Sleep Number Corporation Reports 20% Decline in Q2 2025 Net Sales

Sleep Number Corporation reported a significant decline in financial performance for the second quarter of 2025, with net sales of $327.9 million, a decrease of 20% from $408.4 million in the same period last year. The decline was attributed to lower sales volume and a reduced store count, with comparable retail sales down 19%. The company also experienced a net loss of $25 million, or $1.09 per diluted share, compared to a net loss of $5 million, or $0.22 per diluted share, in the prior year. For the first half of 2025, net sales totaled $721.2 million, down 18% from $878.9 million in the same period of 2024.

In terms of operational metrics, Sleep Number's average sales per store decreased to $2.4 million from $2.7 million year-over-year, reflecting the impact of the reduced store count and overall market conditions. The company closed eight stores during the quarter, bringing the total to 630. Despite the challenges, the average revenue per smart bed unit increased slightly to $5,880, up from $5,802 in the previous year. The gross profit margin remained stable at 59.1%, indicating effective cost management despite the drop in sales.

Strategically, Sleep Number has been undergoing a restructuring initiative aimed at reducing operating expenses and improving margins. The company incurred $8.3 million in restructuring costs during the second quarter, compared to $1.8 million in the same period last year. This initiative is expected to continue, with an additional $8 million in restructuring costs anticipated through the remainder of 2025. The company has also made a payment of $3.3 million to secure contractual rights from a strategic product-development partner, which is reflected in its prepaid expenses.

Looking ahead, Sleep Number's management remains cautious about the economic environment, which has been characterized by high interest rates and consumer spending scrutiny. The company is focused on enhancing its product offerings and improving customer engagement through its Smart Sleepers program, which has benefited nearly 16 million people. As of June 28, 2025, Sleep Number had $564 million in borrowings under its revolving credit facility, with a leverage ratio of 4.6x, compliant with its financial covenants. The company is evaluating the impact of recent tax legislation on its financial statements and continues to prioritize cash flow management to support its operations and strategic initiatives.