Sleep Number Corporation
Sleep Number Corporation (“Sleep Number” or the “Company”) is a mattress manufacturer best known for its Sleep Number 360® smart beds which employ Sleep Number’s SleepIQ® technology to automatically adjust the mattress’s firmness, comfort, and support as one sleeps. In an effort to differentiate Sleep Number from its competitors and to justify Sleep Number’s high stock price, Sleep Number repeatedly touted its “vertical integration” strategy as a key competitive advantage that enabled Sleep Number to manage its inventory and meet customer demand on a timely and profitable basis.
On April 21, 2021, Sleep Number revealed that Sleep Number had missed consensus sales estimates for the first fiscal quarter ended March 31, 2021 as a result of significant supply chain disruptions. Specifically, Sleep Number disclosed that Sleep Number had “more than $50 million of deliveries (two weeks) shifted out of the quarter due to temporary foam supply constraints,” representing nearly 9% of Sleep Number’s entire sales for the quarter. On this news, the price of Sleep Number stock fell by nearly 12%.
Then, on July 20, 2021, Sleep Number revealed that Sleep Number had missed consensus estimates on the top and bottom line for the second fiscal quarter ended June 30, 2021 and again blamed the disappointing results in significant part on “near-term supply constraints” and component shortages. On this news, the price of Sleep Number stock fell by nearly 13%, further damaging investors.
A securities class action has been filed against Sleep Number on behalf of shareholders that purchased Sleep Number shares between February 18, 2021 and July 20, 2021. This case has been filed in the U.S. District Court for the District of Minnesota.
The Complaint alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) Sleep Number had suffered a severe disruption in its supply chain for foam as a result of Winter Storm Uri; (ii) Sleep Number did not have in place the supply chain flexibility, redundancies, and fail-safes, as had been represented to investors, sufficient to offset the foam supply disruption caused by Winter Storm Uri; (iii) because foam was a necessary component for Sleep Number’s production of its primary mattress products, Sleep Number’s ability to timely fulfill customer orders had been materially impaired; (iv) thus, Sleep Number was unable to meet surging customer demand for Sleep Number’s products; and (v) that, as a result, Sleep Number had been forced to delay mattress shipments to end consumers, pushing millions of dollars’ worth of sales into subsequent quarters and negatively impacting Sleep Number’s financial results.
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