Sleep Number Corporation (NASDAQ:SNBR) saw its shares plunge 21.3% in premarket trading following the release of second-quarter results that fell far short of analyst forecasts. The smart bed maker also issued a weaker full-year outlook, underscoring the ongoing challenges in its turnaround strategy.
The company reported a loss of $1.09 per share for Q2, a steep miss compared to the expected loss of just $0.11 per share. Revenue declined 19.7% year-over-year to $328 million, missing the consensus estimate of $357.42 million. The drop was attributed to lower sales volumes and a smaller store footprint after aggressive cost-cutting measures were implemented early in the quarter.
“Sleep Number is in a turnaround. I joined because it is fundamentally a great company and I continue to believe that,” said Linda Findley, President and CEO. “We cut marketing spend dramatically in Q2 because the old marketing strategy was inefficient, and we needed to implement a major reset. We expected the sharp drop in second quarter sales based on these changes.”
Despite lower revenue, gross profit margin held steady at 59.1%, matching the previous year. Operating expenses fell $48 million, or 21%, to $185 million before restructuring charges, driven by cuts in marketing, selling, general, and administrative costs.
For the full year 2025, Sleep Number lowered its revenue guidance to about $1.45 billion, down 14% year-over-year and below analyst estimates of $1.51 billion. The company expects a gross profit margin of 61% and anticipates free cash flow to break even in the second half of the year.
At quarter-end, the company’s leverage ratio stood at 4.56x EBITDAR on a trailing 12-month basis, close to but still under its covenant limit of 4.75x, signaling limited financial flexibility as it works through its turnaround plan.
Sleep Number Corporation stock price
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