Sleep Number Corporation (Nasdaq: SNBR) announced financial results for the first quarter ended 29 March 2025, alongside a strategic overhaul of its organisational structure aimed at improving efficiency, cash generation and shareholder value.
The company reported net sales of $393 million for the quarter, representing a 16% year-over-year decline, primarily due to reduced volume and a smaller store footprint. Despite this revenue drop, gross profit margin increased by 250 basis points to 61.2%, driven by cost efficiencies and a more favourable product mix. Gross profit totalled $241 million, a decrease of $36 million compared to Q1 2024.
Operating expenses, excluding restructuring and non-recurring items, declined by $23 million to $237 million, primarily reflecting lower marketing and selling costs. The company posted a net loss of $8.6 million, or $0.38 per diluted share, compared to a net loss of $7.5 million a year ago. Adjusted EBITDA fell 41% to $22 million, reflecting lost fixed-cost leverage, though partially offset by improved margins.
Since joining as President and CEO three weeks ago, Linda Findley has initiated significant organisational changes aimed at simplifying operations and reducing costs. 'We are laser focused on delivering strong returns for shareholders and are taking a different approach to the Sleep Number business,' Findley said. 'I see a way to run our business on a lower cost basis without compromising our topline. We are fundamentally changing how we operate.'
These changes include a 21% reduction in corporate management roles and restructuring of key functions such as marketing and research and development. 'We implemented an organisational redesign, including changes to our leadership team, to simplify decision making and bring us closer to the customer,' Findley added. 'Since I joined three weeks ago, our efforts have reduced second quarter operating expenses by approximately 10% of our current cost structure, as of the first quarter of 2025.'
As part of broader cost-saving initiatives, Sleep Number anticipates annualised operating expense reductions of $80 to $100 million before restructuring costs, relative to the Q1 2025 cost structure. Of these projected savings, 35% are fixed costs (including R&D and general and administrative), 50% relate to structural changes in marketing, and 15% are volume-driven.
'Sleep Number is truly differentiated and no one else does what we do,' Findley stated. 'With the organisational changes implemented, we are now focused on building a strategy for growth with our customers at the centre. I joined Sleep Number because I believe strongly in the company's long-term potential, and I am confident that we can change our trajectory to drive sustainable growth and profitability.'
Due to ongoing leadership transition and macroeconomic uncertainty, Sleep Number is not issuing 2025 financial guidance at this time. The company plans to reassess guidance as its new strategy evolves and market conditions become clearer.
More information:
Sleep Number
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www.ir.sleepnumber.com