Here are 1-3 brief analogies to describe Sleep Number:

• Sleep Number is like Peloton for sleep – it takes a traditional item (a bed) and makes it smart, personalized, and data-driven for improved health and performance.
• Sleep Number is like Fitbit for your bed – it's a device built into your bed that tracks your sleep, provides insights, and helps optimize your rest.

• Sleep Number® Smart Beds: Customizable air beds that allow users to adjust firmness on each side, often integrated with sleep tracking and insights.
• Pillows: A variety of pillows designed with different support levels and materials to enhance sleep comfort.
• Bedding: Includes sheets, mattress pads, and protectors tailored for their smart beds and general use.
• Bases & Furniture: Adjustable bed bases, frames, and headboards designed to integrate with their mattresses and enhance bedroom aesthetics.

Sleep Number (symbol: SNBR) primarily sells its products directly to individual consumers rather than to other companies. Its business model is direct-to-consumer (DTC) through its retail stores, online platform, and phone sales.

The company serves the following categories of individual customers:

• Health & Wellness-Focused Consumers: This category includes individuals and couples who prioritize sleep as a critical component of their overall health and well-being. They are often seeking solutions for specific sleep-related issues such as back pain, discomfort, snoring, or a desire for improved energy and physical recovery. They value the customizable firmness and support that Sleep Number beds offer to enhance their sleep quality.
• Premium & Tech-Savvy Consumers: These customers are willing to invest in high-end, technologically advanced products for their homes. They appreciate features like Sleep Number's SleepIQ technology, which tracks sleep patterns and provides personalized insights. They are typically early adopters or comfortable with smart home technology and seek innovative solutions to optimize their lifestyle, including their sleep environment.
• Couples with Divergent Sleep Needs: A significant portion of Sleep Number's customer base consists of couples who have different comfort preferences or support requirements. The dual-sided adjustability of Sleep Number beds allows each individual to customize their side of the mattress to their ideal firmness level without compromising their partner's comfort, solving a common challenge faced by couples.

Linda Findley, President and Chief Executive Officer

Linda Findley joined Sleep Number on April 7, 2025. She is an accomplished senior executive with expertise in operations management, organizational transformation, marketing strategy, and global expansion for consumer brands combining digital and physical products. Prior to Sleep Number, Findley served as the President, Chief Executive Officer, and Director of Blue Apron Holdings, Inc. from 2019 to 2024. From 2016 to 2018, she was the Chief Operating Officer at Etsy, Inc.

Robert P. Ryder, Interim Chief Financial Officer

Robert P. Ryder has served as interim Chief Financial Officer for Sleep Number since July 21, 2025. He brings over 30 years of finance leadership experience with both public and private companies. Ryder's previous roles include interim CFO for Resideo Technologies, Inc. from 2019 to 2020, CFO for Constellation Brands from 2007 to 2015, and CFO at IMG and American Greetings Corp. He also held seven advancing management positions over 13 years at PepsiCo, Inc. Since 2015, Ryder has also been a senior advisor at Boston Consulting Group and the CEO of Horsepower Advisors, LLC, a management consulting firm.

Melissa Barra, Executive Vice President, Chief Product and Enterprise Strategy Officer

Melissa Barra oversees Sleep Number's product portfolio, from development through distribution, and is responsible for streamlining research and development efforts to ensure products, partnerships, and distribution evolve to meet customer needs. She previously served as Chief Strategy and Customer Relationship Officer from January 2015 to June 2019 and Vice President, Consumer Insights and Strategy from February 2013 to January 2015 at Sleep Number. Before joining Sleep Number in 2013, Barra was Vice President, Process Reengineering Officer, and also Vice President, Finance, New Business Customer Solutions Group for Best Buy Co., Inc.

Christopher Krusmark, Executive Vice President, Chief Retail and People Officer

Chris Krusmark leads Sleep Number's retail selling experience, real estate footprint, and a wide range of functions including sales, talent acquisition, training, belonging and inclusion, total rewards, talent management, and retail operations. Prior to his current role, Krusmark served as Executive Vice President and Chief Human Resources Officer, interim Chief Financial Officer, and Vice President of Sales Operations, Field Services and Training at Sleep Number. Before joining Sleep Number in 2005, he was a certified public accountant with EY and Arthur Andersen.

Samuel R. Hellfeld, Executive Vice President, Chief Legal and Risk Officer and Secretary

Samuel R. Hellfeld leads Sleep Number's legal, risk management, and safety and security teams. He previously served as Vice President, Associate General Counsel from 2015 to 2018 and joined Sleep Number in 2013 as Director, Intellectual Property Counsel. Before joining Sleep Number, Hellfeld was a Partner in the law firm of Fox Rothschild LLP, specializing in intellectual property and litigation.

The key risks to Sleep Number's (SNBR) business include a challenging consumer spending environment, high debt levels and financial fragility, and intensified competition leading to an erosion of brand differentiation.

1. Challenging Consumer Spending Environment: Sleep Number's success is significantly dependent on discretionary consumer spending, which is currently hampered by low consumer confidence, a weak housing market, and broader economic uncertainties such as inflation, interest rates, and job security. Sleep Number's products are often classified as a luxury, making them particularly vulnerable to these economic factors. This environment has led to declining sales and profitability, with expectations for continued headwinds at least through the first half of 2025.
2. High Debt Levels and Financial Fragility: The company is facing challenges due to high debt levels and significant interest payments, which raise concerns about its ability to cover these obligations from operations. Sleep Number's balance sheet has been described as fragile, with a "medium" bankruptcy risk cited in early 2025. This elevated leverage limits the company's financial flexibility, constraining its capacity to invest in innovation or expand its market presence. Although the company has amended its bank agreement to provide more flexibility through 2027, profitability is not anticipated until fiscal year 2027.
3. Intensified Competition and Erosion of Brand Differentiation: The mattress industry is highly competitive and fragmented, with the rise of direct-to-consumer (DTC) "bed-in-a-box" brands intensifying price competition. Sleep Number's premium smart bed differentiation has reportedly eroded as consumers increasingly view mattresses as commoditized products rather than high-tech items warranting a significant premium. Furthermore, the company's reduced spending on marketing and media, a cost-cutting measure, risks further market share loss if competitors maintain or increase their promotional efforts. Delays in digital transformation also pose a risk, as rivals expand their digital-first models.

The rise of direct competitors focused solely on advanced "smart bed" technology and personalized sleep solutions, particularly companies like Eight Sleep.

Eight Sleep's "Pod" mattress system integrates advanced cooling and heating, sleep tracking, and AI-powered coaching directly into the mattress. This directly challenges Sleep Number's core offering of personalized comfort and sleep optimization via air chambers and associated technology. Eight Sleep targets a similar high-end, tech-savvy consumer base looking for data-driven sleep improvement. Their technology offers distinct features (like active temperature regulation) that present an alternative and increasingly popular approach to enhancing sleep compared to Sleep Number's primary air-chamber adjustments.

The addressable markets for Sleep Number's main products and services primarily encompass the U.S. and global mattress and bedding industries, with a particular focus on the adjustable bed and smart sleep technology segments.

• The worldwide mattress market was valued at approximately $34.52 billion in 2024 and is projected to grow to an estimated $40.7 billion by 2029.
• In the U.S. specifically, the mattress market had a valuation of $11.57 billion in 2024, with projections indicating growth to approximately $13.39 billion by 2029. Another estimate placed the U.S. mattress market revenue at around $16 billion in 2020.
• The broader U.S. bedding industry, which includes mattresses and foundations (both static and adjustable), saw wholesale shipments of approximately $13 billion in 2021, equating to about $26 billion at retail.
• For Sleep Number's more specialized products, the Adjustable Bed & Mattress Manufacturing industry in the U.S. is a significant addressable market. Sleep Number holds an estimated 23.6% of the total industry revenue in this segment.
• More broadly, the total U.S. sleep-health economy was estimated to be between $30 billion and $40 billion in 2017, encompassing mattresses, foundations, and emerging solutions for sleep deprivation.

Sleep Number's main products include various sizes of mattresses, foundations, bedding, adjustable bases (such as FlexFit), and smart beds like the Sleep Number 360, which incorporate temperature balancing features. The company has been ranked as the third largest U.S. bedding retailer and etailer for 2022, holding an estimated 9% market share of industry retail revenue.

Sleep Number (SNBR) is focusing on several key drivers to stimulate future revenue growth over the next 2-3 years, as the company executes a turnaround strategy to reposition its brand and reignite growth. These drivers include:

1. Product Innovation and Differentiation: The company plans to revamp its product offering, focusing on comfort, durability, and total value to attract a broader customer base. Sleep Number's existing "smart bed ecosystem" and the Climate360® smart bed, which offers individualized temperature control and personalized sleep insights, are central to its strategy of consumer-focused differentiation.
2. Expansion and Optimization of Distribution Channels: Sleep Number intends to optimize its store footprint, expand its digital sales channels, and explore new distribution opportunities, such as testing a presence on HSN. This multi-channel approach aims to increase reach and accessibility for potential customers.
3. Brand Repositioning and Modernized Marketing: To drive consumer demand, Sleep Number is making strategic shifts in its brand positioning and will refresh its creative marketing to better highlight product value. Modernizing marketing efforts is a key initiative to stabilize sales and return to growth by 2026.
4. Operational Efficiency and Strategic Cost Reductions: While primarily impacting profitability, significant ongoing operating expense reductions and gross margin improvements are crucial for financial flexibility and investment in growth initiatives. Management anticipates exceeding its cost savings targets and continuing cost control, which can indirectly support revenue growth by allowing for more competitive strategies or freeing capital for demand-driving investments.

Share Repurchases

• Sleep Number repurchased a total of $574 million in stock between Q4 2020 and Q3 2021.
• The company's management engaged in debt-funded share buybacks during 2020-2021 at excessively high share prices, which has been cited as materially destroying long-term shareholder value.
• The number of shares outstanding decreased from 26.96 million in 2020 to 22.24 million in 2022, reflecting significant share repurchases during this period.

Share Issuance

• Sleep Number's outstanding shares increased from 22.24 million in 2022 to 22.9 million in 2025.
• In May 2025, shareholders approved an increase of 500,000 shares to the 2020 Equity Incentive Plan, reserving them for future issuance.
• The company made inducement grants in May 2025 to its new Executive Vice President and Chief Marketing Officer, including performance stock units and time-vested restricted stock units totaling 43,448 shares.

Capital Expenditures

• Sleep Number slashed its 2024 capital expenditure (CapEx) budget by half, from $60 million to $30 million, with a focus on generating free cash flow to pay down debt.
• Capital expenditures were reduced by $5 million in Q3 2025 compared to the previous year.
• The company plans to invest in growth initiatives in 2026, focusing on product, brand positioning, and distribution, which includes rationalizing its store fleet.