sales included in our double-digit order of growth units. was X% keep growth So from prior and XX% the that

quarter a the closing of were out of C-series drove growth. unit in we year last the So lot and that third

of double top that drove digits was and another So year. that we this X% on

Brad Thomas

for Got it. me. clarification. that a one I appreciate And last just

acquisition Some guess here? think competitive some some their landscape very could I speak you're customer the you dialed have clearly costs. to of advertising driving I the of online of strong back results competitors and the Again, some spend.

Shelly Ibach

Sure.

Okay, things. so two

dialed may some dialed all, some First of up. and back have

that this very strong the referral and was would -- So similar media we in helps retention year what to third overall, behind very us leaned the we've seen investment get we competitive creative the acquisition drives that after and quarter the all and in addition said of part we repeat. of into spend our to as environment our customers

opportunity about response we're playing consumers us of we're we're in I've forth lot our and the So front the that have differentiated and to a as in products. confidence unique said, win and of initiatives to excited and the putting

Brad Thomas

Thank you much, Shelly. That's so great.

Operator

question Keith Jaffray. is Peter from Piper next with Our

is open. Your line

Peter Keith

Good additional just afternoon to the and for everyone store little dig thanks. wanted a color and today. Hi, prepared longer-term growth. bit remarks all thanks the into I

I like to projects or X% cited had that guess and store is to relos would be X% guys overall, that growth including You X% of remodels? growth X% net would be,

David Callen

growth around highlighted X% Peter. The X%. to been line. going straight terms evolve be preferences we're Hey, the and that a X shopping has will in last I and thinking that's It's of behaviors to the to X% that David, that includes years, consumer continue not assumption it about the X years next

It straight That line forward. the years and is was it in portfolio. be last going total won't six the over a

stores talking So that number incremental of portfolio about. total the the I'm net of

Peter Keith

Okay, helpful.

you'd implying that as this out target be be XXXX, to a are like point? looking looks would that and math, simple just at potential US just in XXX the stores around thinking doing stores about store So we

David Callen

I that quantify it's kind mean focused on think, US have, XXX by I it is plus didn't that to math, range market. didn't We of as I the -- XXX and we in do the but XXXX

Peter Keith

for Okay, Thanks same on me the theme. cannibalization rate. Last for around quantification the one the great.

up Has there maybe major points. little and recent in any now impacts density? increased cannibalization would of trend that I think XXX with by that think been Would you or store in years all DMAs. said looking you even rate that a sales steady about you're the forward you bit pick it in same-store change could basis hold that

David Callen

portfolio see entire that we average really we hasn't the than react cannibalization, some and that's the and in less across markets more, number strategy average differently That and as have a of different the years. do have meaningfully but some number is overall an execute changed

We same market local of hold the we continue cannibalization in will development that execute approach. a expect strategy as level likely to

Peter Keith

much, Okay. guys and good thank luck. I you very

David Callen

Thank you.

Operator

Our is next question with UBS. from Lasser Michael

open. is line Your

Michael Lasser

lot Good my for a taking question. Thanks evening.

in marketing was up and marketing about grew sales out maybe your you X% XX% I the if X%. were think X%, for take store quarter, Your we some new same-store up X%, it units about growth, and the mentioned

we is should like maybe that think units going So a sustainable the to of your algorithm rate your the twice run? marketing over grow long overall at

David Callen

expect to highlighted net different than sales and of marketing trends. We've that our we this year XX% historical not That's wildly be sales. our

level of of We that any XXXX time other for have not forward. yet provided frame or going our guidance detail

has into total that, drive and that initiatives business into where and the we're and to to our financial we'll is do growth that. lean say hitting to to would continue I is very the playing the continue highlighted, growth going performing Shelly benefits of P&L leaning all we're those well cylinders What company, and win on drivers we're performance

Shelly Ibach

about think to units. you about Michael, And asked how

model driving growth on business about from and basis. annual ARU and to and important metrics drive have our look these We For at it's it's our and think to an also important can units. both both been strategy,

closed we a when had over or promotions double-digit to year unit due fluctuations a growth and X% growth think example quarterly have where we from prior from will out is of lapping something we're I this unit the year prior good how C-series. the a quarter We

Michael Lasser

Shelly. And That's one more helpful. you, Thank for Shelly. you.

marketing There's overall demand have spending during just is we the to elections. year As Sleep shape probably for a next to both know, be election past, associated year? you with up an In going of distracting the election be going and essentially ad how beds year. seen expenses Number lot what

Shelly Ibach

factors. this an a unprecedented Well, number I of time from think is

that very to even So that in lean time and time quality proven tactics today delivering continue consumers the marketplace that smart an XXX around the messaging the we've into all the our the had and we'll an had with also we consume last than is sleep beds during that are this the we election. election. And consumer is for media is resonating know us how and these first different beds

distracted think I how really past media we're in with lot have for buying the right on in-house answers give dynamic reflecting make and messages moving probably adjustments various election we to search agile understanding part the marketplace this we've not is nimble, from so and why the is a get So going can for forward. real-time. digital of us and and consumption a learned the and be consumers And that in-house, in we that

David Callen

the that of color those as top-line we and And the need any the just Michael, thought year and different we we've terms for we incorporated to continue election to the and and plan Olympics provided well. we on next to reasons do through in year that, have for distractions given will out-market things we but that about

Michael Lasser

Shelly Great. and you. Thank Dave.

Operator

Seth from Wedbush. is question next with Our Basham

open. is line Your

Seth Basham

afternoon. could drivers think question ARU ARU help and helpful. us if Thanks as we would a the be lot, good about you the My just go-forward on around is dimensionalize that

rates You're the you'll ARU that you over nice attachment year. Do drive think the in have to last the increase, you price seen reported any able be to step-up you've a level year-to-date? lapping close

Shelly Ibach

on sale, average per ongoing is revenue distribution, next our have a Seth, per of overall. revenue average this we average year from do and the expect growth ARU will innovations, outcome units. proprietary we an beyond. and advancements that sleep an It's basis both mission-driven not our it's result how it's mattress it's of and our we go-to-market team, Again, not our also unit. process -- selling And exclusive

Seth Basham

to to drive innovations price And on be do able you like-for-like Understood. a expect these with new basis?

David Callen

that's one we historically mean to able years and X% driven needed Seth, to employ our -- been if needed for If to I that growth. ARU benefit lever about that's we've

that in any have highlighted to-date, indications lever our haven't pricing certainly that We quiver. we on but

Seth Basham

Understood. Thank you.

Operator

would questions. to to now no for back over like I showing turn call further the I'm Number Sleep remarks. closing

Thank big. and you XXXX early next We to with Sleep discussing our look year. fourth quarter today. you dream us forward for well performance joining

Operator

may lines at Thank you disconnect this for today's All participating conference. time. in

Sleep Number (SNBR) 15 Oct 192019 Q3 Earnings call transcript