Sleep Number Reports Quarter Four & Year End Results for  2024

March 5, 2025  by Karen Parrish in Business Strategy, Industry   

“In the face of significant ongoing weakness in the U.S. bedding industry, we have transformed Sleep Number’s operating model over the past 18 months for greater financial resilience. In 2024, we delivered gross margin rate improvement and operating cost reductions that were nearly double our original targets for the year, while generating positive free cash flow,” said Shelly Ibach, chair, president and CEO.

“While the marketplace remains extremely challenging, our dedicated team is intently focused on driving improved demand and further advancing our operating model transformation, which position Sleep Number to deliver profitable long-term growth when the market recovers.”

Fourth Quarter Overview

Net sales of $377 million were down 12% versus the prior year, including one to two percentage points of pressure from lower store count versus the prior year

Gross margin of 59.9% was up 330 bp versus the prior year, driven by year-over-year product cost reductions, favorable product mix, and efficiency gains in our home delivery and logistics operations

Operating expenses of $219 million were down $28 million versus the prior year (before restructuring costs)

Net loss of $5 million compared with a net loss of $25 million for the same period last year

Adjusted EBITDA of $26 million was up 43% compared to the prior year, with an adjusted EBITDA margin of 7.0%, up 270 bp versus the prior year

Full Year Overview

Net sales decreased 11% to $1.68 billion in 2024

Gross margin of 59.6% of net sales was up 190 bp versus the prior year, including 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 of $962 million were reduced by $88 million versus the prior year (before restructuring costs)

Net loss of $20 million versus a net loss of $15 million last year

Adjusted EBITDA of $120 million, with an adjusted EBITDA margin of 7.1%, up 40 bp versus the prior year

Cash Flows and Liquidity Review

Net cash provided by operating activities of $27 million for the year, up $36 million versus the same period last year

Free cash flow of $4 million for the year, up $70 million versus the prior year

Leverage ratio of 4.2x EBITDAR at the end of the year versus covenant maximum of 4.8x

Amended Credit Agreement
The company also announced today that it has entered into an amendment for its existing revolving credit facility, including permitted financial covenant levels, to provide greater flexibility through 2025. Additional details regarding the credit agreement amendment are available on the Form 8-K filed with the Securities and Exchange Commission.

Leadership Transition
In a separate press release today, the company also announced:
Linda Findley has been appointed as Sleep Number’s President and Chief Executive Officer, and a member of the Board effective April 7, 2025

In addition, Phillip M. Eyler has been appointed independent Chair of the Board, effective upon the conclusion of the 2025 Annual Meeting

Financial Outlook
As Ms. Findley transitions into her role, we want to provide her with the time and flexibility necessary to evaluate our strategies and business trends prior to issuing a 2025 financial outlook at a later date.

Conference Call Information
Management will host its regularly scheduled conference call to discuss the company’s results at 5 p.m. EST (4 p.m. CST; 2 p.m. PST) 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.