Sleep Number Corporation · NASDAQ:SNBR
Sleep Number — Select Comfort — Investor Presentation (January 2005)
16 slides from Sleep Number's investor presentation, Jan 13, 2005
Slide 1: Select Comfort: Creator of the Sleep Number Bed
select @comfort. CREATOR OF THE SLEEP NUMBER BED
Slide 2: Forward Looking Statements
Forward Looking Statements Cautionary statements Certain risks on forward looking information 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
Slide 3: Select Comfort: Sleep and Bed Experts
Select Comfort: Sleep and Bed Experts NASDAQ: SCSS Consumer Product Company Vertically integrated Just in time supply chain #1 U.S. retailer of beds Revolutionizing an $8.0 billion industry - Share expansion: 5% National 20% Regional Self-funding growth 29% 3 year sales CAGR $25 million+ annual free
Slide 4: Competitive Advantage
Competitive Advantage Adjustable firmness, 90% share Better value Queens starting at $800, average $1,600 Durability, 20 year life Proprietary brand Clinically proven Superior customer satisfaction: 92% of owners recommend Controlled distribution Make to order, negative working capital Margin expans
Slide 5: Proven Performance: Early Stage Growth
Proven Performance: Early Stage Growth 2001 2002 2003 2004 262 336 458 558 0 0.28 0.33 0.24 2001 2002 2003 2004E EPS -0.41 0.37 0.69 0.8 Operating Margin -0.041 0.063 0.093 Revenue 1 1 Pro forma to reflect tax expense Profit
Slide 6: Sources of Sustained Growth
Sources of Sustained Growth '01 '02 '03 'Q3 '04 0.1 0.24 0.49 0.6 0.626 0.817 1.101 1.223 '01 '02 '03 '04 328 322 344 370 594 771 937 958 North 45.9 46.9 45 43.9 '01 '02 '03 '04 9.7 15.6 19.2 32.6 '01 '02 '03 'YTD Q3 '04 1298 1461 1686 1839 Established Stores Growing Growing Store Base with Greater
Slide 7: Positive Consumer Trend, Large Growing Market
New health component Premium segment growing Active, affluent, aging Personalization, trading up Select Comfort National Market Share ($): 5% Positive Consumer Trend, Large Growing Market Nutrition Exercise Sleep '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04E '05E East 2.38 2.56 2.76 3.02
Slide 8: Strategies: Building Sustainable Advantage
Strategies: Building Sustainable Advantage Awareness Distribution Innovation Cost Leverage People/Culture
Slide 9: Awareness: Building a Brand
Awareness: Building a Brand 2001 2002 2003 2004 Aided 4 9 21 44 Unaided 1 2 4 6 2001 2002 2003 2004 East 29 39 60 79 Media Investment Awareness Grows Sleep Number Dual Adjustability Location Find Your Sleep Number
Slide 10: Video in Progress
10 VIDEO IN PROGRESS
Slide 11: Distribution: Building Accessibility
Distribution: Building Accessibility * Adjusted for 53 weeks in 2003 2004 Growth % 1 YR* 2 YR Retail 78% 23% 69% Direct 11% 10% 34% E-Com 5% 34% 80% QVC & Retail Partners 6% 72% 209% New --- --- --- Future Same store > 10%+ 7%-10% new store Media leverage Virtual store, growing consumer acceptance A
Slide 12: Distribution: New Store Economics
Distribution: New Store Economics 2001 2002 2003 Q3 2004 0.098 0.241 0.49 0.6 New Stores 1,000 to 1,400 square feet $180,000 initial investment $800,000+ first year sales Year 1 operating cash flow positive 18 - 24 month payback 10% 24% 49% Operating Margins +19% $1 Million Stores 60%
Slide 13: Innovation: Building Product Advantage
Innovation: Building Product Advantage 2002 Line upgrade Home Delivery 2003 Adjustable Foundation 2004 Line upgrade New model (9000) 2005 Sofa launch 4000 model reintroduction
Slide 14: Building Cost Advantage
Building Cost Advantage '02 '03 '04 Q3 0.625 0.627 0.611 Opportunity Plant leverage, 65% utilized Home delivery start-up Productivity gains in existing store base Investing in new markets Future leverage opportunity Systems Scale '02 '03 '04 Q3 0.268 0.245 0.232 '02 '03 '04 Q3 0.118 0.13 0.141 '02 '
Slide 15: Long-Term Targets: $1 Billion by 2007
Long-Term Targets: $1 Billion by 2007 3-5 Year Opportunity Revenue Growth 15% - 25% Gross Margin 60% - 62% Operating Margin 12% - 15% EPS Growth 20% - 30%
Slide 16: Mission: Improving Lives; Vision: Leader in Sleep
Mission: Improving Lives Vision: Leader in Sleep
Select Comfort — Investor Presentation (January 2005) on 6ix