By Dietrich Knauth

NEW YORK, June 12 (Reuters) - Mattress company Sleep Number filed for bankruptcy in New York on Friday and said it plans to sell its assets under a $415 million buyout offer from Canadian bedding company Sleep Country Canada Inc.

Sleep NumberSNBR.O, which recently entered into a sponsorship agreement with National Football League star Travis Kelce, entered bankruptcy with $672 million in debt. It blamed tariffs and inflation for its recent business stumbles.

President Donald Trump’s "unpredictable" tariff policy undermined the company's global supply chain for smart beds and mattresses, increased operating costs and had a significant impact on its bottom line, according to court filings.

The company, headquartered in Minneapolis, Minnesota, has approximately 2,920 employees. Known for its highly adjustable, premium mattresses, Sleep Number reported $319 million in net sales and a net loss of $50 million for the first quarter of 2026, according to its May filing with the U.S. Securities and Exchange Commission.

Before filing for bankruptcy, Sleep Number tried to free up additional cash flow by refinancing some of its debt, selling its right to refunds under 2025 tariffs that were invalidated by the U.S. Supreme Court, closing some stores, and streamlining product offerings, according to court documents. Sleep Number’s court filings did not say how much it paid in 2025 tariffs or how much money it gained by selling its refund rights.

Sleep Number said its combination with Sleep Country Canada will create "a leading North American mattress and bedding company." Sleep Number has 572 retail stores in the U.S. and Sleep Country has over 300 stores across Canada.

The company said in court filings that it remains open to higher bids than Sleep Country's $415 million offer, and it will hold an auction on July 13 if a higher bid is received. Sleep Number is aiming to have a sale approved in bankruptcy court by July 15, with a targeted July 31 closing date.

Sleep Number has advertising partnerships with the NFL and three teams, and it deepened those ties with its sponsorship agreement with Kelce. Kelce had committed to buy some Sleep Number stock on the open market and would have been given additional stock over the three-year sponsorship.

It was not immediately clear from the court filings how much stock Kelce had acquired or how the sponsorship agreement would be treated in the bankruptcy. Equity shares are typically wiped out during a corporate Chapter 11 like Sleep Number’s bankruptcy.

Sleep Number's bankruptcy will be funded by its existing lenders, who are providing $65 million in new money to fund the Chapter 11 case.