Overview

• U.S. mattress retailer's Q4 sales fell 8% but beat analyst expectations

• Company posted a wider Q4 net loss, driven by lower sales and tax adjustment

• Sleep Number realized $185 mln in annualized cost savings as part of turnaround strategy

Outlook

• Sleep Number anticipates double-digit adjusted EBITDA growth in 2026

• Company expects strong sales and margins from new beds launching in March

• Sleep Number is implementing $50 mln of annualized fixed cost savings in 2026

Result Drivers

• INDUSTRY DEMAND PRESSURE - Co said Q4 sales decline was driven by ongoing industry demand pressure and lower store traffic

• INVENTORY CHARGE - Q4 gross margin fell due to $9.6 mln inventory obsolescence charge linked to new product launch

• NEW PRODUCT LAUNCH - ComfortMode bed launch exceeded expectations, outselling plan by 3.5 times with stronger margins

Company press release: ID:nBwc5Gm8Ja

Key Details

Metric	Beat/Miss	Actual	Consensus Estimate
Q4 Sales	Beat	$347 mln	$328.67 mln (4 Analysts)
Q4 Net Income		-$59 mln
Q4 Gross Margin		55.60%
Q4 Gross Profit		$193 mln

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the home furnishings peer group is "buy."

• Wall Street's median 12-month price target for Sleep Number Corp is $11.00, about 139.7% above its March 11 closing price of $4.59

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