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Jun 28
Sleep Number Q2 2025 Earnings Report
Sleep Number reported a significant decline in net sales and a larger net loss in the second quarter of 2025, while maintaining gross profit margin and reducing operating expenses.
Key Takeaways
Sleep Number experienced a challenging second quarter in 2025, with net sales dropping by 19.7% to $328 million and a net loss of $25 million, compared to a $5 million net loss in the prior year. Despite the sales decline, the company maintained its gross profit margin at 59.1% and successfully reduced operating expenses by 21% year-over-year, excluding restructuring costs. The company is undergoing a turnaround, implementing significant cost savings and new marketing and product initiatives.
Net sales for Q2 2025 were $328 million, a 19.7% decrease compared to Q2 2024.
The company reported a net loss of $25 million in Q2 2025, a significant increase from the $5 million net loss in Q2 2024.
Gross profit margin remained flat at 59.1% compared to the prior year, despite lower sales.
Operating expenses were reduced by $48 million, or 21%, year-over-year, before restructuring and other non-recurring costs, demonstrating effective cost management.
Sleep Number
Sleep Number
Sleep Number Revenue by Segment
Revenue by Segment
Retail Stores Revenue
CapyFin.comOnline, Phone, Chat and Other Revenue
CapyFin.com Forward Guidance
Sleep Number expects full-year 2025 net sales to be approximately $1.45 billion, representing a 14% year-over-year decline. Gross profit margin is anticipated to be 61%, consistent with Q1 2025, and operating expenses are projected to be around $830 million. The company aims for break-even free cash flow in the second half of 2025.
Positive Outlook
- Implementing $130 million of cost savings for 2025, exceeding prior annualized targets.
- Maintaining compliance with debt covenants.
- Expectation of sequential topline improvement in coming quarters.
- Gross profit margin expected to be 61% for the full year, consistent with Q1 2025.
- Anticipates break-even free cash flow in the second half of 2025.
Challenges Ahead
- Full year 2025 net sales expected to decline by approximately 14% year-over-year.
- Softer year-over-year comparisons contributing to the sales decline.
- The 53rd week in 2025 partly drives the percentage change in sales.
- Topline remains pressured despite ongoing efforts.
- Significant changes to business operations may introduce execution risks.
Revenue & Expenses
Visualization of income flow from segment revenue to net income