Sleep Number Corporation reported net sales of $327.9 million for the second quarter ended June 28, 2025, a 20% decrease year-over-year, significantly missing analyst expectations. The company posted a net loss of $(25.0) million, or $(1.09) per share, which was substantially wider than both analyst estimates and the prior year's loss.
The revenue decline was attributed to lower volume and a reduced store count, as well as an intentional 30% year-over-year cut to marketing spend in Q2 to reset an inefficient strategy. Despite the sales pressure, the gross profit rate remained resilient at 59.1%, flat year-over-year, supported by product cost reductions and a favorable product mix.
Sleep Number announced aggressive cost management, with operating expenses reduced by $42 million year-over-year in Q2. The company now expects full-year 2025 operating expenses (excluding restructuring) to be approximately $830 million, representing over $130 million in reductions compared to 2024. For the full year, Sleep Number projects net sales of approximately $1.45 billion, a 14% year-over-year decline, and anticipates breakeven free cash flow in the second half of 2025, while maintaining its leverage ratio within amended debt covenants.
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