Bedding manufacturer and retailer Sleep Number (NASDAQ: SNBR) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 7.8% year on year to $347.4 million. Its GAAP loss of $2.55 per share was significantly below analysts’ consensus estimates.
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Sleep Number (SNBR) Q4 CY2025 Highlights:
- Revenue: $347.4 million vs analyst estimates of $328.7 million (7.8% year-on-year decline, 5.7% beat)
- EPS (GAAP): -$2.55 vs analyst estimates of -$0.55 (significant miss due to restructuring charges and a deferred tax valuation adjustment)
- Operating Margin: -2.3%, down from 0.7% in the same quarter last year
- Free Cash Flow was -$643,000 compared to -$29.97 million in the same quarter last year
- Locations: 600 at quarter end, down from 640 in the same quarter last year
- Same-Store Sales fell 8% year on year (-2% in the same quarter last year)
- Market Capitalization: $104.6 million
Linda Findley, President and CEO, commented, "Sleep Number exceeded 2025 guidance provided on our last earnings call. We are still in full turnaround mode and made significant progress against our new product and marketing strategies while continuing to reduce costs. For the full year 2025, pro-forma adjusted EBITDA margin was approximately 9% and anticipate double-digit adjusted EBITDA growth in 2026 as we continue to execute on our strategy.
Company Overview
Known for mattresses that can be adjusted with regards to firmness, Sleep Number (NASDAQ: SNBR) manufactures and sells its own brand of bedding products such as mattresses, bed frames, and pillows.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years.
With $1.41 billion in revenue over the past 12 months, Sleep Number is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Sleep Number’s revenue declined by 12.6% per year over the last three years as it closed stores and observed lower sales at existing, established locations.
This quarter, Sleep Number’s revenue fell by 7.8% year on year to $347.4 million but beat Wall Street’s estimates by 5.7%.
Looking ahead, sell-side analysts expect revenue to decline by 3.4% over the next 12 months. it’s tough to feel optimistic about a company facing demand difficulties.
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Store Performance
Number of Stores
Sleep Number listed 600 locations in the latest quarter and has generally closed its stores over the last two years, averaging 4.1% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Sleep Number’s demand has been shrinking over the last two years as its same-store sales have averaged 1.7% annual declines. This performance isn’t ideal, and Sleep Number is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Sleep Number’s same-store sales fell by 8% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Sleep Number’s Q4 Results
We were impressed that Sleep Number beat analysts’ revenue and operating profit expectations this quarter. On the other hand, its EPS fell short of Wall Street’s estimates, but this was due to restructuring charges and a deferred tax valuation adjustment. Overall, this print leaned positive. The stock traded up 7.6% to $4.93 immediately following the results.
Indeed, Sleep Number had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).
