SNBR - Sleep Number sinks after issuing soft guidance due to faltering demand chip supply constraints

Sleep Number Corporation ( NASDAQ: SNBR ) slid in postmarket hours after the retailer's guidance rattled investors.

The mattress manufacturer reported revenue fell 16% during the quarter with consumer sentiment at historically low levels.

"We continue to navigate a very difficult environment, including persistent electronic chip inventory constraints and softer-than-expected consumer demand. We are aggressively pursuing actions to improve supply, margin, and demand," noted CEO Shelly Ibach.

Gross margin plunged to 56.1% of sales from 61.0% a year ago, reflecting expediting costs and operating inefficiencies resulting from the uneven flow of electronics supply. Cost of sales were 43.9% vs. 39.0% a year ago.

SNBR said return on invested capital was 15.8% for the trailing twelve-month period.

Looking ahead, Sleep Number ( SNBR ) sees full-year EPS of $1.50 to $2.00 vs $3.00 to $4.00 prior and $3.29 consensus. The lower EPS expectation was driven by insufficient and uneven flow of chip supply and softer demand. The outlook assumes flat sales for the fourth quarter. The company anticipates full-year capital expenditures of approximately $70M.

Shares of Sleep Number ( SNBR ) fell 12.52% following the mixed Q2 earnings report.

Sleep Number ( SNBR ) trades below its 50-day, 100-day, and 200-day moving averages.

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