Sleep Number Furloughs Nearly 40 Percent of Staff
Minneapolis-based Sleep Number is furloughing nearly 40 percent of the company’s employees, and another 30 percent are working reduced hours in response to the ongoing financial fallout from Covid-19. Sleep Number President and CEO Shelly Ibach will receive no cash compensation for the rest of the year; the board and leadership team will have reduced cash compensation in exchange for restricted stock units.
The company disclosed an extensive list of measures taken to address the current business environment in a Wednesday announcement. Most of the company’s stores are closed due to various government mandates.
“The COVID-19 pandemic is a human and economic crisis unlike anything our country and world have ever experienced,” said Ibach in a statement. “We have witnessed how lives and businesses have radically changed in a few weeks’ time.”
Per the company’s statement: “Starting in mid-March, the company took significant measures to preserve cash.” Those moves included:
- Discontinuing repurchases of company stock
- Cutting capital expenditures
- Negotiating rent abatements with landlords for stores temporarily closed
- Drawing down the remaining $262 million on a $450 million line of credit
- Temporarily suspending 401(K) matches other benefit programs
The most important four-letter word for businesses everywhere right now? Cash.
Sleep Number’s statement made that clear. “The company remains intently focused on liquidity and balance sheet strength … Sleep Number has taken actions that are expected to result in more than $250 million of cash saving. Discontinuing share repurchases and reduced capital expenditures account for approximately 40 percent of the targeted cash savings. The remainder comes from actions such as reduced sales and marketing expenses, a temporary suspension of virtually all discretionary projects across the company and the workforce actions noted above.”
For 2019, Sleep Number reported revenue of $1.7 billion – up 11 percent from 2018 – and a net profit of $81.8 million. At the end of 2019 the company had 611 stores across the U.S., including 16 locations in Minnesota.
Per the company’s latest proxy statement, Ibach’s total compensation for 2019 was $6.4 million. Her base salary for the year was just under $1 million.
Twin Cities Business profiled Ibach in its current April issue.