Key facts
- Sleep Number is reportedly preparing to file for Chapter 11 bankruptcy.
- The company plans to use the process to restructure its balance sheet and may seek a sale.
- Sleep Number has faced declining revenue and a significant stock price drop.
- Factors contributing to its struggles include higher interest rates, industry pressure, tariffs, and reduced consumer demand for big-ticket items.
Sleep Number Corporation shares experienced a significant crash following reports from The Wall Street Journal and Bloomberg that the company is preparing to file for Chapter 11 bankruptcy. The Wall Street Journal indicated that the Chapter 11 process would be used to restructure the company's balance sheet while allowing operations to continue, with a potential sale of the business also being considered. As of late 2024, Sleep Number operated 640 retail stores across the United States, though its physical footprint has been shrinking. The company's struggles are attributed to a combination of factors, including higher interest rates impacting demand for large purchases like beds, industry-wide pressures, and tariffs. Additionally, demand that was pulled forward during the COVID-19 pandemic has subsided. Revenue decreased by 16% in 2025, reaching $1.4 billion. The company's stock has fallen approximately 97% over the past four months, trading around 32 cents. Sleep Number recently engaged Guggenheim Securities to assess options for improving its balance sheet and liquidity. The retailer has secured $55 million in new liquidity, comprising a $25 million term loan and $30 million in increased flexibility from its existing lenders. This situation reflects a broader trend of consumer discretionary companies facing difficulties as demand for big-ticket home goods declines amid elevated interest rates and a strained consumer base.