Stadium Capital Management LLC, along with its affiliates, has reported a series of stock purchases in Sleep Number Corp (NASDAQ:SNBR), totaling approximately $1.1 million. The acquisitions, disclosed in a recent filing, took place over three consecutive days from November 11 to November 13.
The transactions involved the purchase of 77,185 shares of Sleep Number's common stock. The shares were acquired at a weighted average price range between $13.8625 and $14.9046 per share. Following these transactions, Stadium Capital Management and its affiliates now hold a total of 2,171,860 shares indirectly through Stadium Capital Partners (WA:CPAP), L.P.
These purchases highlight Stadium Capital Management's continued interest in Sleep Number, as the firm remains a significant stakeholder in the company. The shares are held indirectly, reflecting the complex structure of ownership among the reporting entities, including Stadium Capital Management GP, L.P., Stadium Special Opportunity (SO:FTCE11B) I, L.P., and others, with Alexander M. Seaver serving as a key manager.
In other recent news, Sleep Number Corporation reported a 10% year-over-year decrease in net sales for the third quarter of 2024, amounting to $427 million. Despite this, the company maintained its adjusted EBITDA at a steady $28 million. Sleep Number's CEO, Shelly Ibach, also announced her impending retirement, scheduled to occur by the 2025 annual shareholders meeting.
The company has seen an improvement in its gross margin to 60.8% and has managed to reduce operating expenses. A new addition to their product lineup, the ClimateCool smart bed, was introduced amidst these developments. The company's full-year adjusted EBITDA guidance was revised downward, with a new range of $115 million to $125 million.
These recent developments indicate Sleep Number's emphasis on maintaining financial resilience and generating cash flow in a challenging retail environment. The company expects full-year net sales to decline around 10% and is focusing on improving cash flow. Despite persistent demand challenges, Sleep Number plans to maintain compliance with tightened debt covenants through cost structure changes and gross margin improvements.
InvestingPro Insights
Stadium Capital Management's recent $1.1 million investment in Sleep Number Corp (NASDAQ:SNBR) comes at a time when the company faces several challenges, as revealed by InvestingPro data. Sleep Number's revenue growth has declined by 11.28% over the last twelve months, with analysts anticipating further sales decline in the current year. This trend aligns with the company's recent quarterly revenue drop of 9.74%.
Despite these headwinds, Sleep Number maintains impressive gross profit margins of 58.8%, as highlighted by an InvestingPro Tip. This strength in margins could be a factor in Stadium Capital's decision to increase its stake, potentially seeing value in the company's core business model.
The stock's recent performance has been volatile, with InvestingPro data showing a 7.56% decline over the past week, yet a 37.51% gain over the last year. This volatility is consistent with an InvestingPro Tip noting that the stock generally trades with high price volatility, which may present both risks and opportunities for investors like Stadium Capital.
It's worth noting that Sleep Number operates with a significant debt burden, according to another InvestingPro Tip. This financial structure could be influencing the company's performance and investor sentiment.
For readers interested in a deeper analysis, InvestingPro offers 11 additional tips for Sleep Number Corp, providing a more comprehensive view of the company's financial health and market position.
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