Sleep Number Corporation Reports 11% Decline in Net Sales for Fiscal Year 2024

Sleep Number Corporation reported a challenging fiscal year 2024, with net sales declining by 11% to $1.68 billion, down from $1.89 billion in 2023. This decrease was attributed to ongoing weakness in the mattress industry, which saw unit volumes drop to their lowest levels since 2015, alongside heightened consumer scrutiny of spending amid economic pressures. The company's comparable sales across its retail channels fell by 10%, with average sales per store decreasing to $2.6 million from $2.9 million in the previous year. Despite these challenges, Sleep Number managed to improve its gross profit margin to 59.6%, up from 57.7% in 2023, primarily due to cost reductions and efficiency gains in its operations.

In response to the difficult market conditions, Sleep Number implemented significant cost-cutting measures, resulting in an $86 million reduction in operating expenses. This included a $45 million decrease in research and development costs and a $81 million reduction in sales and marketing expenses. The company also incurred $18 million in restructuring costs as part of its operational transformation initiated in late 2023. Despite these efforts, Sleep Number reported a net loss of $20 million for the year, compared to a loss of $15 million in 2023, with a diluted loss per share of $0.90.

Operationally, Sleep Number's workforce consisted of 3,654 employees as of December 28, 2024, with a significant portion engaged in retail sales and support. The company maintained a strong customer engagement rate, with over 3 million Smart Sleepers actively using its digital sleep wellness platform, achieving an average monthly engagement rate of 80%. The company also expanded its product offerings, launching the ClimateCool smart bed in 2024, which enhances temperature control for couples with differing sleep preferences.

Looking ahead, Sleep Number aims to navigate the ongoing mattress industry recession by focusing on improving its operating model and enhancing financial resilience. The company anticipates that its strategic initiatives, including cost reductions and product innovations, will position it for recovery as market conditions improve. However, it remains cautious about the economic environment, consumer sentiment, and the potential impact of rising interest rates on consumer spending. The company has also amended its credit agreement to provide additional liquidity and flexibility, reflecting its commitment to maintaining operational stability during these challenging times.