Sleep Number Corporation · NASDAQ:SNBR
Sleep Number — Select Comfort — 12th Annual ICR XChange (January 2010)
17 slides from Sleep Number's conference presentation, Jan 13, 2010
Slide 1: Select Comfort 12th Annual ICR XChange
Exhibit 99.1 Select Comfort 12th Annual ICR XChange January 13, 2010
Slide 2: Forward Looking Statements
Forward Looking Statements Statements used in this presentation that relate to future plans, events, financial results or performance are forward-looking statements that are subject to certain risks and uncertainties including, among others, such factors as general and industry economic trends; unce
Slide 3: Investment Highlights
Investment Highlights Second largest U.S. mattress retailer and specialty bedding company, with clear competitive advantages. 5% market share (revenue) with 10%-15% share in lead markets Restructuring of business substantially complete - significant improvement in cash flow and profitability achieve
Slide 4: Differentiated Product that Satisfies Consumer Needs
Differentiated Product that Satisfies Consumer Needs Clinically proven product, affordable for a broad range of consumers – Ability to customize to sleep partners’ individual sleep numbers – Dynamic system can be adjusted for life changes (pregnancy, weight change, etc.) Proven benefits Innerspring
Slide 5: Strong "Sleep Number" Brand Equity…Young Brand With Opportunity to Grow
Strong “Sleep Number” Brand Equity…Young Brand With Opportunity to Grow Marketing has historically driven awareness and consideration of new technology Sleep Number → individualized comfort Couples no longer need to compromise Multi-channel call to action: 800#, web, retail stores Sleep Number Brand
Slide 6: Advantaged Business Model
Advantaged Business Model Cash and profit leverage, provides direct customer feedback Cash-Advantaged Minimal inventory Design requirements Customer contact at sale, delivery, and Negative working service capital model New store payback < 2 years Selling Significant leverage Full control of the pote
Slide 7: Consistent Industry Growth until 2008
Consistent Industry Growth until 2008 The mattress industry has shown consistent long-term revenue growth, particularly during post-recessionary periods Recession Recession Recession Recession YoY Growth 5% (2%) 16% 7% 6% 7% 9% 8% 2% 0% 3% 8% 8% 9% 5% 5% 8% 11% 9% 5% 0% 4% 8% 12% 12% 5% 1% (9%) (13%
Slide 8: Cost Restructuring Substantially Complete Following Period of Industry Contraction
Cost Restructuring Substantially Complete Following Period of Industry Contraction…Positioned for Margin Expansion $30 million profit improvement on 14% revenue decline, breakeven lowered 30% Summary P&L (Q3 YTD) $130 million of aggregate annualized cost reductions realized from initiatives executed
Slide 9: Solid Balance Sheet to Support Operations and Future Growth
Solid Balance Sheet to Support Operations and Future Growth Summary Balance Sheet *Includes net proceeds from Sterling Partners investment and net proceeds from a $20 million equity raise 9
Slide 10: Business Model Supports Strong Margin and Cash Expansion on Modest Sales Growth
Business Model Supports Strong Margin and Cash Expansion on Modest Sales Growth Cost Structure aligned with no significant need to add costs with growth — Leverage stores as showrooms. Stores draw from larger trade area, sales/store increases with reduced store count — More efficient media to drive
Slide 11: Macro Headwinds Led to Lower Mattress Demand - Recent Months Indicate Return to Industry Growth
Macro Headwinds Led to Lower Mattress Demand - Recent Months Indicate Return to Industry Growth Mattress industry started declining in Q4 2007 - rate of decline has improved in each sequential quarter of 2009 Housing Decline Banking Crisis 2007 2008 2009 Source: ISPA sales trends based on reporting
Slide 12: Select Comfort Delivered Profitable Growth Coming Out of The Last Recession
Select Comfort Delivered Profitable Growth Coming Out of The Last Recession From 2002 to 2006, Select Comfort achieved significant organic growth and earnings leverage Net Sales Earnings Per Share/Free Cash Flow* ($ in mm) (1) (1) Operating (1%) 6.3% 9.3% 8.9% 9.9% 9.0% (1) Adjusted for deferred tax
Slide 13: Product and Marketing Strategies Refined to Manage Economic Downturn
Product and Marketing Strategies Refined to Manage Economic Downturn and Take Advantage of Economic Recovery and Restore Growth Value messaging – Entry level queen sets below $1,000 – Promotion structure with entry level draw plus incentive to trade-up – Renamed product line positioned around key pr
Slide 14: 2010 Initiatives
2010 Initiatives Improve Profitability, Position for Growth and Economic Recovery Increase operating margin while assuming continued macro challenges - - opportunity to accelerate as recovery materializes – Zero infrastructure growth, savings from annualization of cost takeouts – Same store growth o
Slide 15: Diverse, Experienced Management Team - Demonstrated Turnaround and Growth Track Record
Diverse, Experienced Management Team - Demonstrated Turnaround and Growth Track Record Name Position Previous Experience # of Years with Select Comfort Bill McLaughlin President & CEO PepsiCo/Frito Lay, 9 Pillsbury Jim Raabe CFO ValueRx, KPMG 12 Shelly Ibach Sales Macy’s/Marshall Fields 2 Tim Werner
Slide 16: Summary
Summary Proven success with key strategic assets – Unique product – Strong brand – Advantaged business model – Growing industry Unique time and opportunity for the company – Restructured to essential core – Raised capital – Now able to build on 2009 success and refocus on accelerating profit growth
Slide 17: Select Comfort - Creator of the Sleep Number Bed
select @ comfort CREATOR OF THE SLEEP NUMBER BED select b—4 comfort. CREATOR OF THE SLEEP NUMBER’ BED 17
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