Sleep Number Corp.

Furnishings, Fixtures & Appliances • Consumer Cyclical • Minneapolis, MN, United States • SNBR (NMS)

Quarter: Q4 2025 Reported: November 10, 2025 Sentiment: Positive

Sleep Number Corporation, together with its subsidiaries, designs, manufactures, markets, distributes, retails, and services sleep solutions in the United States. It offers smart beds and adjustable bases, pillows, sheets, and other bedding products. The company sells its products direct-to-consumer retail touch points, including stores, online, phone, and chat. The company was formerly known as Select Comfort Corporation and changed its name to Sleep Number Corporation in November 2017. Sleep Number Corporation was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

Analysis Summary

### Detailed Financial Performance Breakdown
While specific Q4 2025 revenue, net income, or EPS figures were not disclosed in this Form 8-K, Sleep Number provided crucial full-year 2025 guidance. The company expects adjusted EBITDA to be approximately $70 million. Critically, with the inclusion of expanded addbacks for pro forma cost actions (totaling approximately $40 million in structural changes, largely executed), the Consolidated EBITDA, as defined by the credit agreement, is projected to reach approximately $110 million. This higher Consolidated EBITDA figure is essential for demonstrating compliance with the revised financial covenants.

### Strategic Initiatives and Business Segment Analysis
The core strategic initiative is a comprehensive turnaround plan, supported by the recently amended credit agreement. Key components include significant structural cost reductions, with $40 million largely implemented. Looking to 2026, the company plans to stabilize and modestly increase marketing investments, aiming for greater efficiency. These investments are earmarked to support new product launches, attract a wider consumer base, and cultivate demand from repeat buyers. The overarching goal is to restart growth, enhance distribution opportunities, and maintain rigorous cost discipline.

### Management Commentary and Forward Guidance
Management expressed confidence in the turnaround plan, stating that the amended credit agreement "demonstrates lender confidence in the Company's strategy and management team." They explicitly expect to be in compliance with the new covenants, including for Q4 2025. For 2026, the outlook is positive, with expectations to "restart growth" and "generate meaningful free cash flow," driven by the 2025 exit rate of profitability and the full impact of cost savings.

### Competitive Positioning and Market Trends
The transcript does not directly address competitive positioning or broader market trends, focusing instead on internal financial restructuring and operational improvements. However, the emphasis on attracting a "broader set of consumers" and "new product initiatives" suggests an intent to strengthen market presence and appeal.

### Risk Factors and Concerns Raised
The document explicitly states that forward-looking statements are "subject to certain risks and uncertainties which could cause the Company’s results to differ materially." While not detailed in this specific filing, these risks are referenced as being in the Company's Form 10-K. Implicit risks include the successful execution of the turnaround plan, achieving the anticipated $40 million in cost savings, and the ability to effectively stabilize and grow marketing investments to drive demand and new product success. The necessity of amending credit covenants also implies past or ongoing financial pressures that require careful management.

### Analyst Q&A Highlights
This document is a Form 8-K disclosure, not an earnings call transcript, therefore no analyst Q&A highlights are available.

Key Highlights

• Sleep Number secured an amended and extended credit agreement through 2027, demonstrating lender confidence in its turnaround strategy.
• The credit agreement includes increased leverage ratio thresholds and expanded addbacks for Consolidated EBITDA to support covenant compliance.
• Company expects full year 2025 adjusted EBITDA of approximately $70 million, with Consolidated EBITDA reaching $110 million after $40 million in structural cost addbacks.
• Management anticipates compliance with the new covenants, including for the fourth quarter of 2025.
• Plans for 2026 include stabilizing and modestly increasing marketing investments, supporting new product initiatives, and attracting a broader consumer base.
• The company expects to restart growth and generate meaningful free cash flow in 2026 through continued cost discipline and expanded distribution opportunities.

Financial Metrics

eps

N/A

YoY: N/A

revenue

N/A N/A

YoY: N/A

guidance

net income

N/A N/A

YoY: N/A

Stock Performance (90 Days)

Data through Jan 16, 2026

Layoff Events

Earnings Calls

Positive Signals

• Lender confidence in the Company's strategy and management team, evidenced by credit agreement extension through 2027.
• Increased covenant levels and expanded EBITDA addbacks provide necessary financial flexibility for the turnaround plan.
• Expectation to be in compliance with new covenants, including Q4 2025, supported by structural changes.
• Approximately $40 million of structural cost changes have been implemented, with the majority already executed.
• Anticipation of restarting growth and generating meaningful free cash flow in 2026.

Risks & Concerns

— Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
— Successful execution of the turnaround plan is critical for achieving financial targets and covenant compliance.
— Reliance on anticipated cost savings and marketing efficiency gains to drive profitability and growth.
— The need for covenant amendments implies ongoing financial pressures or challenges that require careful management.
— Ability to effectively stabilize and grow marketing investments to support new product initiatives and attract consumers.