Sleep Number launches new lower-priced mattress to help revive sales

Sleep Number this week took a big step forward on new CEO Linda Findley’s plan to turn around the Minneapolis-based company, introducing a new lower-priced mattress.

Sleep Number needs a win.

Over the years, the company has positioned itself as a premium mattress brand with the latest technology to help people sleep better.

However, as inflation rose after the pandemic, sales sputtered and the share price declined 44% just last year. The company’s largest shareholder, investment firm Stadium Capital Management, was pressing for changes. Sales have declined 11 consecutive quarters.

Fourth quarter and year-end results are expected in early March. Analysts expect full-year sales to decline 17%.

Shelly Ibach, Sleep Number’s long-time CEO, retired nine months ago.

Findley got to work immediately. She continued cost cutting, removing approximately $135 million in the first nine months; reduced headquarters staff to 2018 levels; and dramatically cut the second- and third -quarter marketing budget.

The ComfortMode mattress is made of the same quality materials as higher-priced models but without some of the technology bells and whistles.

The ComfortMode will be priced at $1,599. The next most expensive mattress, the C4, is $300 more. The company’s most advanced mattress, Climate360, which includes responsive firmness adjustability throughout the night and temperature control features, can exceed $10,000.

The new mattress “is our bed that will be the introduction to the brand for people who maybe haven’t experienced Sleep Number,” Findley said in an interview.

ComfortMode does not connect with Sleep Number’s mobile app. Instead, users can control firmness from a remote.

The company’s research shows 80% of Sleep Number customers use the app.

“That’s part of expanding our customer opportunity,” Findley said. “Some people don’t want to use an app. Some people do.”

With the ComfortMode mattress, Sleep Number is also introducing a new adjustable base, starting at $1,399. The base is designed to work with any bed frame, including platform frames. That would appeal to customers who don’t want to change out bedroom furniture.

A North Carolina native, Findley moved to Minneapolis from the New York area, where she was most recently CEO of the food delivery company Blue Apron. She’s been exploring the company and the city since.

Sleep Number’s largest shareholder is optimistic Findley’s turnaround steps will deliver long-term value.

“Stadium Capital has been consistently impressed by Linda’s herculean work to turn around a fundamentally great company,” said officials from Stadium Capital.

“This launch, the fastest in our company’s history, reflects our ability to listen to our consumers, adapt our development process and deliver the superior innovation that consumers expect from Sleep Number,” Melissa Barra, Sleep Number’s chief product and enterprise strategy officer, said in a news release.

After more than three years of decline, the mattress industry as a whole is beginning to show signs of acceleration again.

Industry sales increased for the eighth straight month in November, according to a survey of 15 retailers by Peter Keith, an analyst with Piper Sandler, though sales declined in December.