Sleep Number Reports Results for First Quarter

May 12, 2026  by Karen Parrish in Business Strategy, Industry   

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.

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

The webcast replay will remain available for approximately 60 days at https://ir.sleepnumber.com.