Sleep Number Corporation (NASDAQ:SNBR) reported mixed results for the fourth quarter and full year of 2025, with sales declining amid a challenging consumer environment while profitability and cost-control efforts exceeded expectations.
The mattress maker posted full-year net sales of $1.41 billion, a 16% decline from the prior year. The drop was partly due to the absence of an additional trading week that had boosted results in 2024. Despite the lower revenue, the results were in line with company guidance.
Adjusted EBITDA for the year reached $78 million, exceeding the company’s outlook by about $8 million, supported by aggressive cost reductions and operational changes.
Investors reacted positively to the results, sending Sleep Number shares up nearly 20% in premarket trading to around $5.50, as the market focused on the company’s restructuring progress and strategic initiatives.
Cost cuts and innovation support performance
Sleep Number said its turnaround strategy in 2025 focused heavily on reducing operating costs while continuing to invest in product development.
Operating expenses fell by $136 million, or about 14.2%, compared with the previous year. However, the company’s gross profit margin declined slightly to 59%, down 60 basis points year-over-year.
Despite the difficult retail environment, Sleep Number reported fourth-quarter revenue of $347 million, exceeding analyst expectations of approximately $332 million.
New products part of turnaround strategy
The company said product innovation remains central to its recovery strategy. New mattress lines, including the ComfortMode and ComfortNext collections, are expected to help drive growth by targeting younger consumers and entry-level premium buyers.
Executives highlighted the strong launch of the ComfortMode mattress, noting that early sales have exceeded expectations by roughly 3.5 times.
Looking ahead, Sleep Number plans to pursue further efficiency improvements and aims to deliver an additional $50 million in annualized fixed cost reductions during 2026.
Market pressures remain
While the company’s strategy has gained investor support, Sleep Number continues to face several industry challenges.
Supply chain disruptions could affect product availability and margins, while broader economic pressures may weigh on consumer demand for higher-priced mattresses. Competition from traditional manufacturers and direct-to-consumer mattress brands also remains intense.
During the company’s earnings call, analysts asked about the impact of recent product launches and how the company plans to maintain its competitive position in the premium mattress market. Executives reiterated that innovation and disciplined cost management will remain key priorities as Sleep Number works to return to sustainable growth.