Attached files
| file | filename |
|---|---|
| 8-K - SELECT COMFORT 8-K 3-7-2011 - Sleep Number Corp | form8k.htm |
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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 confidence; the
effectiveness of our marketing and sales programs, including advertising and promotional efforts;
consumer acceptance of our products, product quality and brand image; our ability to continue to
improve our product line and product quality; warranty obligations; availability of attractive and cost-
effective consumer credit options; execution of our retail store distribution strategy; rising commodity
costs and other inflationary pressures; our dependence on significant suppliers, including several
sole-source suppliers and the vulnerability of suppliers to recessionary pressures; industry
competition; risks of pending and potentially unforeseen litigation; increasing government
regulations; the adequacy of our management information systems to meet the evolving needs of our
business and evolving regulatory standards; our ability to attract and retain key employees; and
uncertainties arising from global events, such as terrorist attacks or a pandemic outbreak, or the
threat of such events. Additional information concerning these and other risks and uncertainties is
contained in our filings with the SEC, including our Annual Report on Form 10-K, and other periodic
reports filed with the SEC. The company has no obligation to publicly update or revise any of the
forward-looking statements in this presentation.
are forward-looking statements subject to certain risks and uncertainties including, among others,
such factors as current general and industry economic trends; consumer confidence; the
effectiveness of our marketing and sales programs, including advertising and promotional efforts;
consumer acceptance of our products, product quality and brand image; our ability to continue to
improve our product line and product quality; warranty obligations; availability of attractive and cost-
effective consumer credit options; execution of our retail store distribution strategy; rising commodity
costs and other inflationary pressures; our dependence on significant suppliers, including several
sole-source suppliers and the vulnerability of suppliers to recessionary pressures; industry
competition; risks of pending and potentially unforeseen litigation; increasing government
regulations; the adequacy of our management information systems to meet the evolving needs of our
business and evolving regulatory standards; our ability to attract and retain key employees; and
uncertainties arising from global events, such as terrorist attacks or a pandemic outbreak, or the
threat of such events. Additional information concerning these and other risks and uncertainties is
contained in our filings with the SEC, including our Annual Report on Form 10-K, and other periodic
reports filed with the SEC. The company has no obligation to publicly update or revise any of the
forward-looking statements in this presentation.
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Investment Highlights
• Unique and Advantaged Business Model
– Adjustable firmness mattress - individual control of comfort
– Only vertically integrated mattress manufacturer and retailer
• Second largest retailer, fifth largest manufacturer
• Significant Growth Opportunity
– Industry sustains >5% annual growth, premium growing fastest
– 4% market share nationally, >10% in most developed markets
• Margin and Cash Generation Potential
– 8% operating margin, >12% potential
– Self funding cash flow, + $80 million in cash, no debt
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Differentiated Product that Satisfies Consumer Needs
• Push button control of sleep
surface
surface
- Provides for individualized comfort
based on present need
based on present need
- 9 out of 10 couples prefer different
firmness settings
firmness settings
• Scientifically proven benefits
- Third-party studies show improved
sleep quality and reduced back
pain
sleep quality and reduced back
pain
- Superior satisfaction ratings
(20+pts) vs. traditional mattresses
(20+pts) vs. traditional mattresses
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• Good, Better, Best product line
presentation
presentation
• 20+ years proven technology
• Competitive value - promoted pricing
starts at $599 (Queen mattress)
starts at $599 (Queen mattress)
Affordable for a Broad Range of Consumers
Sleep Number Bed Series & Models (Queen Sets)
Classic Series
c2
$999
c3
$1,299
c4
$1,599
Performance Series
p5
$1,999
p6
$2,499
p7
$2,799
Innovation Series
i8
$2,999
i10
$4,299
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Differentiated Distribution = Positive End to End Brand Experience
• 380 Stores nationwide
– Primarily mall based
– Supported by internet and call center
sales
sales
• Knowledgeable “Sleep Experts” = best
in class store experience
• National customer service network
and in-home delivery and set-up
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• Two plants - Columbia, SC and Salt Lake City, UT
- Sew covers and assemble pumps, outsource major components
- 10 Hubs and 111 spokes support national distribution
- Build to order, JIT inventory translates to minimal inventory (15
turns in manufacturing)
turns in manufacturing)
• Negative 30 day cash conversion cycle
- Cash receipt at time of order
- Payables cycle tied to time of order
Differentiated Supply Chain ® Flexible and Cash Advantaged
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Sleep Number Competes in the Industry Sweet Spot
30 years of consistent industry growth (6% CAGR). Macro trends toward better sleep.
1. Total Wholesale Sales based on ISPA 2009 Annual Report and ISPA Oct. 2010 Forecast
2. Premium and specialty percentages for 2010-2012 are company estimates
Wholesale Value of US Industry Shipments - ($Millions)
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2011 - Focused on Acceleration and Market Share Growth
• Awareness and Consideration
– Product is superior, but too few know about it or where to find it
• Market-by-Market Development
– National presence with relatively low market share, particularly in
under-stored/under-aware markets
under-stored/under-aware markets
• Customer Experience
– Goal to be the best end to end experience in the industry
• Leverage Potential
– Vertical integration provides leverage opportunity and cash
generation to reinvest
generation to reinvest
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Awareness Gaps - Both Product and Exclusive Distribution
Unaided Brand Awareness
Unaided Store Awareness
Brand
Store
Source: Company Survey
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Strategies to Boost Product and Store Consideration
• Accelerating Media Growth
– +15% in 2011
– Local and national approach
– Expanded digital investment
• Non-mall Pilot
– Testing “Billboard” affect of high
traffic locations
traffic locations
– 20 Non-mall stores by year end
• New Media Creative
– Highlights what is different
about the Sleep Number bed
about the Sleep Number bed
– Introduces store experience
and where to find a Sleep
Number bed
and where to find a Sleep
Number bed
Increasing media investment
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Market Performance Demonstrates Success …
And Opportunity
And Opportunity
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Piloting Acceleration of Local Markets - Proving
Cost Effective Formula
Cost Effective Formula
What
• Three year goals
– Double market share to >10%
– Achieve above average market profit rate
How
• Aggressive media investment
– Compete on share of voice
• Real estate
– Reposition existing stores to align to target
customer and eliminate trade area overlap
customer and eliminate trade area overlap
– Add stores
• Other tests
– Promotion, marketing, staffing and
compensation
compensation
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Solid Execution Has Returned Company to Growth
Solid Sales Growth (1 Year & 2 Year Comps)
(TTM$ in mm)
(TTM$ in mm)
*As adjusted for one time items in 2008/2009
Significant Returns in 2010: ROA 23%, ROE 78%
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Favorable Store Economics Provide Margin Upside
Net Sales Per Store
(TTM$ in 000’s)
(TTM$ in 000’s)
Planning 5% Store Growth Beginning in 2012
*Excluding national media and customer support
Average
Store
Store
$2MM
Store
Store
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Strong Cash Flow and Debt Free Balance Sheet
Self funding cash model - longer term opportunity to return cash to shareholders
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• Proven success with key strategic assets
– Unique product
– Strong brand
– Advantaged business model
– Growing industry
• Unique time and opportunity for the company
– Success of last 24 months has company positioned for growth
– Solid balance sheet - flexibility to invest
– Focused on key opportunity to accelerate sales and profits
Summary - Select Comfort Offers a Unique Opportunity
for Profitable Growth
for Profitable Growth
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