# EDGAR Filing Document

**Accession Number:** 0000827187
**File Stem:** 0000827187-25-000116
**Filing Date:** 2025-11
**Character Count:** 35543
**Document Hash:** 3e086bca832b4ee630414dee8edbfad9
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000827187-25-000116.hdr.sgml**: 20251105

**ACCESSION NUMBER**: 0000827187-25-000116

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20251105

**ITEM INFORMATION**: Results of Operations and Financial Condition

**FILED AS OF DATE**: 20251105

**DATE AS OF CHANGE**: 20251105

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Sleep Number Corp
- **CENTRAL INDEX KEY:** 0000827187
- **STANDARD INDUSTRIAL CLASSIFICATION:** HOUSEHOLD FURNITURE [2510]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 411597886
- **STATE OF INCORPORATION:** MN
- **FISCAL YEAR END:** 0103

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-25121
- **FILM NUMBER:** 251451720

**BUSINESS ADDRESS:**
- **STREET 1:** 1001 THIRD AVENUE SOUTH
- **CITY:** MINNEAPOLIS
- **STATE:** MN
- **ZIP:** 55404
- **BUSINESS PHONE:** 7635517000

**MAIL ADDRESS:**
- **STREET 1:** 1001 THIRD AVENUE SOUTH
- **CITY:** MINNEAPOLIS
- **STATE:** MN
- **ZIP:** 55404

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SELECT COMFORT CORP
- **DATE OF NAME CHANGE:** 19980821

?xml version='1.0' encoding='ASCII'? snbr-20251105

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 8-K** 

**CURRENT REPORT**

**PURSUANT TO SECTION 13 OR 15(d) OF**

**THE SECURITIES EXCHANGE ACT OF 1934**

Date of Report (Date of earliest event reported): November 5, 2025

![SNBR Logo JPG.jpg](snbr-20251105_g1.jpg)

**SLEEP NUMBER CORPORATION**

(Exact name of registrant as specified in its charter)

**Minnesota** 

(State or other jurisdiction of incorporation)

---

| | |
|:---|:---|
| **000-25121** | **41-1597886** |
| (Commission File Number) | (IRS Employer Identification No.) |

---

<u>1001 Third Avenue South, Minneapolis, MN 55404</u> 

(Address of principal executive offices) (Zip Code)

<u>(763) 551-7000</u> 

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading<br>Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, par value $0.01 per share | SNBR | Nasdaq Global Select Market |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

------

---

| | |
|:---|:---|
| **ITEM 2.02** | **RESULTS OF OPERATIONS AND FINANCIAL CONDITION** |

---

On November 5, 2025, Sleep Number issued a press release announcing results for the fiscal third quarter ended September 27, 2025. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

---

| | |
|:---|:---|
| **ITEM 9.01.** | **FINANCIAL STATEMENTS AND EXHIBITS.** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(d)&nbsp;&nbsp;&nbsp;&nbsp;Exhibits.*

---

| | |
|:---|:---|
| **Exhibit No.** | **Description of Exhibit** |
| 99.1 | <u>[Press Release dated](a2025-q3ex991earnings.htm)[November](a2025-q3ex991earnings.htm)[5](a2025-q3ex991earnings.htm)[, 2025](a2025-q3ex991earnings.htm)</u> |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| | **SLEEP NUMBER CORPORATION** | **SLEEP NUMBER CORPORATION** |
| | (Registrant) | (Registrant) |
| Dated: November 5, 2025 | By:&nbsp;&nbsp;&nbsp;&nbsp; | /s/ Samuel R. Hellfeld |
|  | Name: | Samuel R. Hellfeld |
|  | Title: | Executive Vice President, Chief Legal and Risk Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

![snbrlogojpga.jpg](snbrlogojpga.jpg)

**Sleep Number Announces Third Quarter 2025 Results**

*Company Secured an Amendment and Extension of Bank Agreement Through 2027*

*Sleep Number Executing a Company-wide Turnaround to Reposition Brand, Expand Reach, and Reignite Growth*

***• Reported net sales of $343 million, down 19.6% compared with the third quarter of 2024***

***• Delivered gross profit margin of 59.9%, compared to 60.8% for the same period last year***

***• Reduced third quarter operating expenses by* $44.8 million*, or* 18%*, year-over-year, before restructuring and other non-recurring costs.***

***• Reported net loss of $40 million, compared to a net loss of $3 million for the same period last year***

***• Delivered adjusted EBITDA of $13 million, down $14 million versus the same period last year***

***• Amended and extended bank agreement through 2027 provides financial flexibility***

***• On track to exceed 2025 cost savings target; streamlined organization positioned to execute the business turnaround***

**MINNEAPOLIS** – (November 5, 2025) – Sleep Number Corporation (Nasdaq: SNBR) today reported results for the quarter ended September 27, 2025.

Linda Findley, President and CEO, commented, "We have successfully executed an amendment and extension of our bank agreement through 2027, giving us greater flexibility to further our turnaround plans. With this new agreement, combined with meaningful fixed cost reductions achieved in 2025, we will invest in growth in 2026. To drive consumer demand, we are making strategic shifts in three key areas: product, brand positioning and distribution.

"My learnings thus far make me incredibly optimistic about Sleep Number's future and the ability to create significant shareholder value in the coming years. To be clear, this is a full turnaround of an inherently great company. I came to Sleep Number because I saw huge potential, and I remain excited about what is ahead. As in many situations like this, there were more challenges than I expected, which required us to move extremely fast to fix the business. The pace of our work, along with constraints imposed by our capital structure, has made the first six months difficult. However, we have accomplished a lot and are optimistic that this work positions us to execute the turnaround in 2026."

**Third Quarter Overview** (all comparisons year-over-year unless otherwise noted)

• **Net sales** of $343 million were down 19.6%, driven by lower volume and a reduced store count.

• **Gross profit** was $205 million, a decrease of $54 million. **Gross profit margin** of 59.9% compared to 60.8% for the same period last year.

• **Operating expenses** were $204 million before restructuring and other non-recurring costs, a decrease of $45 million, or 18%, driven by lower marketing and selling expenses, general and administrative expenses, and research and development expenses.

• **Restructuring and other non-recurring costs** in the quarter were $41 million, driven by severance and employee-related benefits, contract termination costs, and asset impairment charges.

• **Net loss** was $40 million or $1.73 per diluted share, down $37 million, driven primarily by lower net sales, partially offset by lower operating expenses.

------

*Sleep Number Announces Third-Quarter 2025 Results - Page 2 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

• **Adjusted EBITDA** was $13 million, down $14 million or 52%, driven by a decline in net sales and associated loss of fixed cost leverage, partially offset by lower operating expenses. **Adjusted EBITDA margin** decreased 260 basis points to 3.9%.

**Cash Flows, Liquidity and Balance Sheet Highlights** (all comparisons year-over-year unless otherwise noted)

• **Net cash used in year-to-date operating activities** was $5 million, down $56 million.

• **Year-to-date Free cash flow** was a use of $17.0 million, down $51 million.

• The Company's **leverage ratio** was 5.0x EBITDAR on a trailing 12-month basis at the end of the quarter versus the amended covenant maximum of 5.25x.

**Financial Outlook**

• Amended and extended bank agreement provides flexibility of covenants to enable business turnaround. Refer to 8-K, filed concurrent with this press release, for additional information.

• Given the pressures on the business, the company is revising its outlook for 2025. The company now expects the full year 2025 net sales to be approximately $1.4 billion and gross profit margin to be approximately 60%. With incremental cost reductions, operating expenses, excluding restructuring and other non-recurring costs, are expected to be approximately $825 million. The company now expects adjusted EBITDA to be approximately $70M and negative free cash flow of approximately $50 million in 2025.

**Conference Call Information**

Management will host its regularly scheduled conference call to discuss the company's results at 8:30 a.m. ET (7:30 a.m. CT; 5:30 a.m. PT) today. To access the webcast, please visit the investor relations area of the Sleep Number website at https://ir.sleepnumber.com. The webcast replay will remain available for approximately 60 days.

**About Sleep Number Corporation**

Sleep Number is a sleep wellness company. We are guided by our purpose to improve the health and wellbeing of society through higher quality sleep; to date, our innovations have improved 16 million lives. Our sleep wellness platform helps solve sleep problems, whether it's providing individualized temperature control for each sleeper through our Climate360<sup>®</sup> smart bed or applying our 36 billion hours of longitudinal sleep data and expertise to research with global institutions. Our smart bed ecosystem drives best-in-class engagement through dynamic, adjustable, and effortless sleep with personalized sleep and health insights; our millions of Smart Sleepers are loyal brand advocates. And our 3,200 mission-driven team members passionately innovate to drive value creation through our vertically integrated business model, including our exclusive direct-to-consumer selling in 611 stores and online.

To learn more about life-changing, individualized sleep, visit a Sleep Number<sup>®</sup> store near you, our newsroom and investor relations sites, or SleepNumber.com.

**Forward-looking Statements**

Statements used in this news release relating to future plans, events, financial results or performance, such as the statements that: the company's new bank agreement gives it greater flexibility to further its turnaround plans, and combined with meaningful fixed cost reductions, will allow it to invest in growth in 2026; to drive consumer demand, the company is making strategic shifts in its product, brand positioning and distribution; the company is in a full turnaround but it is positioned to execute the turnaround in 2026; the company is revising its outlook for 2025 and expectations around full year 2025 net sales, gross profit margin, full year operating expenses, and negative free cash flow in 2025 are forward-looking statements subject to certain risks and

------

*Sleep Number Announces Third-Quarter 2025 Results - Page 3 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

uncertainties which could cause the company's results to differ materially. The most important risks and uncertainties are described in the company's filings with the Securities and Exchange Commission, including in Item 1A of the company's Annual Report on Form 10-K and other periodic reports. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update any forward-looking statement.

**Investor Contact:** <u>investorrelations@sleepnumber.com</u>

**Media Contact:** Muriel Lussier, <u>muriel.lussier@sleepnumber.com</u> 

------

*Sleep Number Announces Third-Quarter 2025 Results - Page 4 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

***Consolidated Statements of Operations***

**(unaudited – in thousands, except per share amounts)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **September 27,<br>2025** | **% of<br>Net Sales** | **September 28,<br>2024** | **% of<br>Net Sales** |
| Net sales | $342879 | 100.0% | $426617 | 100.0% |
| Cost of sales | 137490 | 40.1% | 167089 | 39.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 205389 | 59.9% | 259528 | 60.8% |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 167430 | 48.8% | 205480 | 48.2% |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 31792 | 9.3% | 33070 | 7.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 7328 | 2.1% | 10583 | 2.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring costs | 39154 | 11.4% | 1963 | 0.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 245704 | 71.7% | 251096 | 58.9% |
| Operating (loss) income | (40315) | (11.8%) | 8432 | 2.0% |
| Interest expense, net | 12687 | 3.7% | 12057 | 2.8% |
| Loss before income taxes | (53002) | (15.5%) | (3625) | (0.8%) |
| Income tax benefit | (13212) | (3.9%) | (489) | (0.1%) |
| Net loss | $(39790) | (11.6%) | $(3136) | (0.7%) |
| Net loss per share – basic | $(1.73) |  | $(0.14) |  |
| Net loss per share – diluted | $(1.73) |  | $(0.14) |  |
| **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** |
| Basic weighted-average shares outstanding | 22964 |  | 22643 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dilutive effect of stock-based awards |  |  |  |  |
| Diluted weighted-average shares outstanding | 22964 |  | 22643 |  |

---

For the three months ended September 27, 2025 and September 28, 2024, potentially dilutive stock-based awards have been excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on our net loss per diluted share.

------

*Sleep Number Announces Third-Quarter 2025 Results - Page 5 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

***Consolidated Statements of Operations***

**(unaudited – in thousands, except per share amounts)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
| | **September 27,<br>2025** | **% of<br>Net Sales** | **September 28,<br>2024** | **% of<br>Net Sales** |
| Net sales | $1064065 | 100.0% | $1305479 | 100.0% |
| Cost of sales | 424396 | 39.9% | 528287 | 40.5% |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 639669 | 60.1% | 777192 | 59.5% |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 502997 | 47.3% | 596392 | 45.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 100015 | 9.4% | 111722 | 8.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development | 27651 | 2.6% | 34602 | 2.7% |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring costs | 47546 | 4.5% | 14382 | 1.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 678209 | 63.7% | 757098 | 58.0% |
| Operating (loss) income | (38540) | (3.6%) | 20094 | 1.5% |
| Interest expense, net | 35502 | 3.3% | 36626 | 2.8% |
| Loss before income taxes | (74042) | (7.0%) | (16532) | (1.3%) |
| Income tax benefit | (594) | (0.1%) | (863) | (0.1%) |
| Net loss | $(73448) | (6.9%) | $(15669) | (1.2%) |
| Net loss per share – basic | $(3.21) |  | $(0.69) |  |
| Net loss per share – diluted | $(3.21) |  | $(0.69) |  |
| **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** | **Reconciliation of weighted-average shares outstanding:** |
| Basic weighted-average shares outstanding | 22858 |  | 22588 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dilutive effect of stock-based awards |  |  |  |  |
| Diluted weighted-average shares outstanding | 22858 |  | 22588 |  |

---

For the nine months ended September 27, 2025 and September 28, 2024, potentially dilutive stock-based awards have been excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on our net loss per diluted share.

------

*Sleep Number Announces Third-Quarter 2025 Results - Page 6 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

***Consolidated Balance Sheets***

**(unaudited – in thousands, except per share amounts)**

**subject to reclassification**

---

| | | |
|:---|:---|:---|
| | **September 27,<br>2025** | **December 28,<br>2024** |
| **Assets** | | |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $1264 | $1950 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances of $920 and $1,113, respectively | 13902 | 17516 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories | 89831 | 103152 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income taxes receivable | 11903 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 14355 | 14568 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 38545 | 44098 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 169800 | 181284 |
| Non-current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 95126 | 129574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease right-of-use assets | 316959 | 356641 |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill and intangible assets, net | 66246 | 66412 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 24930 | 33575 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | 76327 | 93324 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $749388 | $860810 |
| **Liabilities and Shareholders' Deficit** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings under credit facility | $579500 | $546600 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 106967 | 107619 |
| &nbsp;&nbsp;&nbsp;&nbsp;Customer prepayments | 36754 | 46933 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued sales returns | 14932 | 19092 |
| &nbsp;&nbsp;&nbsp;&nbsp;Compensation and benefits | 18537 | 31038 |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxes and withholding | 10555 | 18619 |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | 82001 | 82307 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 49566 | 55804 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 898812 | 908012 |
| Non-current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | 279028 | 307201 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other non-current liabilities | 92890 | 97183 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-current liabilities | 371918 | 404384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1270730 | 1312396 |
| Shareholders' deficit: |  |  |
| Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding |  |  |
| Common stock, $0.01 par value; 142,500 shares authorized, 22,790 and 22,388 shares issued and outstanding, respectively | 228 | 224 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 31078 | 27390 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (552648) | (479200) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' deficit | (521342) | (451586) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' deficit | $749388 | $860810 |

---

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*Sleep Number Announces Third-Quarter 2025 Results - Page 7 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

***Consolidated Statements of Cash Flows***

**(unaudited – in thousands)**

**subject to reclassification**

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended** | **Nine Months Ended** |
| | **September 27,<br>2025** | **September 28,<br>2024** |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(73448) | $(15669) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash (used in) provided by<br>&nbsp;&nbsp;&nbsp;&nbsp;operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 42631 | 50379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 4712 | 9541 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on impairment of strategic investment asset | 16134 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal and impairment of leased assets | 19753 | 2457 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | 8645 | (7014) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 3614 | 9833 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 13321 | 22394 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes | (18267) | 1708 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 3159 | (8012) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 10157 | 4980 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer prepayments | (10179) | (5629) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation and benefits | (12491) | 788 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other taxes and withholding | (1701) | (1157) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accruals and liabilities | (11199) | (13775) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in) provided by operating activities | (5159) | 50824 |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of property and equipment | (11888) | (17218) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of property and equipment |  | 156 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment to secure contractual rights | (3280) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of notes receivable |  | (2942) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (15168) | (20004) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase (decrease) in short-term borrowings | 22219 | (31039) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchases of common stock | (1019) | (728) |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt issuance costs | (1559) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | 19641 | (31767) |
| Net decrease in cash and cash equivalents | (686) | (947) |
| Cash and cash equivalents, at beginning of period | 1950 | 2539 |
| Cash and cash equivalents, at end of period | $1264 | $1592 |

---

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*Sleep Number Announces Third-Quarter 2025 Results - Page 8 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION**

**AND SUBSIDIARIES**

***Supplemental Financial Information***

**(unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Nine Months Ended** | **Nine Months Ended** |
| | **September 27,<br>2025** | **September 28,<br>2024** | **September 27,<br>2025** | **September 28,<br>2024** |
| **Percent of sales:** | | | | |
| &nbsp;&nbsp;&nbsp;Retail stores | 87.8% | 87.8% | 87.7% | 87.9% |
| &nbsp;&nbsp;&nbsp;Online, phone, chat and other | 12.2% | 12.2% | 12.3% | 12.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Company | 100.0% | 100.0% | 100.0% | 100.0% |
| **Sales change rates:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Retail comparable-store sales | (19%) | (7%) | (17%) | (9%) |
| &nbsp;&nbsp;&nbsp;Online, phone and chat | (20%) | (18%) | (17%) | (17%) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Retail comparable sales change | (19%) | (9%) | (17%) | (10%) |
|  Net opened/closed stores and other | (1%) | (1%) | (1%) | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Company | (20%) | (10%) | (18%) | (10%) |
| **Stores open:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Beginning of period | 630 | 646 | 640 | 672 |
| &nbsp;&nbsp;&nbsp;Opened | 2 | 1 | 5 | 11 |
| &nbsp;&nbsp;&nbsp;Closed | (21) | (4) | (34) | (40) |
| &nbsp;&nbsp;&nbsp;End of period | 611 | 643 | 611 | 643 |
| **Other metrics:** |  |  |  |  |
| &nbsp;&nbsp;Average sales per store ($ in 000's) <sup>1</sup> | $2276 | $2670 |  |  |
| &nbsp;&nbsp;Average sales per square foot <sup>1</sup> | $735 | $863 |  |  |
| &nbsp;&nbsp;Stores > $2 million net sales <sup>2</sup> | 42% | 60% |  |  |
| &nbsp;&nbsp;Stores > $3 million net sales <sup>2</sup> | 10% | 20% |  |  |
| &nbsp;&nbsp;Average revenue per smart bed unit <sup>3</sup> | $5995 | $5771 | $5958 | $5778 |

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<sup>1</sup> Trailing twelve months Total Retail comparable sales per store open at least one year.

<sup>2</sup> Trailing twelve months for stores open at least one year (excludes online, phone and chat sales).

<sup>3</sup> Represents Total Retail (stores, online, phone and chat) net sales divided by Total Retail smart bed units.

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*Sleep Number Announces Third-Quarter 2025 Results - Page 9 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION AND SUBSIDIARIES**

***Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)***

**(in thousands)**

We define earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net loss plus: income tax benefit, interest expense, depreciation and amortization, stock-based compensation, restructuring costs, other non-recurring items, and asset impairments. Management believes Adjusted EBITDA is a useful indicator of our financial performance and our ability to generate cash from operating activities. Our definition of Adjusted EBITDA may not be comparable to similarly titled definitions used by other companies. The table below reconciles Adjusted EBITDA, which is a non-GAAP financial measure, to the comparable GAAP financial measure:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** |
| | **September 27,<br>2025** | **September 28,<br>2024** | **September 27,<br>2025** | **September 28,<br>2024** |
| Net loss | $(39790) | $(3136) | $(78113) | $(40857) |
| Income tax benefit | (13212) | (489) | (4893) | (7966) |
| Interest expense | 12687 | 12057 | 47244 | 49313 |
| Depreciation and amortization | 12975 | 15859 | 56706 | 67335 |
| Stock-based compensation | (788) | 1432 | 6615 | 13523 |
| Restructuring costs <sup>1</sup> | 39154 | 1963 | 51230 | 30110 |
| Other non-recurring items <sup>2</sup> | 2228 |  | 5053 |  |
| Asset impairments |  |  | 1220 | 198 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjusted EBITDA | $13254 | $27686 | $85062 | $111656 |

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<sup>1</sup> Represents costs related to business restructuring actions.

<sup>2</sup> Represents costs related to CEO transition activities and proxy contest costs of $0.4 million and $0, respectively, for the three months ended September 27, 2025 and $1.4 million and $1.9 million, respectively, for the trailing twelve months ended September 27, 2025. These costs were both initiated in the fourth quarter of fiscal 2024. In addition, represents CFO search costs of $0.2 million and write off of debt issuance cost of $1.6 million for both the three and trailing twelve months ended September 27, 2025. These costs were both initiated in the third quarter of 2025.

***Free Cash Flow***

**(in thousands)**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended** | **Nine Months Ended** | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** |
| | **September 27,<br>2025** | **September 28,<br>2024** | **September 27,<br>2025** | **September 28,<br>2024** |
| Net cash (used in) provided by operating activities | $(5159) | $50824 | $(28840) | $9980 |
| &nbsp;&nbsp;&nbsp;Subtract: Purchases of property and equipment | 11888 | 17218 | 18175 | 26252 |
| Free cash flow | $(17047) | $33606 | $(47015) | $(16272) |

---

Note - Our Adjusted EBITDA calculations and Free Cash Flow data are considered non-GAAP financial measures and are not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts.

GAAP - generally accepted accounting principles in the U.S.

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*Sleep Number Announces Third-Quarter 2025 Results - Page 10 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION AND SUBSIDIARIES**

***Calculation of Net Leverage Ratio under Revolving Credit Facility***

**(in thousands)**

---

| | | |
|:---|:---|:---|
| | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** |
| | **September 27,<br>2025** | **September 28,<br>2024** |
| Borrowings under credit facility | $579500 | $516500 |
| Outstanding letters of credit | 8847 | 7147 |
| Finance lease obligations | 180 | 261 |
| Consolidated funded indebtedness | $588527 | $523908 |
| Operating lease liabilities <sup>1</sup> | 361029 | 401153 |
| Total debt including operating lease liabilities (a) | $949556 | $925061 |
| Adjusted EBITDA <sup>2</sup> | $84597 | $111656 |
| Consolidated rent expense | 106490 | 108863 |
| Consolidated EBITDAR (b) | $191087 | $220519 |
| Net Leverage Ratio under revolving credit facility (a divided by b) | 5.0 to 1.0 | 4.2 to 1.0 |

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<sup>1</sup>Reflects operating lease liabilities included in our financial statements under ASC 842.

<sup>2</sup>Adjusted EBITDA reflects $0.5 million reduction due to limitations on permitted add-backs under the Company's Credit Facility.

Note - Our Net Leverage Ratio under Credit Facility, Adjusted EBITDA and EBITDAR calculations are considered non-GAAP financial measures and are not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts.

GAAP - generally accepted accounting principles in the U.S.

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*Sleep Number Announces Third-Quarter 2025 Results - Page 11 of 11&nbsp;&nbsp;&nbsp;&nbsp;*

**SLEEP NUMBER CORPORATION AND SUBSIDIARIES**

***Calculation of Return on Invested Capital (Adjusted ROIC)***

**(in thousands)**

Adjusted ROIC is a financial measure we use to determine how efficiently we deploy our capital. It quantifies the return we earn on our adjusted invested capital. Management believes Adjusted ROIC is also a useful metric for investors and financial analysts. We compute Adjusted ROIC as outlined below. Our definition and calculation of Adjusted ROIC may not be comparable to similarly titled definitions and calculations used by other companies. The tables below reconcile adjusted net operating profit after taxes (Adjusted NOPAT) and total adjusted invested capital, which are non-GAAP financial measures, to the comparable GAAP financial measures:

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| | | |
|:---|:---|:---|
| | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** |
| | **September 27,<br>2025** | **September 28,<br>2024** |
| <u>Adjusted net operating profit after taxes (Adjusted NOPAT)</u> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating (loss) income | $(35762) | $490 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Add: Operating lease interest <sup>1</sup> | 24956 | 27371 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: Income taxes <sup>2</sup> | 1443 | (5474) |
| Adjusted NOPAT | $(9363) | $22387 |
| <u>Average adjusted invested capital</u> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deficit | $(521342) | $(448784) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Add: Long-term debt <sup>3</sup> | 579680 | 516761 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Add: Operating lease liabilities <sup>4</sup> | 361029 | 401153 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total adjusted invested capital at end of period | $419367 | $469130 |
| Average adjusted invested capital <sup>5</sup> | $460891 | $502494 |
| Adjusted ROIC <sup>6</sup> | (2.0%) | 4.5% |

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| | |
|:---|:---|
| 1 | Represents the interest expense component of lease expense included in our financial statements under ASC 842, *Leases*. |
| 2 | Reflects annual effective income tax rates, before discrete adjustments, of 13.4% and 19.6% for September 27, 2025 and September 28, 2024, respectively. |
| 3 | Long-term debt includes existing finance lease liabilities. |
| 4 | Reflects operating lease liabilities included in our financial statements under ASC 842. |
| 5 | Average adjusted invested capital represents the average of the last five fiscal quarters' ending adjusted invested capital balances. |
| 6 | Adjusted ROIC equals Adjusted NOPAT divided by average adjusted invested capital. |
| Note - The Company's Adjusted ROIC calculation and data are considered non-GAAP financial measures and are not in accordance with, or preferable to, GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts. | Note - The Company's Adjusted ROIC calculation and data are considered non-GAAP financial measures and are not in accordance with, or preferable to, GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts. |
| GAAP - generally accepted accounting principles in the U.S. | GAAP - generally accepted accounting principles in the U.S. |

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