Sleep Number (NASDAQ:SNBR) Announces Earnings Results

Key Points

• Sleep Number reported a large earnings miss — EPS of ($2.55) vs. estimates of ($0.56), although revenue of $347.4M beat expectations but was down 7.8% YoY.
• Restructuring has delivered over $185M of annualized savings with an incremental $50M identified and pro forma 2025 adjusted EBITDA of $78M, but capital‑structure risk remains with year‑end liquidity of only $58M and the company engaging Guggenheim to evaluate refinancing options.
• The new ComfortMode product is outperforming (selling ~3.5x plan) and four new beds plus a base launch March 23, while management expects a steep Q1 sales decline followed by a sequential recovery in Q2 and double‑digit growth in H2.

Sleep Number (NASDAQ:SNBR - Get Free Report) issued its quarterly earnings results on Thursday. The company reported ($2.55) earnings per share for the quarter, missing analysts' consensus estimates of ($0.56) by ($1.99), FiscalAI reports. The business had revenue of $347.39 million during the quarter, compared to analysts' expectations of $328.67 million. During the same period in the prior year, the firm posted ($0.21) EPS. The company's revenue for the quarter was down 7.8% on a year-over-year basis.

Here are the key takeaways from Sleep Number's conference call:

• The new product line is off to a strong start — the January-launched ComfortMode is selling at ~3.5x plan and about twice the sales of the three c‑series beds it replaces, and four new beds plus a base will be available for purchase starting March 23, broadening the brand's premium entry point.
• Management has aggressively cut costs — >$185M of annualized savings realized with an identified incremental $50M to execute — and 2025 adjusted EBITDA of $78M exceeded guidance, with pro forma adjusted EBITDA margin ~9% (up ~200 bps year-over-year).
• Liquidity and capital structure remain a key risk: year-end total liquidity was $58M, the company faces near-term pressure from weak early‑2026 demand and inventory clearance, and has engaged Guggenheim to evaluate refinancing and inbound interest to address covenant and balance‑sheet stress.
• Near-term outlook is mixed — Q1 net sales are expected to decline in the high‑teens% due to the slow start and clearance activity, but management anticipates a material sequential recovery in Q2 and double‑digit growth in H2, with full‑year adjusted EBITDA growth targeted in the high‑teens to mid‑20s% and positive free cash flow expected.

Sleep Number Trading Up 9.4%

SNBR opened at $5.02 on Thursday. Sleep Number has a 1-year low of $3.49 and a 1-year high of $13.94. The company has a market cap of $114.47 million, a price-to-earnings ratio of -1.43 and a beta of 1.93. The company's fifty day moving average price is $9.01 and its two-hundred day moving average price is $7.79.

Institutional Trading of Sleep Number

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Charles Schwab Investment Management Inc. increased its stake in Sleep Number by 52.1% in the 4th quarter. Charles Schwab Investment Management Inc. now owns 1,121,245 shares of the company's stock valued at $9,486,000 after buying an additional 384,124 shares during the last quarter. Millennium Management LLC grew its holdings in shares of Sleep Number by 1,080.8% in the third quarter. Millennium Management LLC now owns 716,873 shares of the company's stock valued at $5,032,000 after acquiring an additional 656,162 shares in the last quarter. Geode Capital Management LLC increased its position in shares of Sleep Number by 1.4% during the second quarter. Geode Capital Management LLC now owns 530,764 shares of the company's stock valued at $3,586,000 after acquiring an additional 7,570 shares during the last quarter. Bank of America Corp DE increased its position in shares of Sleep Number by 28.4% during the second quarter. Bank of America Corp DE now owns 475,623 shares of the company's stock valued at $3,213,000 after acquiring an additional 105,329 shares during the last quarter. Finally, State Street Corp lifted its holdings in Sleep Number by 0.4% during the fourth quarter. State Street Corp now owns 456,627 shares of the company's stock worth $3,863,000 after acquiring an additional 1,994 shares during the period. 85.67% of the stock is owned by institutional investors.

Analyst Upgrades and Downgrades

Several equities research analysts recently commented on SNBR shares. Weiss Ratings reaffirmed a "sell (e+)" rating on shares of Sleep Number in a research note on Friday, January 9th. Piper Sandler increased their price objective on shares of Sleep Number from $5.00 to $12.00 and gave the stock a "neutral" rating in a research report on Friday, January 16th. Finally, UBS Group reaffirmed a "neutral" rating and issued a $10.00 target price on shares of Sleep Number in a research report on Thursday, February 12th. Two equities research analysts have rated the stock with a Hold rating and one has issued a Sell rating to the company. According to MarketBeat.com, Sleep Number has an average rating of "Reduce" and a consensus price target of $11.00.

About Sleep Number

Sleep Number Corporation NASDAQ: SNBR is a Minneapolis‐based company specializing in the design, manufacture and retail of adjustable air mattresses and bedding products. The company's flagship Sleep Number® bed features dual air chambers that allow each side of the mattress to be tailored to an individual's preferred firmness, supported by integrated SleepIQ® technology. This proprietary monitoring system tracks biometric data such as heart rate, breathing and motion, delivering personalized sleep insights through a connected app.

Founded in 1987 as Select Comfort, the business pioneered adjustable air mattress technology and has since grown into a direct-to-consumer retailer.

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