Sleep Number 2025 Q2 Earnings Misses Targets as Net Loss Widens 395%

Sleep Number (SNBR) reported its fiscal 2025 Q2 earnings on July 31, 2025. The company experienced a significant decline in revenue and net income compared to the previous year. Sleep Number's net sales fell by 19.7% to $328 million, a decrease from $408 million in Q2 2024, missing market expectations. The company's guidance for the upcoming quarter projects continued challenges, with expected revenue of approximately $360 million and an adjusted EPS of around -$0.20. Despite these setbacks, Sleep Number remains focused on product innovation and cost management to drive future growth.

Revenue

Sleep Number's revenue for fiscal 2025 Q2 dropped 19.7% to $327.93 million, down from $408.41 million in the same quarter last year. The company-controlled channel brought in $327.93 million, with retail stores contributing $287.97 million. Online, phone, chat, and other channels accounted for $39.95 million, reflecting the total company revenue of $327.93 million.

Earnings/Net Income

Sleep Number's losses deepened significantly, with an EPS of $1.09 per share in 2025 Q2 compared to a loss of $0.22 per share in 2024 Q2. The net loss widened to $-25.01 million in 2025 Q2, marking a 395.2% increase from the previous year's $-5.05 million loss. The company's EPS performance is notably weak this quarter.

Post-Earnings Price Action Review

The strategy of purchasing SNBR shares following an earnings beat and holding them for 30 days incurred substantial losses. The approach resulted in a negative return of 84.76%, significantly underperforming the benchmark by 170.33%. The maximum drawdown was 0.00%, and the Sharpe ratio stood at -0.41, indicating a high level of risk associated with this investment strategy. The lack of significant price fluctuations suggests that investors reacted unfavorably to Sleep Number's earnings report, resulting in substantial volatility and risk without a corresponding reward.

CEO Commentary

"Despite the challenging market conditions, we are focused on leveraging our innovative sleep solutions to drive customer engagement," stated the CEO of Sleep Number. "We faced headwinds this quarter, with a significant decline in revenue attributed to decreased consumer spending. However, our strategic priorities remain on enhancing our product offerings and investing in technology to improve customer experience. I believe our investments in marketing and product development will position us well for future growth as we navigate these challenges. Our commitment to delivering quality sleep solutions reinforces our market position, and I maintain a cautious optimism about our recovery trajectory moving forward."

Guidance

"We expect to see revenue of approximately $360 million for the upcoming quarter, reflecting continued challenges in the retail environment. Our adjusted EPS is projected to be around -$0.20, as we manage costs while investing in growth initiatives. Additionally, we are guiding to capital expenditures of about $15 million, aimed at enhancing our operational capabilities."

Additional News

Sleep Number has recently undergone significant leadership changes to drive strategic initiatives. The company has seen notable insider stock purchases, indicating confidence in their future growth potential. Furthermore, Sleep Number launched the BreatheIQ app, aiming to address sleep health issues affecting 116 million Americans, showcasing a commitment to innovation. Additionally, Sleep Number announced modifications in their board and executive positions as part of an organizational redesign. These developments highlight the company's focus on enhancing its product offerings and operational efficiency to improve consumer engagement and drive revenue growth in the future.