In recent transactions, Stadium Capital Partners (WA:CPAP) L.P., a significant shareholder of Sleep Number Corp (NASDAQ:SNBR), increased its stake in the company by acquiring additional shares. The purchases, made between November 14 and November 18, amounted to a total of $556,389. The shares were acquired at prices ranging from $12.1234 to $13.7296 per share.
The acquisitions were executed in multiple transactions, with a total of 41,140 shares purchased. Following these transactions, Stadium Capital Partners now holds a total of 2,215,000 shares in Sleep Number. The transactions were filed jointly by Stadium Capital Management, LLC, and related entities, which collectively own more than 10% of Sleep Number's outstanding shares.
Stadium Capital Management, LLC, and its affiliates, including Alexander M. Seaver, who serves as the manager, have been actively adjusting their holdings in the company, as reflected in the recent SEC filings. The purchases indicate continued interest and confidence in Sleep Number's performance by the investment group.
In other recent news, Sleep Number Corporation reported a 10% decline in third quarter net sales, amounting to $427 million. Despite the dip in sales, the company's adjusted EBITDA remained steady at $28 million. Additionally, Sleep Number CEO Shelly Ibach announced her upcoming retirement, planned to take place by the 2025 annual shareholders meeting.
In the face of these developments, the company saw an improvement in gross margin to 60.8% and a decrease in operating expenses, aiming for a full-year reduction target of around $75 million. The corporation also introduced the ClimateCool smart bed to its product lineup, emphasizing its commitment to innovation amidst challenging market conditions.
Revising its full-year adjusted EBITDA guidance downward, Sleep Number is now projecting figures between $115 million and $125 million. The corporation anticipates a 10% decline in full-year net sales and is focusing on financial resilience and improving cash flow. As part of its strategy, Sleep Number plans to meet tighter debt covenants through cost structure changes and gross margin improvements.
InvestingPro Insights
The recent share purchases by Stadium Capital Partners L.P. come at a time when Sleep Number Corp (NASDAQ:SNBR) is facing some challenges, as revealed by InvestingPro data. The company's stock has taken a significant hit, with a 20.5% decline over the past month and an 18.03% drop in just the last week. This recent downturn might explain the timing of Stadium Capital's increased investment, possibly viewing it as a buying opportunity.
Despite the recent stock performance, Sleep Number maintains impressive gross profit margins, which stood at 58.8% for the last twelve months as of Q3 2023. This InvestingPro Tip suggests that the company still has strong pricing power in its market segment, which could be attractive to investors like Stadium Capital.
However, it's worth noting that analysts anticipate a sales decline in the current year, with revenue growth showing a negative 11.28% for the last twelve months. This projection, combined with the fact that the company is not expected to be profitable this year, may explain the recent stock price volatility.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Sleep Number Corp, providing a deeper understanding of the company's financial health and market position.
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