Sleep Number (Nasdaq: SNBR) posts 2025 loss as turnaround and cost cuts deepen
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Sleep Number Corporation reported a difficult 2025 with early signs of a turnaround. Full-year net sales were $1.41 billion, down 16%, as weak industry demand and lower store traffic weighed on results. The company posted a net loss of $132 million, much wider than the prior year’s $20 million loss, while adjusted EBITDA fell 35% to $78 million with a 5.5% margin, down 160 basis points.
Despite this, Sleep Number realized $185 million of annualized cost savings and exited the year with a pro forma adjusted EBITDA margin of about 9%. Management plans another $50 million of annualized fixed cost reductions in 2026 and highlights strong initial demand and higher margins for its new ComfortMode bed and broader product refresh.
Liquidity remains tight, with net cash used in operating activities of $3 million, free cash flow of negative $18 million, cash of $1.7 million, and borrowings of $588.2 million under its revolving credit facility. The leverage ratio under the credit agreement was 4.1x EBITDAR versus a 4.5x covenant maximum, and the company has engaged Guggenheim Securities to evaluate options to improve its capital structure.
Positive
- Material cost reductions and efficiency gains: The company realized $185 million of annualized cost savings in 2025 and plans an additional $50 million of annualized fixed cost reductions in 2026, lifting pro forma adjusted EBITDA margin to about 9.1%.
- Encouraging new product traction: The ComfortMode bed launch in January exceeded expectations, outselling plan by 3.5 times with stronger margins than the beds it replaces, supporting the product-led turnaround strategy.
Negative
- Sharp deterioration in profitability: 2025 net sales declined 16% to $1.41 billion, while the net loss widened to $131.96 million from $20.33 million and adjusted EBITDA fell 35% to $78.26 million, indicating significant earnings pressure.
- Tight liquidity and high leverage: Year-end cash was $1.69 million, free cash flow was negative $17.69 million, borrowings under the revolving credit facility were $588.2 million, and the net leverage ratio stood at 4.1x EBITDAR against a 4.5x covenant maximum.
Insights
Results show steep losses and tight liquidity, with cost cuts and new products supporting a challenging turnaround.
Sleep Number generated
Management has executed
Balance sheet and liquidity metrics are a key risk. Cash was only
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): March 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 March 12, 2026, Sleep Number issued a press release announcing results for the fiscal fourth quarter and full year ended January 3, 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 March 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: March 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 Fourth Quarter and Full Year 2025 Results
Reports FY2025 Net Sales of $1.4 Billion, Exceeding Adjusted EBITDA Guidance
Realized $185 Million of Annualized Cost Savings
Launches New Products as the Next Phase of Turnaround Strategy to Return to Profitable Growth
MINNEAPOLIS – (March 12, 2026) – Sleep Number Corporation (Nasdaq: SNBR) today reported results for fourth quarter and the year ended January 3, 2026.
Linda Findley, President and CEO, commented, "Sleep Number exceeded 2025 guidance provided on our last earnings call. We are still in full turnaround mode and made significant progress against our new product and marketing strategies while continuing to reduce costs. For the full year 2025, pro-forma adjusted EBITDA margin was approximately 9% and anticipate double-digit adjusted EBITDA growth in 2026 as we continue to execute on our strategy.
"The launch of our ComfortMode bed in January exceeded our expectations and is outselling plan by 3.5 times, with stronger margins than the beds it replaces. The rest of the new product line, available this month, is all built on the same consumer research highlighting comfort and value, and we anticipate similar strength from the new beds, as the supporting marketing is also performing well.
"Even with the strength of our product and marketing strategies, the negative industry impact at the start of the year plus the clearance of our existing products had an outsized impact on our liquidity. We are implementing a plan to address our liquidity and capital strategy as we move towards topline growth in the second half of the year."
Fourth Quarter Overview (all comparisons year-over-year unless otherwise noted)
•Net sales of $347 million, down 8%, driven by ongoing industry demand pressure and lower store traffic.
•Gross profit of $193 million, a decrease of $32 million. Gross profit margin of 55.6% compared to 59.9% for the same period last year, primarily due to a $9.6 million inventory obsolescence charge associated with the introduction of the company's new product line. Excluding the charge, adjusted gross profit margin was 58.4%.
•Operating expenses were $201 million. Adjusted operating expenses before restructuring and other non-recurring costs were $197 million, a decrease of $20 million, or 9%, driven by lower marketing and selling expenses, general and administrative expenses, and research and development expenses.
•Restructuring and other non-recurring costs were $14 million, driven primarily by the $9.6 million inventory obsolescence charge and contract termination costs due to store closures.
•Net loss of $59 million compared with a net loss of $5 million for the same period last year, driven primarily by lower net sales and recognition of a $47.9 million deferred tax valuation adjustment during the fourth quarter of 2025.
•Adjusted EBITDA of $19 million, down 26%, driven by a year-over-year net sales decline, partially offset by lower operating expenses. Adjusted EBITDA margin of 5.6%, down 140 basis points ("bps").
Sleep Number Announces Fourth-quarter and Full-year 2025 Results - Page 2 of 11
Full Year Overview (all comparisons year-over-year unless otherwise noted)
•Net sales of $1.4 billion, down 16%, driven by driven by ongoing industry pressure and lower store traffic.
•Gross profit of $833 million, a decrease of $170 million. Gross profit margin of 59.0% of net sales, down 60 bps, driven by the $9.6 million inventory write-down charge and partially offset by the benefit of product cost reductions through value engineering and ongoing supplier negotiations and ongoing efficiencies in our home delivery and logistics operations.
•Operating expenses were $880 million. Adjusted operating expenses before restructuring and other non-recurring costs were $824 million, a decrease of $136 million, or 14%, driven by lower marketing and selling expenses, general and administrative expenses, and research and development expenses.
•Restructuring and other non-recurring costs were $65 million, driven primarily by severance and employee-related benefits, contract termination costs due to store closures, asset impairment charges, and inventory obsolescence.
•Net loss of $132 million compared with a net loss of $20 million last year.
•Adjusted EBITDA of $78 million, down 35%, driven by year-over year net sales decline, partially offset by lower operating expenses. Adjusted EBITDA margin of 5.5%, down 160 bps, exiting the year with an annualized pro forma adjusted EBITDA margin of approximately 9%, a 200 bps improvement versus the prior year.
Cash Flows and Liquidity Review (all comparisons year-over-year unless otherwise noted)
•Net cash used in operating activities was $3 million, down $30 million.
•Free cash flow was a use of $18 million, down $21 million.
•The company's leverage ratio calculated under its credit agreement was 4.1x EBITDAR at the end of the year versus the amended covenant maximum of 4.5x.
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:
•Leadership and Organizational Realignment – After appointing a new CEO in April 2025, the company further strengthened the executive team with the appointment of a new Chief Marketing Officer in May 2025 and Chief Financial Officer in December 2025 while reorganizing reporting lines and responsibilities to improve accountability, accelerate decision-making, and enhance customer responsiveness.
•Product Portfolio Transformation – The company announced a new product line, taking only ten months versus the historical two years to design and develop, aimed to meet customer demands and simplify the shopping experience to address a broader range of sleep needs. Sleep Number launched the ComfortMode™ bed in January and sales have exceeded expectations by more than three times. The remainder of the new product line was announced separately today and will be available for purchase on March 23.
•Modernized Marketing Foundation – Under new leadership, Sleep Number has rebuilt its marketing foundation with refreshed creative and channel-specific media strategies aimed at strengthening brand awareness and funnel performance to drive purchase intent.
•Cost Structure Reset – Implemented $185 million of annualized cost reductions through efficiencies in general and administrative, corporate structure, technology, and adapting Sleep Number’s existing real estate footprint. These changes created a more agile organization while preserving innovation. In 2026, Sleep Number is implementing another $50 million of annualized fixed costs savings.
Sleep Number Announces Fourth-quarter and Full-year 2025 Results - Page 3 of 11
•Capital Structure Review – Engaged Guggenheim Securities to evaluate inbound interest and other opportunities to address the company's amended credit facility and improve Sleep Number’s liquidity, balance sheet and flexibility.
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 player health data, team partnerships, and league-wide initiatives to amplify brand awareness and drive consumer engagement.
Sleep Number mattresses, bases, bedding, and furniture are available exclusively at its 600 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 that: the company is launching new products as the next phase of its turnaround strategy to return to profitable growth; it anticipates double digit increase to adjusted EBITDA in 2026; it anticipates strong sales and margins from the new product line launching this month; it is implementing a plan to address liquidity and capital strategy as it moves towards topline growth in the second half of 2026; it 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; it is implementing $50 million of annualized fixed costs savings in 2026; and it is working with Guggenheim Securities to address the company's amended credit facility and improve its liquidity, balance sheet and flexibility are forward-looking statements subject to certain risks and uncertainties which could cause the company’s results to differ materially. 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 Fourth-quarter and Full-year 2025 Results - Page 4 of 11
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited – in thousands, except per share amounts)
| Fourteen Weeks Ended | Thirteen Weeks Ended | ||||||||||||||||||||||
| January 3, 2026 | % of Net Sales | December 28, 2024 | % of Net Sales | ||||||||||||||||||||
| Net sales | $ | 347,385 | 100.0 | % | $ | 376,817 | 100.0 | % | |||||||||||||||
| Cost of sales | 154,103 | 44.4 | % | 151,236 | 40.1 | % | |||||||||||||||||
| Gross profit | 193,282 | 55.6 | % | 225,581 | 59.9 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 161,238 | 46.4 | % | 170,232 | 45.2 | % | |||||||||||||||||
| General and administrative | 30,654 | 8.8 | % | 38,234 | 10.1 | % | |||||||||||||||||
| Research and development | 6,291 | 1.8 | % | 10,653 | 2.8 | % | |||||||||||||||||
| Restructuring costs | 3,151 | 0.9 | % | 3,684 | 1.0 | % | |||||||||||||||||
| Total operating expenses | 201,334 | 58.0 | % | 222,803 | 59.1 | % | |||||||||||||||||
| Operating (loss) income | (8,052) | (2.3 | %) | 2,778 | 0.7 | % | |||||||||||||||||
| Interest expense, net | 13,880 | 4.0 | % | 11,742 | 3.1 | % | |||||||||||||||||
| Loss before income taxes | (21,932) | (6.3 | %) | (8,964) | (2.4 | %) | |||||||||||||||||
| Income tax expense (benefit) | 36,578 | 10.5 | % | (4,299) | (1.1 | %) | |||||||||||||||||
| Net loss | $ | (58,510) | (16.8 | %) | $ | (4,665) | (1.2 | %) | |||||||||||||||
Net loss per share – basic and diluted | $ | (2.55) | $ | (0.21) | |||||||||||||||||||
| Reconciliation of weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic weighted-average shares outstanding | 22,952 | 22,659 | |||||||||||||||||||||
| Dilutive effect of stock-based awards | — | — | |||||||||||||||||||||
| Diluted weighted-average shares outstanding | 22,952 | 22,659 | |||||||||||||||||||||
For the fourteen weeks ended January 3, 2026 and the thirteen weeks ended December 28, 2024, 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 Fourth-quarter and Full-year 2025 Results - Page 5 of 11
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited – in thousands, except per share amounts)
| Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||||||||||||
| January 3, 2026 | % of Net Sales | December 28, 2024 | % of Net Sales | ||||||||||||||||||||
| Net sales | $ | 1,411,450 | 100.0 | % | $ | 1,682,296 | 100.0 | % | |||||||||||||||
| Cost of sales | 578,499 | 41.0 | % | 679,523 | 40.4 | % | |||||||||||||||||
| Gross profit | 832,951 | 59.0 | % | 1,002,773 | 59.6 | % | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 664,235 | 47.1 | % | 766,624 | 45.6 | % | |||||||||||||||||
| General and administrative | 130,669 | 9.3 | % | 149,956 | 8.9 | % | |||||||||||||||||
| Research and development | 33,942 | 2.4 | % | 45,255 | 2.7 | % | |||||||||||||||||
| Restructuring costs | 50,697 | 3.6 | % | 18,066 | 1.1 | % | |||||||||||||||||
| Total operating expenses | 879,543 | 62.3 | % | 979,901 | 58.2 | % | |||||||||||||||||
| Operating (loss) income | (46,592) | (3.3 | %) | 22,872 | 1.4 | % | |||||||||||||||||
| Interest expense, net | 49,382 | 3.5 | % | 48,368 | 2.9 | % | |||||||||||||||||
| Loss before income taxes | (95,974) | (6.8 | %) | (25,496) | (1.5 | %) | |||||||||||||||||
| Income tax expense (benefit) | 35,984 | 2.5 | % | (5,162) | (0.3 | %) | |||||||||||||||||
| Net loss | $ | (131,958) | (9.3 | %) | $ | (20,334) | (1.2 | %) | |||||||||||||||
Net loss per share – basic and diluted | $ | (5.77) | $ | (0.90) | |||||||||||||||||||
| Reconciliation of weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic weighted-average shares outstanding | 22,883 | 22,606 | |||||||||||||||||||||
| Dilutive effect of stock-based awards | — | — | |||||||||||||||||||||
| Diluted weighted-average shares outstanding | 22,883 | 22,606 | |||||||||||||||||||||
For the fifty-three weeks ended January 3, 2026 and the fifty-two weeks ended December 28, 2024, 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 Fourth-quarter and Full-year 2025 Results - Page 6 of 11
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited – in thousands, except per share amounts)
subject to reclassification
| January 3, 2026 | December 28, 2024 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,693 | $ | 1,950 | |||||||
Accounts receivable, net of allowances of $694 and $1,113, respectively | 15,502 | 17,516 | |||||||||
| Inventories | 82,233 | 103,152 | |||||||||
| Prepaid expenses | 13,656 | 14,568 | |||||||||
| Other current assets | 36,873 | 44,098 | |||||||||
| Total current assets | 149,957 | 181,284 | |||||||||
| Non-current assets: | |||||||||||
| Property and equipment, net | 86,528 | 129,574 | |||||||||
| Operating lease right-of-use assets | 311,723 | 356,641 | |||||||||
| Goodwill and intangible assets, net | 66,186 | 66,412 | |||||||||
| Deferred income taxes | 399 | 33,575 | |||||||||
| Other non-current assets | 65,267 | 93,324 | |||||||||
| Total assets | $ | 680,060 | $ | 860,810 | |||||||
| Liabilities and Shareholders’ Deficit | |||||||||||
| Current liabilities: | |||||||||||
| Borrowings under revolving credit facility | $ | 588,200 | $ | 546,600 | |||||||
| Accounts payable | 117,977 | 107,619 | |||||||||
| Customer prepayments | 39,527 | 46,933 | |||||||||
| Accrued sales returns | 12,817 | 19,092 | |||||||||
| Compensation and benefits | 14,975 | 31,038 | |||||||||
| Taxes and withholding | 11,429 | 18,619 | |||||||||
| Operating lease liabilities | 81,191 | 82,307 | |||||||||
| Other current liabilities | 46,430 | 55,804 | |||||||||
| Total current liabilities | 912,546 | 908,012 | |||||||||
| Non-current liabilities: | |||||||||||
| Operating lease liabilities | 273,111 | 307,201 | |||||||||
| Other non-current liabilities | 72,878 | 97,183 | |||||||||
| Total non-current liabilities | 345,989 | 404,384 | |||||||||
| Total liabilities | 1,258,535 | 1,312,396 | |||||||||
| Shareholders’ deficit: | |||||||||||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Common stock, $0.01 par value; 142,500 shares authorized, 22,860 and 22,388 shares issued and outstanding, respectively | 229 | 224 | |||||||||
| Additional paid-in capital | 32,454 | 27,390 | |||||||||
| Accumulated deficit | (611,158) | (479,200) | |||||||||
| Total shareholders’ deficit | (578,475) | (451,586) | |||||||||
| Total liabilities and shareholders’ deficit | $ | 680,060 | $ | 860,810 | |||||||
Sleep Number Announces Fourth-quarter and Full-year 2025 Results - Page 7 of 11
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited – in thousands)
subject to reclassification
| Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | ||||||||||
| January 3, 2026 | December 28, 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (131,958) | $ | (20,334) | |||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | 55,608 | 66,351 | |||||||||
| Stock-based compensation | 6,282 | 11,444 | |||||||||
Inventory obsolescence write off | 9,565 | — | |||||||||
| Loss on impairment of strategic investment asset | 16,225 | — | |||||||||
| Loss on disposal and impairment of leased assets | 20,319 | 4,315 | |||||||||
| Deferred income taxes | 33,176 | (13,322) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 2,014 | 9,343 | |||||||||
| Inventories | 11,354 | 12,281 | |||||||||
| Income taxes | (4,378) | 3,987 | |||||||||
| Prepaid expenses and other assets | 9,889 | (10,867) | |||||||||
| Accounts payable | 22,673 | (15,910) | |||||||||
| Customer prepayments | (7,406) | (2,210) | |||||||||
| Accrued compensation and benefits | (16,113) | 2,755 | |||||||||
| Other taxes and withholding | (2,812) | (2,502) | |||||||||
| Other accruals and liabilities | (27,721) | (18,188) | |||||||||
| Net cash (used in) provided by operating activities | (3,283) | 27,143 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | (14,407) | (23,505) | |||||||||
| Proceeds from sales of property and equipment | — | 156 | |||||||||
| Issuance of notes receivable | — | (2,942) | |||||||||
| Payment to secure contractual rights | (3,280) | — | |||||||||
| Net cash used in investing activities | (17,687) | (26,291) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Net increase (decrease) in short-term borrowings | 28,068 | (673) | |||||||||
| Repurchases of common stock | (1,213) | (768) | |||||||||
| Debt issuance costs | (6,142) | — | |||||||||
| Net cash provided by (used in) financing activities | 20,713 | (1,441) | |||||||||
| Net decrease in cash and cash equivalents | (257) | (589) | |||||||||
| Cash and cash equivalents, at beginning of period | 1,950 | 2,539 | |||||||||
| Cash and cash equivalents, at end of period | $ | 1,693 | $ | 1,950 | |||||||
Sleep Number Announces Fourth-quarter and Full-year 2025 Results - Page 8 of 11
SLEEP NUMBER CORPORATION
AND SUBSIDIARIES
Supplemental Financial Information
(unaudited)
| Fourteen Weeks Ended | Thirteen Weeks Ended | Fifty-Three Weeks Ended | Fifty-Two Weeks Ended | ||||||||||||||||||||
| January 3, 2026 | December 28, 2024 | January 3, 2026 | December 28, 2024 | ||||||||||||||||||||
| Percent of sales: | |||||||||||||||||||||||
| Retail stores | 86.6 | % | 86.6 | % | 87.6 | % | 87.6 | % | |||||||||||||||
| Online, phone, chat and other | 13.4 | % | 13.4 | % | 12.4 | % | 12.4 | % | |||||||||||||||
| Total Company | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Sales change rates: | |||||||||||||||||||||||
Retail comparable-store sales4 | (15 | %) | (9 | %) | (17 | %) | (9 | %) | |||||||||||||||
Online, phone and chat4 | (15 | %) | (17 | %) | (17 | %) | (17 | %) | |||||||||||||||
Total Retail comparable sales change4 | (15 | %) | (10 | %) | (17 | %) | (10 | %) | |||||||||||||||
Net opened/closed stores and other | 7 | % | (2 | %) | 1 | % | (1 | %) | |||||||||||||||
| Total Company | (8 | %) | (12 | %) | (16 | %) | (11 | %) | |||||||||||||||
| Stores open: | |||||||||||||||||||||||
| Beginning of period | 611 | 643 | 640 | 672 | |||||||||||||||||||
| Opened | 1 | 1 | 6 | 12 | |||||||||||||||||||
| Closed | (12) | (4) | (46) | (44) | |||||||||||||||||||
| End of period | 600 | 640 | 600 | 640 | |||||||||||||||||||
| Other metrics: | |||||||||||||||||||||||
Average sales per store ($ in 000's)1,4 | $ | 1,946 | $ | 2,601 | |||||||||||||||||||
Average sales per square foot1,4 | $ | 629 | $ | 841 | |||||||||||||||||||
Stores > $2 million net sales2,4 | 32 | % | 57 | % | |||||||||||||||||||
Stores > $3 million net sales2,4 | 8 | % | 18 | % | |||||||||||||||||||
Average revenue per smart bed unit3 | $ | 6,393 | $ | 5,959 | $ | 6,060 | $ | 5,818 | |||||||||||||||
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 (stores, online, phone and chat) net sales divided by Total Retail smart bed units.
4 Fiscal 2025 included 53 weeks, as compared to 52 weeks in fiscal 2024. The additional week in 2025 was in the fiscal fourth quarter. Total Retail comparable sales have been adjusted to remove the estimated impact of the additional week on the three and twelve months ended January 3, 2026.
Sleep Number Announces Fourth-quarter and Full-year 2025 Results - Page 9 of 11
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 | ||||||||||||||||||||||
| January 3, 2026 | December 28, 2024 | January 3, 2026 | December 28, 2024 | ||||||||||||||||||||
| Net loss | $ | (58,510) | $ | (4,665) | $ | (131,958) | $ | (20,334) | |||||||||||||||
Income tax expense (benefit) | 36,578 | (4,299) | 35,984 | (5,162) | |||||||||||||||||||
| Interest expense | 13,880 | 11,742 | 49,382 | 48,368 | |||||||||||||||||||
| Depreciation and amortization | 12,091 | 15,628 | 53,169 | 64,979 | |||||||||||||||||||
| Stock-based compensation | 1,570 | 1,903 | 6,282 | 11,444 | |||||||||||||||||||
Restructuring costs1 | 3,151 | 3,684 | 50,697 | 18,066 | |||||||||||||||||||
Other non-recurring items2 | 10,643 | 998 | 14,699 | 998 | |||||||||||||||||||
| Asset impairments | — | 1,220 | — | 1,220 | |||||||||||||||||||
| Adjusted EBITDA | $ | 19,403 | $ | 26,211 | $ | 78,255 | $ | 119,579 | |||||||||||||||
1 Represents costs related to business restructuring actions.
2 Other non-recurring items includes the following:
| Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
| January 3, 2026 | December 28, 2024 | January 3, 2026 | December 28, 2024 | ||||||||||||||||||||
Inventory obsolescence write off | $ | 9,565 | $ | — | $ | 9,565 | $ | — | |||||||||||||||
CEO transition costs | 450 | 224 | 1,584 | 224 | |||||||||||||||||||
Debt issuance cost write off | — | — | 1,596 | — | |||||||||||||||||||
Proxy contest costs | — | 774 | 1,148 | 774 | |||||||||||||||||||
CFO search costs | 164 | — | 340 | — | |||||||||||||||||||
Legal and consulting costs | 464 | — | 466 | ||||||||||||||||||||
Other non-recurring items | $ | 10,643 | $ | 998 | $ | 14,699 | $ | 998 | |||||||||||||||
Free Cash Flow
(in thousands)
| Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
| January 3, 2026 | December 28, 2024 | January 3, 2026 | December 28, 2024 | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 1,876 | $ | (23,681) | $ | (3,283) | $ | 27,143 | |||||||||||||||
| Subtract: Purchases of property and equipment | 2,519 | 6,287 | 14,407 | 23,505 | |||||||||||||||||||
| Free cash flow | $ | (643) | $ | (29,968) | $ | (17,690) | $ | 3,638 | |||||||||||||||
Note - Our Adjusted EBITDA and Free Cash Flow 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 Fourth-quarter and Full-year 2025 Results - Page 10 of 11
SLEEP NUMBER CORPORATION AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)
| Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
| January 3, 2026 | December 28, 2024 | January 3, 2026 | December 28, 2024 | ||||||||||||||||||||
Operating expenses | $ | 201,334 | $ | 222,803 | $ | 879,543 | $ | 979,901 | |||||||||||||||
Subtract: Restructuring costs | 3,151 | 3,684 | 50,697 | 18,066 | |||||||||||||||||||
| Subtract: Asset impairments | — | 1,220 | — | 1,220 | |||||||||||||||||||
Subtract: Other non-recurring items1 | 1,078 | 998 | 5,134 | 998 | |||||||||||||||||||
Non-GAAP operating expenses | $ | 197,105 | $ | 216,901 | $ | 823,712 | $ | 959,617 | |||||||||||||||
Operating expense reduction versus prior period, excluding restructuring costs and non-recurring items | $ | 19,796 | $ | 135,905 | |||||||||||||||||||
1 Excludes inventory obsolescence write off of $9.6 million, which is included in the cost of sales line on the statement of operations.
| Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
| January 3, 2026 | December 28, 2024 | January 3, 2026 | December 28, 2024 | ||||||||||||||||||||
Gross profit | $ | 193,282 | $ | 225,581 | $ | 832,951 | $ | 1,002,773 | |||||||||||||||
Gross profit margin | 55.6 | % | 59.9 | % | 59.0 | % | 59.6 | % | |||||||||||||||
Add: Inventory obsolescence write off | 9,565 | — | 9,565 | — | |||||||||||||||||||
Non-GAAP gross profit | $ | 202,847 | $ | 225,581 | $ | 842,516 | $ | 1,002,773 | |||||||||||||||
Non-GAAP gross profit margin | 58.4 | % | 59.9 | % | 59.7 | % | 59.6 | % | |||||||||||||||
| Trailing Twelve Months Ended | |||||
| January 3, 2026 | |||||
| Adjusted EBITDA | $ | 78,255 | |||
Proforma annualized cost reductions1 | 50,000 | ||||
| Proforma adjusted EBITDA | 128,255 | ||||
| Net sales | 1,411,450 | ||||
| Proforma adjusted EBITDA margin | 9.1 | % | |||
1 Represents annualized impact of cost reductions over the future trailing twelve months the Company has executed.
Note - Our Non-GAAP Operating Expenses, Non-GAAP Gross Profit, Non-GAAP Gross Profit Margin, and Proforma Adjusted EBITDA measures 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 Fourth-quarter and Full-year 2025 Results - Page 11 of 11
SLEEP NUMBER CORPORATION AND SUBSIDIARIES
Calculation of Net Leverage Ratio under Revolving Credit Facility
(in thousands)
| Trailing Twelve Months Ended | |||||||||||
| January 3, 2026 | December 28, 2024 | ||||||||||
| Borrowings under revolving credit facility | $ | 588,200 | $ | 546,600 | |||||||
| Outstanding letters of credit | 8,800 | 7,147 | |||||||||
| Finance lease obligations | 159 | 241 | |||||||||
| Consolidated funded indebtedness | $ | 597,159 | $ | 553,988 | |||||||
Operating lease liabilities1 | 354,302 | 389,508 | |||||||||
| Total debt including operating lease liabilities (a) | $ | 951,461 | $ | 943,496 | |||||||
| Adjusted EBITDA (see above) | $ | 78,255 | $ | 119,579 | |||||||
| Consolidated rent expense | 104,983 | 107,105 | |||||||||
Proforma annualized cost reductions2 | 50,000 | — | |||||||||
| Consolidated EBITDAR (b) | $ | 233,238 | $ | 226,684 | |||||||
| Net Leverage Ratio under revolving credit facility (a divided by b) | 4.1 to 1.0 | 4.2 to 1.0 | |||||||||
1Reflects operating lease liabilities included in our financial statements under ASC 842.
2Represents annualized impact of cost reductions over the future trailing twelve months the Company has executed.
Note - Our Net Leverage Ratio under Revolving Credit Facility, Adjusted EBITDA and EBITDAR calculations 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 Fourth-quarter and Full-year 2025 Results - Page 12 of 11
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 | |||||||||||
| January 3, 2026 | December 28, 2024 | ||||||||||
| Adjusted net operating profit after taxes (Adjusted NOPAT) | |||||||||||
| Operating income | $ | (46,592) | $ | 22,872 | |||||||
Add: Operating lease interest1 | 24,346 | 26,775 | |||||||||
Less: Income taxes2 | 4,495 | (11,907) | |||||||||
| Adjusted NOPAT | $ | (17,751) | $ | 37,740 | |||||||
| Average adjusted invested capital | |||||||||||
| Total deficit | $ | (578,475) | $ | (451,586) | |||||||
Add: Long-term debt3 | 588,359 | 546,841 | |||||||||
Add: Operating lease liabilities4 | 354,302 | 389,508 | |||||||||
| Total adjusted invested capital at end of period | $ | 364,186 | $ | 484,763 | |||||||
Average adjusted invested capital5 | $ | 439,902 | $ | 497,972 | |||||||
Adjusted ROIC6 | (4.0 | %) | 7.6 | % | |||||||
| 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 20.2% and 24.0% for January 3, 2026 and December 28, 2024, 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 financially in full-year 2025?
Sleep Number reported 2025 net sales of $1.41 billion, down 16% year over year. The company posted a net loss of $131.96 million versus a $20.33 million loss previously, while adjusted EBITDA declined 35% to $78.26 million with a 5.5% margin.
What were Sleep Number’s (SNBR) fourth-quarter 2025 results?
In the fourth quarter of 2025, Sleep Number generated net sales of $347.39 million, down 8%. Gross margin fell to 55.6% from 59.9%, impacted by a $9.57 million inventory obsolescence charge. The quarter ended with a net loss of $58.51 million and adjusted EBITDA of $19.40 million.
How strong is Sleep Number’s (SNBR) liquidity and leverage position?
At January 3, 2026, Sleep Number had cash of $1.69 million and borrowings of $588.2 million under its revolving credit facility. Net cash used in operating activities was $3.28 million and free cash flow was negative $17.69 million. The net leverage ratio was 4.1x EBITDAR versus a 4.5x covenant limit.
What cost savings and efficiency actions did Sleep Number (SNBR) take in 2025?
Sleep Number implemented $185 million of annualized cost reductions across general and administrative, corporate structure, technology, and real estate. It also plans another $50 million of annualized fixed cost savings in 2026, supporting a pro forma adjusted EBITDA margin of roughly 9.1% over the trailing twelve months.
How is Sleep Number’s (SNBR) new product strategy performing?
The company launched its ComfortMode bed in January 2026, which is outselling plan by 3.5 times and carries higher margins than the prior models. The rest of the new product line, built around comfort and value positioning, is being introduced in March 2026 to support the turnaround.
What turnaround and capital structure steps is Sleep Number (SNBR) pursuing?
Sleep Number is executing a turnaround focused on product, marketing, distribution, and cost structure. It has engaged Guggenheim Securities to evaluate opportunities related to its amended credit facility, aiming to improve liquidity, the balance sheet, and overall financial flexibility while working toward topline growth in the second half of 2026.
Filing Exhibits & Attachments
4 documents
Sleep Number
NASDAQ:SNBR
SNBR Rankings
SNBR Latest News
SNBR Latest SEC Filings
Mar 12, 2026
[8-K] Sleep Number Corp Reports Material Event
Mar 12, 2026
[10-K] Sleep Number Corp Files Annual Report
Mar 12, 2026
[8-K] Sleep Number Corp Reports Material Event