Sleep Number Reports Results for First Quarter 2025

April 30, 2025  by Karen Parrish in Business Strategy, Industry   

FIRST QUARTER HIGHLIGHTS

Net sales in the first quarter of $393 million, down 16% compared with the first quarter of 2024

Gross profit margin of 61.2%, up 250 basis points versus the prior year

Reduced first quarter operating expenses by $23 million year-over-year, before restructuring and other non-recurring costs

Reported first quarter net loss of $8.6 million, compared with a net loss of $7.5 million for the same period last year

Delivered first quarter adjusted EBITDA of $22 million down 41% versus the same period last year

Introduced new organizational structure and accelerated cost saving initiatives in the second quarter of 2025 with expected annualized operating expense reductions of $80 to $100 million before restructuring costs from the cost structure versus first quarter of 2025

Linda Findley, president and CEO, commented, “We are laser focused on delivering strong returns for shareholders and are taking a different approach to the Sleep Number business. I see a way to run our business on a lower cost basis without compromising our topline. We are fundamentally changing how we operate. We implemented an organizational redesign, including changes to our leadership team, to simplify decision making and bring us closer to the customer. With that change, we reduced corporate management roles by 21%. In addition, we are reshaping key functions within the company, including marketing and research and development, to further drive efficiency. Since I joined three weeks ago, our efforts have reduced second quarter operating expenses by approximately 10% of our current cost structure, as of the first quarter of 2025."

“Sleep Number is truly differentiated and no one else does what we do. With the organizational changes implemented, we are now focused on building a strategy for growth with our customers at the center. I joined Sleep Number because I believe strongly in the company’s long-term potential, and I am confident that we can change our trajectory to drive sustainable growth and profitability.”

Cash Flows, Liquidity and Balance Sheet Highlights (all comparisons year-over-year unless otherwise noted)

Net cash used in operating activities was $2.6 million for the quarter, down $36 million.

Free cash flow was a use of $7.2 million for the quarter, down $32 million.

The company’s leverage ratio was 4.46x EBITDAR on a trailing 12-month basis at the end of the quarter versus the covenant maximum of 4.75x.

Financial Outlook

Given the recent leadership transition, changes being implemented within the business, and the rapidly evolving macroeconomic environment, the company will not be providing a 2025 outlook at this time. The company will continue to reassess its ability to provide such guidance as the new leadership team evaluates the company’s strategy and the macroeconomic and consumer demand environment.

Conference Call Information

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.