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Jun 28, 2025
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.
Revenue by Segment
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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