Sleep Number's shares lost 29% of their value Friday after a disappointing second quarter financial report.

The results were better than expected. The Minneapolis-based company had warned profits would be down, and analysts were expecting a loss. Net earnings fell from $35 million, or $1.54 a share, in the same quarter a year ago to $754,000, or 3 cents a share.

Still, revenue missed estimates at $459 million, down 16% from last year, the company reported after the markets closed on Thursday.

"Sleep Number and the mattress industry overall have been operating in a disrupted and challenging macro environment, which has resulted in a historic contraction in demand for mattresses with six consecutive quarters at recessionary spend levels," Shelly Ibach, the company's chief executive, told analysts on an earnings call.

After the earnings release, Peter Keith, an analyst who covers the company for Piper Sandler, wrote in an investor note that the sharp selloff was a correction to the rise in the company's stock over the past two months.

Sleep Number shares had risen 112% since the start of June until the decline that began in after-markets trading on Thursday.

Marketing and new product innovation generally have separated Sleep Number from competitors, and Sleep Number's recent initiatives still has Ibach confident in the second half of the year.

"As we continue to navigate a challenging macro environment, our business is well positioned for growth," Ibach wrote in a news release. "Demand has steadily improved year-to-date, and we expect this trend to continue in the back-half of the year."

Sleep Number is introducing new advertising tied to the opening of the National Football League season as part of its renewed sponsorship agreement with the NFL, and it plans to complete the roll out of a new lineup of smart beds in the second half.

Last fall, Sleep Number introduced the Climate 360 bed that has temperature control features. The remaining beds in the new product portfolio will have similar features.

"With the introduction of our next-generation smart beds, all Sleep Number smart beds now have temperature benefits," Ibach said on the earnings call.

On Thursday, Sleep Number also announced that Francis Lee — a former executive at Nike, Gap and Wyze Labs, an AI-powered, smart home innovator — will become its new chief financial officer and executive vice president. He officially starts Aug. 14. Lee succeeds David Callen, who resigned as CFO of Sleep Number in January.

Sleep Number shares closed Friday at $27.17 a share, down 29.4%.