Sleep Number Corporation reported a challenging fiscal year 2025, concluding on January 3, 2026, with a net loss of $132 million, a significant increase from a loss of $20 million in the previous year. The company's total revenue fell by 16% to $1.4 billion, down from $1.7 billion in 2024, primarily due to ongoing industry demand pressures and reduced store traffic. The fiscal year included an additional week, which contributed approximately $25 million to net sales. The decline in revenue was reflected in a 17% decrease in comparable sales across its retail channels.
In response to these financial challenges, Sleep Number implemented a turnaround strategy called "Sleep Number Shifts," aimed at streamlining operations and enhancing accountability. The company reduced operating costs by $136 million compared to 2024, excluding restructuring costs. This included a $100 million reduction in operating expenses, driven by decreased sales and marketing costs, general and administrative expenses, and research and development expenditures. However, the company also incurred $51 million in restructuring costs, primarily related to contract terminations and asset impairments.
Operationally, Sleep Number's retail footprint consisted of 600 stores across the United States, with 88% of net sales generated from these locations. The average sales per store decreased to $1.9 million from $2.6 million in the prior year. The company reported that over 50% of its sales came from repeat and referral customers, highlighting a loyal customer base despite the overall decline in sales. The average monthly engagement rate among its 3 million Smart Sleepers was approximately 80%, indicating strong user engagement with its digital sleep wellness platform.
Looking ahead, Sleep Number faces liquidity challenges and anticipates difficulties in complying with financial covenants in its credit agreement. The company has engaged financial advisors to explore options for amending or waiving these covenants and to secure additional capital. Management has expressed substantial doubt about the company's ability to continue as a going concern over the next year, emphasizing the need for successful execution of its turnaround strategy to restore financial stability.
About Sleep Number Corp
Sleep Number Corporation designs, manufactures, and markets innovative sleep solutions, primarily smart beds and adjustable bases, focused on personalized comfort and health benefits. Its direct-to-consumer model, digital engagement platform, and sleep science collaborations foster lifelong customer relationships. The company emphasizes sleep wellness, data-driven innovation, and brand differentiation in a competitive bedding and digital health market.
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