Sleep Number Corporation Reports 20% Decline in Q3 2025 Net Sales

Sleep Number Corporation reported a significant decline in financial performance for the third quarter of 2025, with net sales of $342.9 million, a decrease of 20% from $426.6 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 $39.8 million, or $1.73 per diluted share, compared to a net loss of $3.1 million, or $0.14 per diluted share, in the prior year. For the nine months ended September 27, 2025, net sales totaled $1.064 billion, down 18% from $1.305 billion in the same period of 2024.

The company's gross profit for the third quarter was $205.4 million, representing a gross profit margin of 59.9%, down from 60.8% in the previous year. This decrease was primarily driven by higher manufacturing costs and unfavorable logistics expenses. Operating expenses totaled $245.7 million, slightly lower than the $251.2 million reported in the same quarter last year, but restructuring costs surged to $39.2 million from $2 million a year ago. The restructuring costs were related to contract termination, severance, and asset impairment charges as part of the company's ongoing efforts to reduce operating expenses.

In terms of operational metrics, Sleep Number's average sales per store decreased to $2.3 million from $2.7 million year-over-year, with total retail smart bed unit sales down 23%. The company closed 21 stores during the quarter, ending with 611 locations. The average revenue per smart bed unit increased by 4% to $5,995, indicating some resilience in pricing despite the overall sales decline. The company’s employee headcount stood at approximately 3,200 as of the end of the quarter.

Looking ahead, Sleep Number has initiated a turnaround strategy aimed at repositioning the brand and expanding its reach to new customer groups. The company anticipates incurring an additional $3 million in restructuring costs through the remainder of 2025. The recent amendment to its credit agreement, which extends the maturity date to December 2027 and adjusts certain financial covenants, is expected to provide the necessary liquidity to support its strategic initiatives. However, the company remains cautious about the economic environment, which continues to impact consumer spending and overall market conditions.