Mr. Stewart Schaefer reports

SLEEP COUNTRY REPORTS Q4 REVENUE GROWTH OF 5.2% AND ANNUAL REVENUE GROWTH OF 0.7%

Sleep Country Canada Holdings Inc. has released its financial results for its fourth quarter and year ended Dec. 31, 2023.

Fourth quarter financial highlights:

• Revenues increased by $12.6-million or 5.2 per cent to $255.6-million in Q4 2023 from $243.0-million in Q4 2022.
• Same-store sales decreased by 3.2 per cent in Q4 2023 from Q4 2022.
• Revenues attributed to e-commerce increased to 26.4 per cent in Q4 2023 from 21.1 per cent in Q4 2022.
• Gross profit increased by $5.2-million or 5.7 per cent to $96.3-million in Q4 2023 from $91.1-million in Q4 2022.
• Gross profit margin increased to 37.7 per cent in Q4 2023 from 37.5 per cent in Q4 2022.
• Operating earnings before interest, taxes, depreciation and amortization decreased by $1.6-million or 3.1 per cent to $51.4-million in Q4 2023 from $53.0-million in Q4 2022.
• Operating EBITDA margin decreased to 20.1 per cent in Q4 2023 from 21.8 per cent in Q4 2022.
• Net income attributable to the company decreased by $18.0-million or 44.5 per cent to $22.5-million in Q4 2023 from $40.5-million in Q4 2022.
• Adjusted net income attributable to the company decreased by $4.6-million or 19.1 per cent to $19.3-million in Q4 2023 from $23.9-million in Q4 2022.
• Diluted earnings per share decreased by 48 cents or 42.5 per cent to 65 cents in Q4 2023 from $1.13 in Q4 2022.
• Diluted adjusted earnings per share decreased by 11 cents or 16.4 per cent to 56 cents in Q4 2023 from 67 cents in Q4 2022.
• The company purchased for cancellation 1,132,199 common shares (Q4 2022: 976,532 common shares) in Q4 2023 for total consideration of $26.2-million (Q4 2022: $22.0-million) against the company's normal course issuer bid.
• Subsequent to quarter-end, on Feb. 5, 2024, the board declared a dividend of 23.7 cents per common share that was paid on Feb. 29, 2024, to holders of the common shares of record as at the close of business on Feb. 21, 2024.

Annual financial highlights:

• Revenues increased by $6.3-million or 0.7 per cent to $935.0-million in 2023 from $928.7-million in 2022.
• Revenues attributed to e-commerce increased to 22.7 per cent in 2023 from 19.6 per cent in 2022.
• Gross profit margin increased to 37.2 per cent in 2023 from 36.7 per cent in 2022.
• Operating EBITDA margin decreased to 21.0 per cent in 2023 from 23.5 per cent in 2022.
• Net income attributable to the company decreased by $39.3-million or 35.6 per cent to $71.2-million in 2023 from $110.5-million in 2022.
• Adjusted net income attributable to the company decreased by $28.8-million or 27.9 per cent to $74.1-million in 2023 from $102.9-million in 2022.
• Diluted EPS decreased by 97 cents or 32.2 per cent to $2.04 in 2023 from $3.01 in 2022.
• Diluted adjusted EPS decreased by 69 cents or 24.6 per cent to $2.12 in 2023 from $2.81 in 2022.
• The company purchased for cancellation 1,596,910 common shares (2022: 2,339,409 common shares) in 2023 for total consideration of $37.3-million (2022: $57.7-million) against its NCIB.

Fourth quarter business highlights:

• Opened one new Sleep Country store in Calgary, Alta., and one new Dormez-vous store in Victoriaville, Que.;
• Opened first ever bricks and mortar store for Endy in Sherway Gardens, Toronto, Ont.;
• Opened first store within a store for Sleep Country and Silk & Snow in Ottawa, Ont.;
• Launched first ultrapremium retail concept store, the rest, in Yorkdale Shopping Centre, Toronto, Ont.;
• Subsequent to quarter-end, opened two new Sleep Country stores in Oshawa and Etobicoke, Ont., and one new Dormez-vous store in Quebec City, Que.

President and chief executive officer commentary

"I am very proud to report a solid finish to our fiscal year, setting a new watermark record in revenues in our nearly 30-year-old company. Our annual revenues grew by 0.7 per cent while our Q4 2023 revenues grew by 5.2 per cent from Q4 2022. Despite ongoing industry challenges that have seen double-digit unit declines in mattress purchases across North America, we delivered strong results. As we execute our multiyear plan of continuing to grow our house of brands and focus on driving efficiencies through our resilient omnichannel business model, we remain razor-focused on innovative ways to grow our market share," said Stewart Schaefer, president and chief executive officer of Sleep Country.

"Our omnichannel approach continues to resonate well with our customers, as successfully demonstrated with the opening of three new brick and mortar concepts, Endy, Silk & Snow and the rest, our first luxury retail brand. With all three brands adding and expanding our merchandising hierarchy, while also broadening our customer segmentation, it further reinforces our position as Canada's leading and most trusted specialty sleep retailer," said Mr. Schaefer.

"As we step into fiscal 2024, we remain focused on three key priorities: growth through innovation, our customer experience and our operational excellence. We will continue to invest in expanding our brands with cutting-edge sleep technologies and products, we will further develop personalized and exceptional customer experiences, and we will continue to streamline our operations to maximize synergies across the company while preserving the unique identities of each of our brands. I am confident that by staying true to these priorities, we will continue to create value for all stakeholders and help Canadians achieve their best sleep every night," concluded Mr. Schaefer.

Conference call

Mr. Schaefer and chief financial officer Craig De Pratto will host a conference call for analysts and investors on March 7, 2024, 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 March 14, 2024, at 11:59 p.m. ET. To listen to the replay, please dial 416-764-8677 or 888-390-0541 and use passcode 713010 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 retail banners Sleep Country, Dormez-vous, Endy, Silk & Snow, Hush and, most recently acquired, Casper Canada. The company has omnichannel and e-commerce operations, including 304 corporate-owned stores and 19 warehouses, across Canada. Recognized as one of Canada's most admired corporate cultures 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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