What caused SNBR's earnings decline in 2024?

Sleep Number's earnings decline in 2024 can be attributed to a combination of factors:

1. **Revenue Decline**: The most significant factor contributing to Sleep Number's earnings decline was the decrease in net sales. In Q4 2024, net sales fell by 12% year-over-year to $377 million. This decline was due to ongoing weakness in the U.S. bedding industry, low consumer sentiment, and challenging market conditions. The mattress industry faced a difficult demand environment, with 2024 US mattress volumes at their lowest since 2015. Additionally, consumer sentiment, influenced by inflation and economic policies, played a role in reduced demand for mattresses during key shopping events.
2. **Cost Management**: Despite the revenue decline, Sleep Number managed to improve its gross profit rate to 59.9% in Q4 2024, up 330 basis points year-over-year. This improvement was due to year-over-year product cost reductions, favorable product mix, and efficiency gains in home delivery and logistics. The company also reduced its operating expenses, with a $28 million decrease in Q4 2024 and an $88 million reduction for the full year 2024 before restructuring costs.
3. **Market Conditions and Consumer Behavior**: The bedding industry faced challenges such as ongoing consolidation, low-cost imports, and sustainability issues. These factors, combined with high interest rates and low home sales, impacted demand in the market. Consumers, influenced by inflation and uncertain economic policies, held back on purchases, which affected Sleep Number's sales.

In conclusion, Sleep Number's earnings decline in 2024 was primarily caused by a 12% decrease in net sales due to challenging industry conditions, low consumer sentiment, and reduced demand for mattresses. While the company implemented cost management strategies that improved gross profit margins, the revenue decline and associated factors ultimately led to the earnings decline.