Mr. Stewart Schaefer reports

SLEEP COUNTRY REPORTS SECOND QUARTER RESULTS, ACHIEVING THE COMPANY'S SECOND STRONGEST Q2 REVENUES IN THE COMPANY'S HISTORY

Sleep Country Canada Holdings Inc. has released its financial results for the second quarter ended June 30, 2023.

Second quarter financial highlights:

• Revenues decreased by $10.4-million or 4.6 per cent to $217.2-million in Q2 2023 from $227.6-million in Q2 2022.
• Same-store sales decreased by 10.9 per cent in Q2 2023 from Q2 2022.
• Revenues attributed to e-commerce increased to 21.3 per cent in Q2 2023 from 18.1 per cent in Q2 2022.
• Gross profit decreased by $2.7-million to $79.0-million in Q2 2023 from $81.7-million in Q2 2022.
• Gross profit margin increased to 36.4 per cent in Q2 2023 from 35.9 per cent in Q2 2022.
• Operating EBITDA (earnings before interest, taxes, depreciation and amortization) decreased by $9.0-million or 17.0 per cent to $44.2-million in Q2 2023 from $53.2-million in Q2 2022.
• Operating EBITDA margin decreased to 20.4 per cent in Q2 2023 from 23.4 per cent in Q2 2022.
• Net income attributable to the company decreased by $10.0-million or 44.0 per cent to $12.7-million in Q2 2023 from $22.7-million in Q2 2022.
• Adjusted net income attributable to the company decreased by $10.9-million or 42.5 per cent to $14.8-million in Q2 2023 from $25.7-million in Q2 2022.
• Diluted earnings per share decreased by 25 cents or 41.0 per cent to 36 cents in Q2 2023 from 61 cents in Q2 2022.
• Diluted adjusted earnings per share decreased by 27 cents or 39.1 per cent to 42 cents in Q2 2023 from 69 cents in Q2 2022.
• Subsequent to quarter-end, on Aug. 10, 2023, the company's board of directors declared a dividend of 23.7 cents per share payable on Aug. 31, 2023, to shareholders of record at the close of business on Aug. 25, 2023. The dividend was designated as an eligible dividend for Canadian tax purposes.

Second quarter business highlights:

• The company acquired the Canadian operations of Casper Sleep Inc. including six retail stores and its e-commerce platform, paying $27.5-million ($20.6-million (U.S.)) in cash at close;
• Expanded the company's partnership with Walmart Canada, opening an additional two new Sleep Country/Dormez-vous express stores in Walmart Supercentres bringing the total number of express stores to 19;
• Endy was certified by Great Place to Work Canada for the fifth year in a row;
• Hush won Retail Council of Canada's award for the best pop-up experience for its Yorkdale Shopping Centre store.

President and chief executive officer commentary

"We continued to see softness in the second quarter following a slowdown in consumer spending on large discretionary goods that began in the second half of 2022. While Canadians adapt to an environment of higher interest rates and inflation, we feel consumer spending is still healthy. While our customers have deferred their large ticketed purchases towards travel and leisure, we are cautiously optimistic that this shift is temporary," said Stewart Schaefer, president and chief executive officer of Sleep Country.

"Our digital platforms continue to experience softness as customers come back into our retail stores postpandemic. The shift we have experienced between our digital platforms and our bricks and mortar over the past few years only reaffirms our long-term strategic plans to build a seamless omnichannel experience and allow our customers to shop how they want, when they want and where they want.

"We are focused on transforming our business by investing in the growth of all our brands. This quarter, we put in motion plans to open our very first Endy and Silk & Snow retail locations. With these store openings planned for [fourth quarter], we are excited to bring these digital brands into a tactile environment.

"At the same time, we are focused on managing costs and driving efficiencies throughout our organization. We see great opportunities to leverage our infrastructure and scale as a consolidated company across the three acquisitions that we have made in the last two years. When our customers are ready to shop, we will be well positioned to service them in a seamless and frictionless way.

"With a strong balance sheet, we continue to explore opportunities to maximize shareholder value and grow our ecosystem as the country's leading sleep retailer. At the start of the quarter, we acquired Casper Canada, and we are well under way on putting plans and changes in place to maximize this investment for years to come.

"We are proud to be releasing our second [environmental, social and governance] report this month. This report outlines the progress we've made on our commitment to being a purpose-led, sustainable business focused on helping people enhance their overall health and well-being, building a best-in-class company culture, supporting positive social change and protecting our planet," concluded Mr. Schaefer.

Conference call

Sleep Country's Mr. Schaefer and chief financial officer Craig De Pratto will host a conference call for analysts and investors on Aug. 11 at 8 a.m. ET. The dial-in numbers for the conference call are 416-764-8659 or 888-664-6392. This conference call will be recorded and available for replay until Aug. 18, 2023, at 11:59 p.m. ET. To listen to the replay, please dial 416-764-8677 or 888-390-0541 and use passcode 917921 followed by the number sign.

About Sleep Country Canada Holdings Inc.

Sleep Country is Canada's leading specialty sleep retailer with a purpose to transform lives by awakening Canadians to the power of sleep. Sleep Country operates under the retailer banners Sleep Country Canada, Dormez-vous, Endy, Silk & Snow, Hush and most recently acquired Casper Canada. The company has omnichannel and e-commerce operations, including 295 corporate-owned stores and 19 warehouses across Canada. Recognized as one of Canada's most admired corporate cultures in 2022 by Waterstone Human Capital, Sleep Country is committed to building a company culture of inclusion and diversity where differences are embraced and valued. The company actively invests in its sleep ecosystem, innovative products, world-class customer experience, communities and its people.

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