Sleep Number Corporation · NASDAQ:SNBR
Sleep Number — Select Comfort — Investor Presentation (October 2011)
19 slides from Sleep Number's investor presentation, Oct 19, 2011
Slide 1: Sleep Number: Transforming a large, undifferentiated industry
October 2011 Sleep Number . . . Transforming a large, undifferentiated industry
Slide 2: Forward Looking Statements
Forward Looking Statements Statements used in this news release relating to future plans, events, financial results or performance are forward-looking statements subject to certain risks and uncertainties including, among others, such factors as current general and industry economic trends; consumer
Slide 3: Sleep Number... Transforming a large, undifferentiated industry
Sleep Number... Transforming a large, undifferentiated industry Large industry Unique business model Redefining comfort, ... “one-size-fits-all” _. . differentiated sleep and experience Sg [{—EEE Sleep Number .. . An early stage and highly profitable growth opportunity + Compelling top line growth .
Slide 4: Competing in the industry sweet spot
• 30 years consistent industry growth, reset in ’08/’09 . . . 6% CAGR • Premium (>$1,000) outpacing total industry growth • Specialty also outpacing with consumer trend toward better sleep • Significant growth opportunity in adjustable “air” segment • SCSS = 5% market share in $’s; lead markets 2-3X
Slide 5: Unique, vertically-integrated business model
Unique, vertically-integrated business model Differentiated end-to-end brand experience • 374 stores nationwide, supported by sleepnumber.com and call center • Knowledgeable, tenured Sleep Experts and “white glove” home delivery and service • Company-controlled customer touchpoints provide direct in
Slide 6: Proprietary products, real consumer benefits
Performance Series Innovation Series Proprietary products . . . real consumer benefits Individualized comfort at the touch of a button • 9 out of 10 couples prefer different mattress firmness • Adjustable comfort on both sides…only with Sleep Number Scientifically proven benefits • 3 rd party studie
Slide 7: Target Customer Sustainable Competitive Advantages
Target Customer Sustainable Competitive Advantages Product Marketing Distribution Expanding consumer base through integrated consumer-focused strategy
Slide 8: The product opportunity
The product opportunity • Value : Addressed price confusion in 2009; currently emphasizing accessibility (e.g., queen mattresses starting @ $699) • Core promise : Proprietary personalized comfort for individuals and couples – Sleep Number brand – “DualAir technology inside” – New “signature look” •
Slide 9: The marketing opportunity
Media efficiency performance Broad Reach - National Broad Reach - Local Digital Media spend by type Direct Response • Sleep Number : Recently consolidated brand in 2010 • Creative & Media : Evolving to reach a broader target customer, addressing proprietary benefits - including advantaged store expe
Slide 10: The distribution opportunity
New Store Economics Build out costs (000’s) ~$320 Inventory (000’s) $15 Payback 12-18 months First year sales target (000’s) >$1,500 The distribution opportunity • Company-controlled channel growth – Average sales/store leverage – Store expansion starts in 2012; 5-7% net expansion, >500 stores by 20
Slide 11: Today, every $100,000 increase in average sales per store
Today, every $100,000 increase in average sales per store • $38 million sales (+1 bed/store/week) • ~ $11 million operating profit • ~ $0.13 incremental EPS Store growth adds incremental upside potential
Slide 12: Integrated marketing and retail demonstrate path to increase market share
Integrated marketing and retail demonstrate path to increase market share
Slide 13: Early stage growth company revenue and profit
1 Q3-11 represents trailing 12 months Early stage growth company . . . revenue and profit
Slide 14: The profit margin opportunity
2009 1 2011 2 Potential by 2015 Drivers Gross margin 60% 63% # 2-3 pts • Supply chain leverage & efficiencies • Product innovation & pricing Selling & Marketing % 50% 43% $ 2-5 pts • Store base leverage • Media mix & efficiency G&A/other % 11% 9% $ 0-1 pts • Focus on core business Operating margin (
Slide 15: Generating cash while funding high growth
Generating cash while funding high growth Robust cash generation Rock solid balance sheet $100 (simmons Lins] [ete] Pi cash & MarketableSeaurities $ 12 $ 76 Other Current Assets: 42 41 46 Non-Current Assets: 64 53 56 Total Assets $118 $170 $238 (Current Liabilities 80 97 113 Non-Current Liabilities
Slide 16: Investment Summary: why now?
Investment Summary . . . why now? • SCSS emerged from 2008-2009 economic crisis a stronger company, prepared for an uncertain economy – Consolidated brand – Target customer expansion – Breakeven point lowered – Flexibility with short lead-time media and promotions – Balance sheet strength - $136 mil
Slide 17: Appendix
Appendix
Slide 18: Experienced Management Team
Name Age Title # yrs w/ SCSS Previous experience Bill McLaughlin 55 President & CEO 11 PepsiCo/Frito-Lay Shelly Ibach 52 COO 4 Macy’s, Target Corporation Kathy Roedel 51 EVP, Chief Technology & Services 6 GE Health Care Wendy Schoppert 44 EVP & CFO 6 U.S. Bank, America West, Northwest, AMR Mark Kimb
Slide 19: Unaided Brand Awareness
Unaided Brand Awareness Unaided Store Awareness Brand Store #1 Growth Opportunity . . . Awareness & Consideration
Select Comfort — Investor Presentation (October 2011) on 6ix