Sleep Number (NASDAQ: SNBR) Q1 2026 sales fall as net loss deepens
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Sleep Number Corporation reported a weak first quarter 2026 as it continues a turnaround and capital structure review. Net sales were $319 million, down 18.9% year over year, reflecting lower volume and fewer stores. Gross profit fell to $185 million with margin compressing to 57.9% from 61.2% due to mix shift and discounting legacy inventory.
Operating expenses were $221 million, but on a non-GAAP basis fell 18% to $195 million after restructuring and other non‑recurring items, supported by about $200 million of annualized cost savings. Restructuring and other non‑recurring costs were $22 million. Net loss widened sharply to $50 million, or $2.19 per share, compared with a $9 million loss a year ago. Adjusted EBITDA dropped 74% to $6 million, a 1.8% margin. Liquidity remains tight: cash was $1.5 million and borrowings under the credit facility were $605.6 million, contributing to a shareholders’ deficit of $626 million and an Adjusted ROIC of ‑13.1%.
The company is executing a broad product and marketing reset and has completed its largest portfolio redesign in nearly a decade, reporting encouraging early customer response. It has secured covenant relief and $55 million of incremental liquidity, including a new $25 million term loan, and is working with advisors on strategic and financing options for a longer‑term capital solution while referencing going‑concern risks noted in its Form 10‑K and upcoming Form 10‑Q.
Positive
- Adjusted operating expenses reduced 18% year over year to $194.9 million, reflecting approximately $200 million of annualized cost savings across general and administrative, corporate structure, technology and real estate.
- Incremental liquidity and covenant relief from existing lenders adds $55 million, including a new $25 million term loan, providing additional flexibility while strategic and financing options for a long‑term capital solution are evaluated.
Negative
- Net sales declined 18.9% to $318.987 million, driven by lower volume and a reduced store count, indicating significant demand pressure despite new product launches.
- Net loss widened to $50.3 million from $8.6 million a year earlier, while Adjusted EBITDA fell 74% to $5.75 million and margin dropped 380 basis points to 1.8%.
- Balance sheet is highly stressed, with $605.6 million of borrowings under the credit facility, cash of $1.5 million, a shareholders’ deficit of $626.3 million and Adjusted ROIC of -13.1%.
- Going‑concern risk remains material, as the company explicitly references its ability to continue as a going concern and the need to secure a long‑term capital solution through strategic and financing options.
Insights
Q1 shows deep losses, heavy leverage and execution pressure despite cost cuts.
Sleep Number’s Q1 2026 results highlight a challenged turnaround. Net sales fell 18.9% to $318.987M, and gross margin slipped to 57.9% as the company discounted legacy products and shifted mix toward its new ComfortMode bed.
Despite approximately $200M of annualized cost savings and an 18% reduction in adjusted operating expenses, net loss expanded to $50.3M and Adjusted EBITDA dropped 74% to $5.75M. Leverage is high, with $605.6M of credit facility borrowings and a shareholders’ deficit of $626.3M, producing an Adjusted ROIC of -13.1%.
The agreement with lenders adding $55M of incremental liquidity, including a new $25M term loan, provides near‑term flexibility while the company evaluates strategic and financing options. However, disclosures referencing its ability to continue as a going concern underscore that the turnaround, demand recovery and long‑term capital solution remain critical.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Net sales: $318.987M
Net loss: $50.297M
Gross profit margin: 57.9%
+5 more
8 metrics
Net sales
$318.987M
Three months ended April 4, 2026
Net loss
$50.297M
Three months ended April 4, 2026
Gross profit margin
57.9%
Three months ended April 4, 2026
Adjusted EBITDA
$5.75M
Q1 2026, down 74% year over year
Borrowings under credit facility
$605.6M
Balance sheet as of April 4, 2026
Cash and cash equivalents
$1.484M
Balance sheet as of April 4, 2026
Shareholders’ deficit
$626.319M
As of April 4, 2026
Adjusted ROIC
-13.1%
Trailing twelve months ended April 4, 2026
Key Terms
Adjusted EBITDA, Free cash flow, Restructuring costs, Adjusted ROIC, +2 more
6 terms
Adjusted EBITDA financial
"We define earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net loss plus"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Free cash flow financial
"Year-to-date Free cash flow was a use of $13.2 million."
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Restructuring costs financial
"Restructuring and other non-recurring costs in the quarter were $22 million"
Restructuring costs are the immediate expenses a company incurs when reorganizing operations, such as closing facilities, laying off staff, breaking leases, or consolidating divisions. Investors care because these upfront outlays can lower short-term profits but may reduce future running costs or improve efficiency—like paying to renovate a house to make it cheaper to maintain—so they signal whether near-term earnings are being affected and what benefits might follow.
Adjusted ROIC financial
"Calculation of Return on Invested Capital (Adjusted ROIC) (in thousands)"
Adjusted ROIC measures how effectively a company turns the money it has invested in its business into profit, but after removing one-time items and accounting tweaks so the result shows the recurring operating performance. Think of it like checking a car’s fuel efficiency after unloading temporary extra weight: it gives investors a clearer view of the business’s true efficiency and helps compare companies or track whether management is improving returns on the capital used to run and grow the business.
going concern financial
"including its ability to continue as a going concern as detailed in the company's Annual Report"
A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.
non-GAAP financial measures financial
"Our Adjusted EBITDA, Free Cash Flow and Adjusted Operating Expenses are considered non-GAAP financial measures"
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
Earnings Snapshot
Net sales: $318.987M
Q1 2026
Net sales
$318.987M
-18.9% YoY
Net loss
$50.297M
Net loss per share (basic and diluted)
$2.19
Adjusted EBITDA
$5.75M
-74% YoY
Adjusted EBITDA margin
1.8%
-380 bps YoY
Free cash flow
-$13.192M
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 12, 2026
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
| (Commission File Number) | (IRS Employer Identification No.) | ||||
(Address of principal executive offices) (Zip Code)
(763 ) 551-7000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION | ||||
On May 12, 2026, Sleep Number issued a press release announcing results for the fiscal first quarter ended April 4, 2026. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
| ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. | ||||
(d) Exhibits.
| Exhibit No. | Description of Exhibit | ||||
| 99.1 | Press Release dated May 12, 2026 | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SLEEP NUMBER CORPORATION | ||||||||||||||
| (Registrant) | ||||||||||||||
Dated: May 12, 2026 | By: | /s/ Samuel R. Hellfeld | ||||||||||||
| Name: | Samuel R. Hellfeld | |||||||||||||
| Title: | Executive Vice President, Chief Legal and Risk Officer | |||||||||||||
Exhibit 99.1
Sleep Number Announces First Quarter 2026 Results
Reports First Quarter 2026 Net Sales of $319 million
Advances Turnaround Through Product and Brand Reset to Drive Sustainable Growth
Continues Focus on Long-term Capital Structure Solutions, Including Strategic and Financing Options
MINNEAPOLIS – (May 12, 2026) – Sleep Number Corporation (Nasdaq: SNBR) today reported results for the quarter ended April 4, 2026.
Linda Findley, President and CEO, commented, “Q1 came in as expected given the soft start to the year, but year-over-year demand improved steadily throughout the quarter, ending with growth in March over last year. We are confident in the early positive metrics we are seeing from our new product launch and marketing campaigns, and the customer feedback on our new beds is fantastic. We believe this, combined with the full realization of our cost savings actions, puts us in line with the financial indications we highlighted in the previous earnings call.
“With the additional short-term liquidity provided by our existing lender group, we are fully focused on securing a long-term capital solution and are moving through the process of evaluating a range of strategic and financing options to maximize stakeholder value. I’m proud of the significant progress the team has made on the turnaround, and I believe we have positioned Sleep Number well for future growth.”
First Quarter Overview (all comparisons year-over-year unless otherwise noted)
•Net sales of $319 million were down 18.9%, driven by lower volume and a reduced store count.
•Gross profit was $185 million, a decrease of $56 million. Gross profit margin of 57.9% compared to 61.2% for the same period last year, primarily driven by a shift in mix to the new ComfortMode bed and discounting of legacy inventory.
•Operating expenses were $221 million. Adjusted operating expenses before restructuring and other non-recurring costs were $195 million, a decrease of $42 million, or 18%, driven by lower marketing and selling expenses, general and administrative expenses, and research and development expenses.
•Restructuring and other non-recurring costs in the quarter were $22 million, primarily driven by store and office closure costs, strategic alternative legal and advisory fees, other professional and bank fees and severance related expenses.
•Net loss was $50 million, compared to a net loss of $9 million for the same period last year, driven primarily by lower net sales, partially offset by lower operating expenses.
•Adjusted EBITDA was $6 million, down 74%, driven by a decline in net sales and associated loss of fixed cost leverage, partially offset by lower operating expenses. Adjusted EBITDA margin of 1.8%, down 380 basis points ("bps").
Cash Flows, Liquidity and Balance Sheet Highlights (all comparisons year-over-year unless otherwise noted)
•Net cash used in year-to-date operating activities was $8 million, down $5 million.
•Year-to-date Free cash flow was a use of $13.2 million.
Sleep Number Announces First Quarter 2026 Results - Page 2 of 9
Additional Business Highlights
Sleep Number is executing a turnaround strategy centered on product, marketing and distribution with ongoing cost savings and operating efficiencies to reignite growth and increase financial resilience. Recent highlights include:
•Product Portfolio Transformation – Completed the largest product redesign in nearly a decade, and all stores are fully reset. Early customer response has been encouraging, with initial indicators showing improved product engagement, strong attachment to the ComfortNext portfolio and a simplified shopping experience across stores and digital channels.
•Modernized Marketing Foundation – Launched “To a Good Life’s Sleep™,” the company’s first major integrated campaign in several years and the next phase of its brand evolution. The campaign supports the redesigned portfolio with benefit-led messaging focused on personalized, adjustable comfort that adapts as customers’ needs change.
•Cost Structure Reset – Continued to right-size the fixed cost base, with approximately $200 million of annualized cost savings already executed, including efficiencies across G&A, corporate structure, technology and real estate.
•Capital Structure Review – Reached an agreement with existing lenders that provides relief from certain financial covenants and adds $55 million of incremental liquidity, including a new $25 million term loan as detailed in the company's prior press release and Form 8-K filed on April 28, 2026. The agreement provides additional stability and flexibility to continue executing the turnaround while the company works with advisors to evaluate strategic and financing options for a longer-term capital structure solution.
Financial Outlook
In connection with the company's previously announced engagement of Guggenheim Securities to evaluate strategic and financing options, the company is not providing financial guidance. The company, however, expects performance to be consistent with the financial indications it provided on the 2025 fourth quarter and full year earnings call. The company does not intend to provide forward-looking financial guidance while the strategic process is ongoing.
Conference Call Information
Management will host its regularly scheduled conference call to discuss the company’s results at 8:30 a.m. ET (7:30 a.m. CT; 5:30 a.m. PT) today. To access the webcast, please visit the investor relations area of the Sleep Number website at https://ir.sleepnumber.com. The webcast replay will remain available for approximately 60 days.
About Sleep Number Corporation
Sleep Number® is the leader in personalized sleep wellness. Its mattresses are designed to evolve with each sleeper to help them feel and perform their best. With adjustable firmness, pressure-relieving support and temperature balancing comfort built into every mattress, Sleep Number beds adapt to customers’ changing needs, night after night, year after year.
Backed by almost 40 years of innovation, 1,000+ patents and patents pending, and billions of hours of sleep data, Sleep Number has helped more than 16 million people achieve their best sleep. The fully integrated model ensures quality, durability, and care at every step—from design and craftsmanship to delivery and long-term support.
Sleep Number products are awarded the industry's top recognitions, including ranked #1 in customer satisfaction for mattresses purchased in-store and online, and #1 in comfort, by J.D. Power. In addition, the company is the Official Sleep + Wellness Partner of the NFL, marking a relationship that leverages players, team partnerships, and league-wide initiatives to amplify brand awareness and drive consumer engagement.
Sleep Number Announces First Quarter 2026 Results - Page 3 of 9
Sleep Number mattresses, bases, bedding, and furniture are available exclusively at its over 570 stores nationwide and online. To learn more, visit SleepNumber.com or a store near you.
Forward-looking Statements
Statements used in this news release relating to future plans, events, financial results or performance, such as the statements about the company’s ability to: advance and execute its turnaround to drive growth and increase financial resilience; achieve and fully realize cost savings and operational efficiencies; perform in line with its financial indications highlighted in the previous earnings call; successfully evaluate and execute strategic and financing options to achieve a long-term capital structure solution to maximize value; and realize the expected benefits from its new product portfolio and marketing initiatives are forward-looking statements subject to certain risks and uncertainties which could cause the company’s results to differ materially, including its ability to continue as a going concern as detailed in the company's Annual Report on Form 10-K for fiscal year 2025 and its Quarterly Report on Form 10-Q for the first quarter of fiscal 2026 and secure a long-term capital solution through an evaluation of strategic and financing options. The most important risks and uncertainties are described in the company’s filings with the Securities and Exchange Commission, including in Item 1A of the company’s Annual Report on Form 10-K and other periodic reports. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update any forward-looking statement.
Investor Contact: investorrelations@sleepnumber.com
Media Contact: Muriel Lussier, muriel.lussier@sleepnumber.com
Sleep Number Announces First Quarter 2026 Results - Page 4 of 9
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited – in thousands, except per share amounts)
| Three Months Ended | |||||||||||||||||||||||
| April 4, 2026 | % of Net Sales | March 29, 2025 | % of Net Sales | ||||||||||||||||||||
| Net sales | $ | 318,987 | 100.0 | % | $ | 393,261 | 100.0 | % | |||||||||||||||
| Cost of sales | 134,372 | 42.1 | % | 152,726 | 38.8 | % | |||||||||||||||||
| Gross profit | 184,615 | 57.9 | % | 240,535 | 61.2 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 160,795 | 50.4 | % | 189,103 | 48.1 | % | |||||||||||||||||
| General and administrative | 33,592 | 10.5 | % | 38,619 | 9.8 | % | |||||||||||||||||
| Research and development | 5,348 | 1.7 | % | 10,903 | 2.8 | % | |||||||||||||||||
| Restructuring costs | 21,736 | 6.8 | % | 60 | 0.0 | % | |||||||||||||||||
| Total operating expenses | 221,471 | 69.4 | % | 238,685 | 60.7 | % | |||||||||||||||||
| Operating (loss) income | (36,856) | (11.6 | %) | 1,850 | 0.5 | % | |||||||||||||||||
| Interest expense, net | 13,103 | 4.1 | % | 11,081 | 2.8 | % | |||||||||||||||||
| Loss before income taxes | (49,959) | (15.7 | %) | (9,231) | (2.3 | %) | |||||||||||||||||
| Income tax expense (benefit) | 338 | 0.1 | % | (585) | (0.1 | %) | |||||||||||||||||
| Net loss | $ | (50,297) | (15.8 | %) | $ | (8,646) | (2.2 | %) | |||||||||||||||
| Net loss per share – basic and diluted | $ | (2.19) | $ | (0.38) | |||||||||||||||||||
| Reconciliation of weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic weighted-average shares outstanding | 22,991 | 22,706 | |||||||||||||||||||||
| Dilutive effect of stock-based awards | — | — | |||||||||||||||||||||
| Diluted weighted-average shares outstanding | 22,991 | 22,706 | |||||||||||||||||||||
For the three months ended April 4, 2026 and March 29, 2025, potentially dilutive stock-based awards have been excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on our net loss per diluted share.
Sleep Number Announces First Quarter 2026 Results - Page 5 of 9
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited – in thousands, except per share amounts)
subject to reclassification
| April 4, 2026 | January 3, 2026 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,484 | $ | 1,693 | |||||||
Accounts receivable, net of allowances of $656 and $694, respectively | 13,354 | 15,502 | |||||||||
| Inventories | 78,216 | 82,233 | |||||||||
| Prepaid expenses | 19,727 | 13,656 | |||||||||
| Other current assets | 30,694 | 36,873 | |||||||||
| Total current assets | 143,475 | 149,957 | |||||||||
| Non-current assets: | |||||||||||
| Property and equipment, net | 73,755 | 86,528 | |||||||||
| Operating lease right-of-use assets | 295,315 | 311,723 | |||||||||
| Goodwill and intangible assets, net | 66,131 | 66,186 | |||||||||
| Deferred income taxes | 399 | 399 | |||||||||
| Other non-current assets | 61,933 | 65,267 | |||||||||
| Total assets | $ | 641,008 | $ | 680,060 | |||||||
| Liabilities and Shareholders’ Deficit | |||||||||||
| Current liabilities: | |||||||||||
Borrowings under credit facility | $ | 605,600 | $ | 588,200 | |||||||
| Accounts payable | 116,395 | 117,977 | |||||||||
| Customer prepayments | 43,338 | 39,527 | |||||||||
| Accrued sales returns | 12,266 | 12,817 | |||||||||
| Compensation and benefits | 19,415 | 14,975 | |||||||||
| Taxes and withholding | 10,908 | 11,429 | |||||||||
| Operating lease liabilities | 79,340 | 81,191 | |||||||||
| Other current liabilities | 44,447 | 46,430 | |||||||||
| Total current liabilities | 931,709 | 912,546 | |||||||||
| Non-current liabilities: | |||||||||||
| Operating lease liabilities | 268,697 | 273,111 | |||||||||
| Other non-current liabilities | 66,921 | 72,878 | |||||||||
| Total liabilities | 1,267,327 | 1,258,535 | |||||||||
| Shareholders’ deficit: | |||||||||||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Common stock, $0.01 par value; 142,500 shares authorized, 23,049 and 22,860 shares issued and outstanding, respectively | 230 | 229 | |||||||||
| Additional paid-in capital | 34,906 | 32,454 | |||||||||
| Accumulated deficit | (661,455) | (611,158) | |||||||||
| Total shareholders’ deficit | (626,319) | (578,475) | |||||||||
| Total liabilities and shareholders’ deficit | $ | 641,008 | $ | 680,060 | |||||||
Sleep Number Announces First Quarter 2026 Results - Page 6 of 9
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited – in thousands)
subject to reclassification
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (50,297) | $ | (8,646) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | 12,371 | 14,836 | |||||||||
| Stock-based compensation | 2,826 | 3,951 | |||||||||
| Inventory obsolescence write off | 2,099 | — | |||||||||
| Loss on disposal and impairment of leased assets | 17,539 | 17 | |||||||||
| Deferred income taxes | — | (1,321) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 2,148 | 3,291 | |||||||||
| Inventories | 1,918 | (724) | |||||||||
| Income taxes | 482 | 736 | |||||||||
| Prepaid expenses and other assets | (4,266) | 781 | |||||||||
| Accounts payable | 3,818 | 8,784 | |||||||||
| Customer prepayments | 3,811 | (6,576) | |||||||||
| Accrued compensation and benefits | 4,354 | (9,686) | |||||||||
| Other taxes and withholding | (1,003) | (1,925) | |||||||||
| Other accruals and liabilities | (3,551) | (6,144) | |||||||||
| Net cash used in operating activities | (7,751) | (2,626) | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | (5,441) | (4,599) | |||||||||
| Net cash used in investing activities | (5,441) | (4,599) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Net increase in short-term borrowings | 13,805 | 9,087 | |||||||||
| Repurchases of common stock | (373) | (563) | |||||||||
| Debt issuance costs | (449) | (1,558) | |||||||||
| Net cash provided by financing activities | 12,983 | 6,966 | |||||||||
| Net decrease in cash and cash equivalents | (209) | (259) | |||||||||
| Cash and cash equivalents, at beginning of period | 1,693 | 1,950 | |||||||||
| Cash and cash equivalents, at end of period | $ | 1,484 | $ | 1,691 | |||||||
Sleep Number Announces First Quarter 2026 Results - Page 7 of 9
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Supplemental Financial Information
(unaudited)
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Percent of sales: | |||||||||||
| Retail stores | 87.0 | % | 87.6 | % | |||||||
| Online, phone, chat and other | 13.0 | % | 12.4 | % | |||||||
| Total Company | 100.0 | % | 100.0 | % | |||||||
| Sales change rates: | |||||||||||
| Retail comparable-store sales | (17 | %) | (15 | %) | |||||||
| Online, phone and chat | (15 | %) | (12 | %) | |||||||
| Total Retail comparable sales change | (16 | %) | (15 | %) | |||||||
Net opened/closed stores and other | (3 | %) | (1 | %) | |||||||
| Total Company | (19 | %) | (16 | %) | |||||||
| Stores open: | |||||||||||
| Beginning of period | 600 | 640 | |||||||||
| Opened | — | 2 | |||||||||
| Closed | (23) | (5) | |||||||||
| End of period | 577 | 637 | |||||||||
| Other metrics: | |||||||||||
Average sales per store ($ in 000's)1 | $ | 2,170 | $ | 2,495 | |||||||
Average sales per square foot1 | $ | 700 | $ | 807 | |||||||
Stores > $2 million net sales2 | 31 | % | 51 | % | |||||||
Stores > $3 million net sales2 | 6 | % | 15 | % | |||||||
Average revenue per mattress unit3 | $ | 6,021 | $ | 5,992 | |||||||
1 Trailing twelve months Total Retail comparable sales per store open at least one year.
2 Trailing twelve months for stores open at least one year (excludes online, phone and chat sales).
3 Represents Total Retail net sales divided by Total Retail mattress units.
Sleep Number Announces First Quarter 2026 Results - Page 8 of 9
SLEEP NUMBER CORPORATION AND SUBSIDIARIES
Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
(in thousands)
We define earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net loss plus: income tax expense (benefit), interest expense, depreciation and amortization, stock-based compensation, restructuring costs, other non-recurring items, and asset impairments. Management believes Adjusted EBITDA is a useful indicator of our financial performance and our ability to generate cash from operating activities. Our definition of Adjusted EBITDA may not be comparable to similarly titled definitions used by other companies. The table below reconciles Adjusted EBITDA, which is a non-GAAP financial measure, to the comparable GAAP financial measure:
| Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
| April 4, 2026 | March 29, 2025 | April 4, 2026 | March 29, 2025 | ||||||||||||||||||||
| Net loss | $ | (50,297) | $ | (8,646) | $ | (173,609) | $ | (21,498) | |||||||||||||||
| Income tax expense (benefit) | 338 | (585) | 36,907 | (6,472) | |||||||||||||||||||
| Interest expense | 13,103 | 11,081 | 51,404 | 47,150 | |||||||||||||||||||
| Depreciation and amortization | 11,126 | 14,406 | 49,889 | 62,240 | |||||||||||||||||||
| Stock-based compensation | 2,827 | 3,951 | 5,158 | 11,278 | |||||||||||||||||||
Restructuring costs1 | 21,736 | 60 | 72,373 | 7,526 | |||||||||||||||||||
Other non-recurring items2 | 6,917 | 1,774 | 19,841 | 2,772 | |||||||||||||||||||
| Asset impairments | — | — | — | 1,220 | |||||||||||||||||||
| Adjusted EBITDA | $ | 5,750 | $ | 22,041 | $ | 61,963 | $ | 104,216 | |||||||||||||||
1 Represents costs related to business restructuring actions.
2 Non‑recurring costs represent discrete, non‑operational items, including obsolete inventory associated with the Company’s product transition, strategic alternative legal and advisory fees, executive transition and search fees, proxy contest costs, public debt issuance cost write-off, tax matters and other non‑routine professional and bank fees. These amounts are treated as permitted add-backs in the calculation of Adjusted EBITDA in accordance with the Company’s Credit Agreement.
Free Cash Flow
(in thousands)
| Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
| April 4, 2026 | March 29, 2025 | April 4, 2026 | March 29, 2025 | ||||||||||||||||||||
Net cash used in operating activities | $ | (7,751) | $ | (2,626) | $ | (8,408) | $ | (9,228) | |||||||||||||||
| Subtract: Purchases of property and equipment | 5,441 | 4,599 | 15,249 | 18,796 | |||||||||||||||||||
| Free cash flow | $ | (13,192) | $ | (7,225) | $ | (23,657) | $ | (28,024) | |||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)
| Three Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
Operating expenses | $ | 221,471 | $ | 238,685 | |||||||
Subtract: Restructuring costs | 21,736 | 60 | |||||||||
Subtract: Other non-recurring items1 | 4,818 | 1,774 | |||||||||
Non-GAAP operating expenses | $ | 194,917 | $ | 236,851 | |||||||
Adjusted operating expense reduction versus prior period, excluding restructuring costs and non-recurring items | $ | 41,934 | |||||||||
1 Excludes inventory obsolescence write off of $2.1 million recorded in the three months ended April 4, 2026, which is included in the cost of sales line on the consolidated statement of operations.
Note - Our Adjusted EBITDA, Free Cash Flow and Adjusted Operating Expenses are considered non-GAAP financial measures and are not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts.
GAAP - generally accepted accounting principles in the U.S.
Sleep Number Announces First Quarter 2026 Results - Page 9 of 9
SLEEP NUMBER CORPORATION AND SUBSIDIARIES
Calculation of Return on Invested Capital (Adjusted ROIC)
(in thousands)
Adjusted ROIC is a financial measure we use to determine how efficiently we deploy our capital. It quantifies the return we earn on our adjusted invested capital. Management believes Adjusted ROIC is also a useful metric for investors and financial analysts. We compute Adjusted ROIC as outlined below. Our definition and calculation of Adjusted ROIC may not be comparable to similarly titled definitions and calculations used by other companies. The tables below reconcile adjusted net operating profit after taxes (Adjusted NOPAT) and total adjusted invested capital, which are non-GAAP financial measures, to the comparable GAAP financial measures:
| Trailing Twelve Months Ended | |||||||||||
| April 4, 2026 | March 29, 2025 | ||||||||||
| Adjusted net operating profit after taxes (Adjusted NOPAT) | |||||||||||
| Operating (loss) income | $ | (85,299) | $ | 19,180 | |||||||
Add: Operating lease interest1 | 23,832 | 26,098 | |||||||||
Less: Income taxes2 | 7,902 | (10,022) | |||||||||
| Adjusted NOPAT | $ | (53,565) | $ | 35,256 | |||||||
| Average adjusted invested capital | |||||||||||
| Total deficit | $ | (626,317) | $ | (456,844) | |||||||
Add: Long-term debt3 | 605,720 | 557,921 | |||||||||
Add: Operating lease liabilities4 | 348,037 | 376,909 | |||||||||
| Total adjusted invested capital at end of period | $ | 327,440 | $ | 477,986 | |||||||
Average adjusted invested capital5 | $ | 408,437 | $ | 487,361 | |||||||
Adjusted ROIC6 | (13.1 | %) | 7.2 | % | |||||||
| 1 | Represents the interest expense component of lease expense included in our financial statements under ASC 842, Leases. | ||||
| 2 | Reflects annual effective income tax rates, before discrete adjustments, of 12.9% and 22.1% for April 4, 2026 and March 29, 2025, respectively. | ||||
| 3 | Long-term debt includes existing finance lease liabilities. | ||||
| 4 | Reflects operating lease liabilities included in our financial statements under ASC 842. | ||||
| 5 | Average adjusted invested capital represents the average of the last five fiscal quarters' ending adjusted invested capital balances. | ||||
| 6 | Adjusted ROIC equals Adjusted NOPAT divided by average adjusted invested capital. | ||||
| Note - The Company's Adjusted ROIC calculation and data are considered non-GAAP financial measures and are not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts. | |||||
| GAAP - generally accepted accounting principles in the U.S. | |||||
FAQ
How did Sleep Number (SNBR) perform in Q1 2026?
Sleep Number reported weak Q1 2026 results, with net sales of $318.987 million, down 18.9% year over year, and a widened net loss of $50.297 million. Profitability declined sharply as lower volume and margin pressure outweighed significant cost reductions.
What happened to Sleep Number’s profitability in Q1 2026?
Sleep Number’s profitability deteriorated, posting a $50.297 million net loss versus an $8.646 million loss a year ago. Adjusted EBITDA dropped 74% to $5.75 million, with margin falling to 1.8% as sales declines reduced fixed‑cost leverage.
How strong is Sleep Number’s balance sheet and liquidity in Q1 2026?
The balance sheet is strained, with $605.6 million in credit facility borrowings, cash of $1.484 million, and a shareholders’ deficit of $626.319 million. The company obtained covenant relief and $55 million of incremental liquidity, including a $25 million term loan.
What cost savings did Sleep Number achieve by Q1 2026?
Sleep Number reports approximately $200 million of annualized cost savings, reflected in an 18% reduction in adjusted operating expenses to $194.917 million. Savings span marketing, selling, general and administrative, research and development, and broader corporate efficiency measures.
What strategic and financing actions is Sleep Number pursuing?
The company is working with advisors, including Guggenheim Securities, to evaluate strategic and financing options for a long‑term capital structure solution. It recently secured covenant relief and $55 million of additional liquidity from lenders while continuing its turnaround efforts.
How is Sleep Number’s new product and marketing strategy performing?
Management highlights encouraging early response to its largest product redesign in nearly a decade and a new “To a Good Life’s Sleep™” campaign. They cite improved product engagement and a simplified shopping experience as part of efforts to reignite growth and strengthen the brand.