Sleep Number has turnaround plan after 11 quarters of sales declines

Sleep Number CEO Linda Findley has a steep climb to get the company she has led for six months back in the black.

Quarterly sales have declined for 11 quarters in a row, and on Wednesday the company posted a third-quarter loss of $40 million.

“I am not pleased, but we’re on top of the reasons, and we’re moving quickly to stabilize all elements of the company,” Findley told analysts on the earnings call.

Findley said in an interview that the company now has a handle on the reasons for the declines and is well-positioned for a turnaround.

Much of the 19.6% decrease in third-quarter sales was attributed to cuts in marketing and reduced traffic to stores. The company decreased marketing spending by 32% in the second and third quarters.

The company said Wednesday a new credit agreement with lenders will give the company more flexibility in spending going forward.

The transformation at Sleep Number is focused on product, brand positioning and distribution, she said.

“It’s a good venue for us, because you have the ability to describe and give a lot more detail on the product and how it helps,” Findley said.

Findley said to expect more experiments with distribution in coming months.

“We’re looking for opportunities where we can maximize our already healthy margin on our product and make sure that the experience is the right experience for the customer,” she said.

The loss for the quarter included $41 million in restructuring and other nonrecurring costs as the company closed underperforming stores.

Findley also has some thoughts about positioning the brand in the marketplace.

In 2026, Findley said Sleep Number will simplify its product assortment and focus on connecting its price points to value for the customer.

As the company puts the new plan in place, Sleep Number adjusted its sales outlook for the rest of the year. It now expects full-year sales of $1.4 billion, down from the $1.45 million guidance it offered in the second quarter earnings release.

That would be its lowest annual revenue since 2017.

Sleep Number didn’t disclose the number of stores closed or the reduction in employees for the quarter but said corporate employment is now at 2017 levels.

Mattress industry trends have been improving this year after an extended downcycle.

Findley wants Sleep Number to be ready to capture the upswing.

“Part of the reason we’re trying to move really, really fast is so we can be ready when the customer is ready,“ Findley said.