SLEEP NUMBER CORP, 10-K filed on 2/23/2024
Annual Report
v3.24.0.1
Cover - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Jan. 27, 2024
Jul. 01, 2023
Cover [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 30, 2023    
Current Fiscal Year End Date --12-30    
Document Transition Report false    
Entity File Number 000-25121    
Entity Registrant Name SLEEP NUMBER CORPORATION    
Entity Incorporation, State or Country Code MN    
Entity Tax Identification Number 41-1597886    
Entity Address, Address Line One 1001 Third Avenue South    
Entity Address, City or Town Minneapolis    
Entity Address, State or Province MN    
Entity Address, Postal Zip Code 55404    
City Area Code 763    
Local Phone Number 551-7000    
Title of 12(b) Security Common Stock, par value $0.01 per share    
Trading Symbol SNBR    
Security Exchange Name NASDAQ    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Document Financial Statement Error Correction [Flag] false    
Entity Shell Company false    
Entity Public Float     $ 417,932
Entity Common Stock, Shares Outstanding   22,239,000  
Documents Incorporated by Reference
Portions of the registrant’s proxy statement to be furnished to shareholders in connection with its 2024 Annual Meeting of Shareholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K.
    
Entity Central Index Key 0000827187    
Document Fiscal Year Focus 2023    
Document Fiscal Period Focus FY    
Amendment Flag false    
v3.24.0.1
Audit Information
 12 Months Ended
Dec. 30, 2023
Audit Information [Abstract]  
Auditor Name DELOITTE & TOUCHE LLP
Auditor Location Minneapolis, Minnesota
Auditor Firm ID 34
v3.24.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalents $ 2,539 $ 1,792
Accounts receivable, net of allowances of $1,437 and $1,267, respectively 26,859 26,005
Inventories 115,433 114,034
Prepaid expenses 16,660 16,006
Other current assets 44,637 39,921
Total current assets 206,128 197,758
Non-current assets:    
Property and equipment, net 179,503 200,605
Operating lease right-of-use assets 395,411 397,755
Goodwill and intangible assets, net 66,634 68,065
Deferred income taxes 20,253 7,958
Other non-current assets 82,951 81,795
Total assets 950,880 953,936
Current liabilities:    
Borrowings under revolving credit facility 539,500 459,600
Accounts payable 135,901 176,207
Customer prepayments 49,143 73,181
Accrued sales returns 22,402 25,594
Compensation and benefits 28,273 31,291
Taxes and withholding 17,134 23,622
Operating lease liabilities 81,760 79,533
Other current liabilities 61,958 60,785
Total current liabilities 936,071 929,813
Non-current liabilities:    
Operating lease liabilities 351,394 356,879
Other non-current liabilities 105,343 105,421
Total liabilities 1,392,808 1,392,113
Shareholders’ deficit:    
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding 0 0
Common stock, $0.01 par value; 142,500 shares authorized, 22,235 and 22,014 shares issued and outstanding, respectively 222 220
Additional paid-in capital 16,716 5,182
Accumulated deficit (458,866) (443,579)
Total shareholders’ deficit (441,928) (438,177)
Total liabilities and shareholders’ deficit $ 950,880 $ 953,936
v3.24.0.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Current assets:    
Accounts Receivable, Allowance for Credit Loss, Current $ 1,437 $ 1,267
Shareholders’ deficit:    
Undesignated preferred stock, shares authorized (in shares) 5,000,000 5,000,000
Undesignated preferred stock, shares issued (in shares) 0 0
Undesignated preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 142,500,000 142,500,000
Common stock, shares issued (in shares) 22,235,000 22,014,000
Common stock, shares outstanding (in shares) 22,235,000 22,014,000
v3.24.0.1
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Income Statement [Abstract]      
Net sales $ 1,887,482 $ 2,114,297 $ 2,184,949
Cost of sales 798,952 912,001 866,102
Gross profit 1,088,530 1,202,296 1,318,847
Operating expenses:      
Sales and marketing 847,442 919,629 905,359
General and administrative 146,621 153,266 161,412
Research and development 55,797 61,521 58,540
Restructuring costs 15,728 0 0
Total operating expenses 1,065,588 1,134,416 1,125,311
Operating income 22,942 67,880 193,536
Interest expense, net 42,695 18,985 6,245
(Loss) income before income taxes (19,753) 48,895 187,291
Income tax (benefit) expense (4,466) 12,285 33,545
Net (loss) income $ (15,287) $ 36,610 $ 153,746
Basic net (loss) income per share:      
Net (loss) income per share - basic (in dollars per share) $ (0.68) $ 1.63 $ 6.40
Weighted-average shares - basic (in shares) 22,429 22,396 24,038
Diluted net (loss) income per share:      
Net (loss) income per share - diluted (in dollars per share) $ (0.68) $ 1.60 $ 6.16
Weighted-average shares (in shares) 22,429 22,852 24,947
v3.24.0.1
Consolidated Statements of Shareholders' Deficit - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Balance (in shares) at Jan. 02, 2021   25,390    
Balance at Jan. 02, 2021 $ (223,978) $ 254 $ 0 $ (224,232)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income 153,746     153,746
Exercise of common stock options (in shares)   174    
Exercise of common stock options 4,441 $ 2 4,439  
Stock-based compensation (in shares)   369    
Stock-based compensation 23,214 $ 4 23,210  
Repurchases of common stock (in shares)   (3,250)    
Repurchases of common stock (382,376) $ (33) (23,678) (358,665)
Balance (in shares) at Jan. 01, 2022   22,683    
Balance at Jan. 01, 2022 (424,953) $ 227 3,971 (429,151)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income 36,610     36,610
Exercise of common stock options (in shares)   48    
Exercise of common stock options 1,131   1,131  
Stock-based compensation (in shares)   405    
Stock-based compensation 13,223 $ 4 13,219  
Repurchases of common stock (in shares)   (1,122)    
Repurchases of common stock $ (64,188) $ (11) (13,139) (51,038)
Balance (in shares) at Dec. 31, 2022 22,014 22,014    
Balance at Dec. 31, 2022 $ (438,177) $ 220 5,182 (443,579)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income $ (15,287)     (15,287)
Exercise of common stock options (in shares) 20 20    
Exercise of common stock options $ 428   428  
Stock-based compensation (in shares)   335    
Stock-based compensation 14,855 $ 3 14,852  
Repurchases of common stock (in shares)   (134)    
Repurchases of common stock $ (3,747) $ (1) (3,746)  
Balance (in shares) at Dec. 30, 2023 22,235 22,235    
Balance at Dec. 30, 2023 $ (441,928) $ 222 $ 16,716 $ (458,866)
v3.24.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Cash flows from operating activities:      
Net (loss) income $ (15,287) $ 36,610 $ 153,746
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation and amortization 74,043 67,401 60,394
Stock-based compensation 14,855 13,223 23,214
Net loss on disposals and impairments of assets 2,898 291 37
Deferred income taxes (12,295) (8,646) 446
Changes in operating assets and liabilities:      
Accounts receivable (854) (287) 6,153
Inventories (1,399) (11,560) (24,282)
Income taxes (5,969) 1,356 (3,066)
Prepaid expenses and other assets (5,220) 19,379 (13,836)
Accounts payable (28,934) (4,743) 54,405
Customer prepayments (24,038) (56,318) 57,482
Accrued compensation and benefits (2,943) (19,821) (24,790)
Other taxes and withholding (519) 179 1,814
Other accruals and liabilities (3,366) (926) 8,293
Net cash (used in) provided by operating activities (9,028) 36,138 300,010
Cash flows from investing activities:      
Purchases of property and equipment (57,056) (69,454) (66,900)
Proceeds from sales of property and equipment 21 49 257
Issuance of notes receivable (1,317) 0 0
Investment in non-marketable equity securities 0 (1,202) 0
Net cash used in investing activities (58,352) (70,607) (66,643)
Cash flows from financing activities:      
Repurchases of common stock (3,747) (64,188) (382,376)
Net increase in short-term borrowings 73,463 97,647 145,473
Proceeds from issuance of common stock 428 1,131 4,441
Debt issuance costs (2,017) (718) (2,759)
Net cash provided by (used in) financing activities 68,127 33,872 (235,221)
Net increase (decrease) in cash and cash equivalents 747 (597) (1,854)
Cash and cash equivalents, at beginning of period 1,792 2,389 4,243
Cash and cash equivalents, at end of period 2,539 1,792 2,389
Supplemental Disclosure of Cash Flow Information      
Income taxes paid, net of refunds 13,716 19,792 36,305
Interest paid 40,570 16,918 5,438
Purchases of property and equipment included in accounts payable $ 6,670 $ 11,707 $ 13,968
v3.24.0.1
Business and Summary of Significant Accounting Policies
 12 Months Ended
Dec. 30, 2023
Accounting Policies [Abstract]  
Business and Summary of Significant Accounting Policies Business and Summary of Significant Accounting Policies
Business & Basis of Presentation

Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of Sleep Number beds which allows it to offer consumers high-quality, individualized sleep solutions and services. Sleep Number also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products.

Sleep Number generates revenue by marketing its innovations directly to new and existing customers, and selling products through its Stores, Online, Phone, Chat (Total Retail) and Other.

The consolidated financial statements include the accounts of Sleep Number Corporation and its 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation.

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2023 ended December 30, 2023; fiscal 2022 ended December 31, 2022; and fiscal 2021 ended January 1, 2022. Fiscal 2023, 2022 and 2021 each had 52 weeks.

Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material.

The Company’s critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition.

Cash and Cash Equivalents

Cash and cash equivalents include highly-liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in the consolidated balance sheets and in net increase (decrease) in short-term borrowings in the financing activities section of the Company’s consolidated statements of cash flows. Book overdrafts totaled $30 million and $36 million at December 30, 2023 and December 31, 2022, respectively.

Accounts Receivable

Accounts receivable are recorded net of an allowance for expected credit losses and consist primarily of receivables from third-party financiers for customer credit purchases. The allowance is recognized in an amount equal to anticipated future write-offs. The Company estimates future write-offs based on delinquencies, aging trends, industry risk trends, its historical experience and current trends. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.
Inventories

Inventories include materials, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company reviews inventory quantities on hand and record reserves for obsolescence based on historical selling prices, current market conditions and forecasted product demand, to reduce inventory to net realizable value.

Property and Equipment

Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net (loss) income in the consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized.

Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable.

Estimated useful lives of the Company’s property and equipment by major asset category are as follows:
Leasehold improvements
5 to 15 years
Furniture and equipment
3 to 15 years
Production machinery
3 to 7 years
Computer equipment and software
3 to 12 years

Goodwill and Intangible Assets, Net

Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net identifiable assets. The Company’s intangible assets include developed technologies and trade names/trademarks. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 8-10 years.

Asset Impairment Charges

Long-lived Assets and Definite-lived Intangible Assets - the Company reviews its long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, the Company first compares the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, the Company calculates an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When the Company recognizes an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. The Company reviews retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If the Company recognizes an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset.

Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The goodwill impairment test involves a comparison of the fair value of a reporting unit with its carrying value. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and the Company’s market capitalization. The Company has only one reporting unit, which has a negative carrying value. The reporting unit had a goodwill balance of $64 million at December 30, 2023 and December 31, 2022. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the
carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. Based on the Company’s 2023 assessments, it determined there was no impairment.

Other Investments

The Company has an investment in non-marketable equity securities of $1.2 million at December 30, 2023. This investment was made in a strategic product-development partner and is included in other non-current assets in the consolidated balance sheet. Non-marketable equity securities are equity securities without readily determinable fair value that are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.

Warranty Liabilities

The Company provides a limited warranty on most of the products it sells. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by the Company and are adjusted for any current trends as appropriate. The majority of the Company’s warranty claims are incurred within the first year. The Company’s warranty liability contains uncertainties because its warranty obligations cover an extended period of time and require management to make estimates for claim rates and the projected cost of materials and freight associated with sending replacement parts to customers. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. The warranty liabilities are included in other current liabilities and other non-current liabilities in the consolidated balance sheet.

The Company classifies as non-current those estimated warranty costs expected to be paid out in greater than one year. The activity in the accrued warranty liabilities account was as follows (in thousands):
 202320222021
Balance at beginning of period$8,997 $10,069 $12,152 
Additions charged to costs and expenses for current-year sales15,939 16,694 16,732 
Deductions from reserves(16,438)(17,157)(18,134)
Change in liabilities for pre-existing warranties during the current
   year, including expirations		5 (609)(681)
Balance at end of period$8,503 $8,997 $10,069 

Fair Value Measurements

Fair value measurements are reported in one of three levels based on the lowest level of significant input used:
•Level 1 – observable inputs such as quoted prices in active markets;
•Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company generally estimates fair value of long-lived assets, including its retail stores, using the income approach, which the Company based on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date.
Shareholders’ Deficit

Dividends

The Company is not restricted from paying cash dividends under the Credit Agreement so long as it is not in default under the Credit Agreement, the Company’s leverage ratio (as defined in the Credit Agreement) after giving effect to such restricted payments (as defined in the Credit Agreement) would not exceed 3.00:1.00 and no default or event of default (as defined in the Credit Agreement) would result therefrom. At December 30, 2023, the Company exceeded the 3.00:1.00 leverage ratio. However, Sleep Number has not historically paid, and has no current plans to pay, cash dividends on the Company’s common stock.

Share Repurchases

At December 30, 2023, there was $348 million remaining authorization under the $600 million board-approved share repurchase program. There is no expiration date governing the period over which the Company can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to accumulated deficit.

Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. Revenue recognized excludes sales taxes. Amounts billed to customers for delivery and setup are included in net sales. For most products, the Company receives payment before or promptly after, the products or services are delivered to the customer.

The Company accepts sales returns of most products during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that the Company does not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period the Company remeasures the liability to reflect changes in the estimate, with a corresponding adjustment to net sales.

Sleep Number beds sold with SleepIQ technology contain multiple performance obligations including the bed, and SleepIQ hardware and software. The Company analyzes its multiple performance obligation(s) to determine whether they are distinct and can be separated or whether they must be accounted for as a single performance obligation. The Company determined that beds sold with the SleepIQ technology have two performance obligations consisting of: (i) the bed; and (ii) SleepIQ hardware and software. SleepIQ hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. The Company determined the transaction price for multiple performance obligations based on their relative standalone selling prices. The performance obligation related to the bed is satisfied at a point in time. The performance obligation related to SleepIQ technology is satisfied over time based on the ongoing access and usage by the customer of software essential to the functionality of SleepIQ technology. The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the estimated period of benefit to the customer of 4.5 to 5.0 years because its inputs are generally expended evenly throughout the performance period.

See Note 9, Revenue Recognition, for additional information on revenue recognition and sales returns.
Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses

The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within the Company’s industry):
Cost of SalesSales & Marketing
•
Costs associated with purchasing, manufacturing, shipping, handling and delivering the Company’s products to its retail stores and customers;
•Advertising, marketing and media production;
•Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage;
•Physical inventory losses, scrap and obsolescence;•Payroll and benefits for sales and customer service staff;
•Related occupancy and depreciation expenses;•Store occupancy costs;
•Costs associated with returns and exchanges; and•Store depreciation expense;
•Estimated costs to service customer warranty claims.•Credit card processing fees; and
•Promotional financing costs.
G&A
R&D(1)
•Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management;•Internal labor and benefits related to research and development activities;
•Outside consulting services related to research and development activities; and
•Testing equipment related to research and development activities.
•Occupancy costs of corporate facilities;
___________________________
(1) Costs incurred in connection with R&D are charged to expense as incurred.
•Depreciation related to corporate assets;
•Information hardware, software and maintenance;
•Insurance;
•Investor relations costs; and
• Other overhead costs.

Leases

The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of future lease payments over the lease term. The Company elected the option to not separate lease and non-lease components for all of its leases. Most of the Company’s leases do not provide an implicit interest rate nor is the rate available to it from its lessors. As an alternative, the Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet as an ROU asset or operating lease liability. The Company recognizes operating lease costs for these short-term leases, primarily small equipment leases, on a straight-line basis over the lease term. At December 30, 2023, the Company’s finance lease ROU assets and associated lease liabilities were not significant.

See Note 7, Leases, for further information regarding the Company’s operating leases.

Pre-opening Costs

Costs associated with the start-up and promotion of new retail store openings are expensed as incurred.

Advertising Costs

The Company incurs advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs. Advertising expense was $272 million, $309 million and $323 million in 2023, 2022 and 2021, respectively and is included in sales and marketing expenses on the consolidated statement of
operations. Advertising costs deferred and included in prepaid expenses in the consolidated balance sheet were not significant at December 30, 2023 or December 31, 2022, respectively.
Insurance

The Company is self-insured for certain losses related to health and workers’ compensation claims, although the Company obtains third-party insurance coverage to limit exposure to these claims. The Company estimates its self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. The Company’s self-insurance liability was $13 million at both December 30, 2023 and December 31, 2022. At December 30, 2023 and December 31, 2022, $8 million and $9 million, respectively was included in current liabilities: compensation and benefits in the consolidated balance sheets and $5 million and $4 million, respectively, were included in other non-current liabilities in the consolidated balance sheets.

Software Capitalization

For software developed or obtained for internal use, the Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company capitalizes certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. The Company expenses any data conversion or training costs as incurred. Capitalized software costs are included in property and equipment, net in the consolidated balance sheet.

The Company capitalizes costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with its policy for software developed or obtained for internal use. The capitalized implementation costs of cloud computing arrangements are expensed over the term of the cloud computing arrangement in the same line item in the statement of operations as the associated hosting fees. Capitalized costs incurred with the implementation of a cloud computing arrangement are included in prepaid expenses and other non-current assets in the Company’s consolidated balance sheet, and in operating cash flows in its consolidated statement of cash flows.

Stock-based Compensation

The Company compensates officers, directors and key employees with stock-based compensation under stock plans approved by its shareholders and administered under the supervision of the Company’s Board of Directors (Board). At December 30, 2023, a total of 1.2 million shares were available for future grant. These plans include non-qualified stock options and stock awards.

The Company records stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. The Company recognizes stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. The Company reduces compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. The Company includes, as part of cash flows from operating activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. In addition, excess tax benefits or deficiencies are recorded as discrete adjustments to income tax expense.

Stock Options - stock option awards are granted at exercise prices equal to the closing price of the Company’s stock on the grant date. Generally, options vest proportionally over three years and expire after 10 years. Compensation expense is recognized ratably over the vesting period.

The Company determines the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows:

Expected Volatility – expected volatility was determined based on implied volatility of the Company’s traded options and historical volatility of the Company’s stock price.
Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term.
Expected Term – expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards.

Stock Awards - the Company issues stock awards to certain employees in conjunction with its stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time-based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of the Company’s common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options.

Certain time-based stock awards have a performance condition (performance-based). The final number of shares earned for performance-based stock awards and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2023, 2022 and 2021 awards. The Company evaluates the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2023, 2022 and 2021, the performance targets are based on growth in net sales and in operating profit, and the performance periods are fiscal 2023 through 2025, 2022 through 2024 and fiscal 2021 through 2023, respectively.

See Note 8, Shareholders’ Deficit, for additional information on stock-based compensation.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. The Company evaluates all available positive and negative evidence, including its forecast of future taxable income, to assess the need for a valuation allowance on its deferred tax assets.

The Company records a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in the Company’s tax returns. The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes.

The Company classifies net interest and penalties related to income taxes as a component of income tax expense in its consolidated statements of operations.
Net (Loss) Income Per Share

The Company calculates basic net (loss) income per share by dividing net (loss) income by the weighted-average number of common shares outstanding during the period. It calculates diluted net (loss) income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards.

Sources of Supply

The Company currently obtains materials and components used to produce its beds from outside sources. As a result, the Company is dependent upon suppliers that in some instances, are its sole source of supply, or supply the vast majority of the particular component or material. The Company continuously evaluates opportunities to dual-source key components and materials. The failure of one or more of the Company’s suppliers to provide it with materials or components on a timely basis could significantly impact the consolidated results of operations and net (loss) income per share. While the Company believes that these materials and components, or suitable replacements, could be obtained from other sources in the event of a disruption or loss of supply, it may not be able to find alternative sources of supply or alternative sources of supply on comparable terms and an unexpected loss of supply over a short period of time may not allow the Company to replace these sources in the ordinary course of business.
v3.24.0.1
Fair Value Measurements
 12 Months Ended
Dec. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
At December 30, 2023 and December 31, 2022, the Company had $19 million and $17 million, respectively, of debt and equity securities that fund its deferred compensation plan and are classified in other non-current assets. The Company also had corresponding deferred compensation plan liabilities of $19 million and $17 million, at December 30, 2023 and December 31, 2022, respectively, which are included in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient frequency and volume to enable it to obtain pricing information on an ongoing basis. Unrealized gains/(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan liabilities.
v3.24.0.1
Inventories
 12 Months Ended
Dec. 30, 2023
Inventory Disclosure [Abstract]  
Inventories Inventories
Inventories consisted of the following (in thousands):
 December 30,
2023		December 31,
2022
Raw Materials$9,092 $7,785 
Work in Progress92 102 
Finished goods106,249 106,147 
$115,433 $114,034 

Finished goods inventories consisted of the following (in thousands):
 December 30,
2023		December 31,
2022
Finished beds, including deliveries in-transit to those customers who have utilized home delivery services
$39,235 $36,708 
Finished components that were ready for assembly for the completion of beds46,179 45,722 
Retail accessories20,835 23,717 
 $106,249 $106,147 
v3.24.0.1
Property and Equipment
 12 Months Ended
Dec. 30, 2023
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment consisted of the following (in thousands):
 December 30, 2023December 31,
2022
Leasehold improvements$143,006 $140,344 
Furniture and equipment158,309 151,202 
Production machinery, computer equipment and software306,972 287,834 
Construction in progress6,552 11,568 
Less: Accumulated depreciation and amortization(435,336)(390,343)
$179,503 $200,605 
Depreciation for 2023, 2022 and 2021 was $71 million, $64 million and $57 million, respectively.
v3.24.0.1
Goodwill and Intangible Assets, Net
 12 Months Ended
Dec. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets, Net Goodwill and Intangible Assets, Net
Goodwill and Indefinite-lived Intangible Assets

Goodwill was $64 million at December 30, 2023 and December 31, 2022. Indefinite-lived trade name/trademarks totaled $1.4 million at December 30, 2023 and December 31, 2022.

Definite-lived Intangible Assets

December 30, 2023December 31, 2022
Gross Carrying
Amount		Accumulated
Amortization		Gross Carrying
Amount		Accumulated
Amortization
Developed technologies$18,851 $18,851 $18,851 $17,641 
Patents1,972 780 1,972 559 
$20,823 $19,631 $20,823 $18,200 

Amortization expense for developed technologies was $1.2 million, $2.0 million and $2.0 million in 2023, 2022 and 2021, respectively.
Amortization expense for patents was $0.2 million, in each of 2023, 2022 and 2021.

Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands):
2024$222 
2025226 
2026222 
2027222 
2028155 
Thereafter145 
Total future amortization for definite-lived intangible assets$1,192 
v3.24.0.1
Credit Agreement
 12 Months Ended
Dec. 30, 2023
Debt Disclosure [Abstract]  
Credit Agreement Credit Agreement
As of December 30, 2023, the Company’s credit facility had a total commitment amount of $685 million. The credit facility is for general corporate purposes, to meet seasonal working capital requirements and to repurchase its stock. The Credit Agreement includes an accordion feature which allows the Company to increase the amount of the credit facility from $685 million to $1.0 billion, subject to lenders’ approval. The Credit Agreement provides the lenders with a collateral security interest in substantially all of the Company’s assets and those of its subsidiaries and requires the Company to comply with, among other things, a maximum net leverage ratio and a minimum interest coverage ratio.

The Company amended the Credit Agreement on October 26, 2022. The amendment, among other things: (a) provided relief from the requirement that the net leverage ratio not exceed 3.75x for certain corporate actions including Permitted Capital Distributions for Performance or Taxes (as defined in the Credit Agreement) and certain acquisition activity; (b) increased the permissible net leverage ratio to 5.0x for the three consecutive quarterly reporting periods ending July 1, 2023; (c) increased the commitment fee rate to 50 basis points and the margin applicable to interest rates for all borrowings by an additional 50 basis points, in each case if the net leverage ratio is greater than or equal to 4.5x; and (d) replaces the option to borrow at an interest rate based on London Interbank Offered Rate (LIBOR) to one based on a Term SOFR Rate. The Term SOFR Rate equals the sum of (x) the Term SOFR Screen Rate (as defined in the Credit Agreement) for the applicable interest period (but in no event less than zero), plus (y) 0.10%, plus (z) the margin based on Sleep Number’s net leverage ratio.

The Company amended the Credit Agreement on July 24, 2023. The amendment, among other things, extended the increased permissible Net Leverage Ratio to 5.0x to include the quarterly reporting period ending September 30, 2023. For the quarterly reporting period ending December 30, 2023, and subsequent quarterly reporting periods, the Maximum Leverage Ratio will be 4.5x.

The Company amended the Credit Agreement on November 2, 2023. The amendment, among other things: (a) decreased the total aggregate commitment under the Credit Agreement from $825 million to $685 million; (b) decreased the $625 million revolving loan commitment to $485 million; (c) decreased the accordion from $400 million to $342.5 million; (d) increased the Applicable Commitment Fee Rate to 50 basis points when the Net Leverage Ratio is greater than or equal to 3.50 to 1.00 (as each is defined in the Credit Agreement); (e) increased the Applicable Margin by 25 to 75 basis points for each respective range of Net Leverage Ratios (as each is defined in the Credit Agreement); (f) deemed the Company’s Net Leverage Ratio as greater than or equal to 4.00 to 1.00 but less than 4.50 to 1.00 as of the amendment effective date to set pricing for the Applicable Commitment Fee Rate and Applicable Margin until receipt of the compliance certificate for the quarterly reporting period ending December 30, 2023; (g) amended the definition of Consolidated EBITDA (as defined in the Credit Agreement) to include cash add backs, capped at $30 million for the quarterly reporting periods ending December 30, 2023, March 30, 2024, June 29, 2024, September 28, 2024, and December 28, 2024 and capped at $20 million for each quarterly reporting period ending thereafter; (h) amended the definitions of each of Net Leverage Ratio and Senior Secured Leverage Ratio (as each is defined in the Credit Agreement) to include the total operating lease liabilities of borrower, as calculated in accordance with ASC 842 accounting guidance (as of the end of the most recently completed quarterly reporting period) replacing the prior language of six multiplied by Consolidated Rent Expense (for the most recently completed four quarterly reporting
periods); (i) adjusted the permissible maximum Net Leverage Ratio (as defined in the Credit Agreement) to (I) 5.00 to 1.00 for the quarterly reporting periods ending December 30, 2023 and March 30, 2024, (II) 5.50 to 1.00 for the quarterly reporting period ending June 29, 2024, (III) 5.00 to 1.00 for the quarterly reporting period ending September 28, 2024, (IV) 4.80 to 1.00 for the quarterly reporting period ending December 28, 2024, and (V) 4.00 to 1.00 for each quarterly reporting period occurring thereafter; (j) adjusted the permissible maximum Interest Coverage Ratio (as defined in the Credit Agreement) to (I) 1.50 to 1.00 for the quarterly reporting periods ending December 30, 2023 and March 30, 2024, (II) 1.25 to 1.00 for the quarterly reporting period ending June 29, 2024, (III) 1.50 to 1.00 for the quarterly reporting periods ending September 28, 2024 and December 28, 2024, and (IV) 3.00 to 1.00 for each quarterly reporting period occurring thereafter; and (k) decreased the requisite Net Leverage Ratio from 3.75 to 1.00 down to 3.00 to 1.00 (under the new applicable definitions) before any Acquisitions (with the exception of the Specified Acquisition) or Restricted Payments (as each is defined in the Credit Agreement) may be made. A fee for the amendment was payable to the approving lenders in an amount equal to 20 basis points multiplied by the sum of such lender's Revolving Credit Commitment and outstanding Term Loans (as each is defined in the Credit Agreement).
Under the terms of the Credit Agreement, the Company pays a variable rate of interest and a commitment fee based on its leverage ratio. The Credit Agreement matures in December 2026. The Company was in compliance with all financial covenants as of December 30, 2023.

The following tables summarizes the Company’s borrowings under the credit facility ($ in thousands):
 December 30, 2023December 31, 2022
Outstanding borrowings$539,500 $459,600 
Outstanding letters of credit$7,147 $5,947 
Additional borrowing capacity$138,353 $359,453 
Weighted-average interest rate8.5 %6.7 %
v3.24.0.1
Leases
 12 Months Ended
Dec. 30, 2023
Leases [Abstract]  
Leases Leases
The Company leases its retail, office and manufacturing space under operating leases which, in addition to the minimum lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating expenses. While the Company’s local market development approach generally results in long-term participation in given markets, its retail store leases generally provide for an initial lease term of five to 10 years. Sleep Number’s office and manufacturing leases provide for an initial lease term of up to 15 years. In addition, its mall-based retail store leases may require payment of variable rent based on net sales in excess of certain thresholds. Certain leases may contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company’s sole discretion. Lease options are included in the lease term only if exercise is reasonably certain at lease commencement. The Company lease agreements do not contain any material residual value guarantees. The Company also leases vehicles and certain equipment under operating leases with an initial lease term of three to six years.

The Company’s operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date the Company takes possession of the property. During lease renewal negotiations that extend beyond the original lease term, the Company estimates straight-line rent expense based on current market conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be reasonably estimated. Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in operating lease costs.

At December 30, 2023, the Company’s finance lease right-of-use assets and lease liabilities were not significant.

Lease costs were as follows (in thousands):
202320222021
Operating lease costs(1)
$113,510 $109,766 $99,474 
Variable lease costs$278 $877 $2,205 
____________________
(1)Includes short-term lease costs which are not significant.
The maturities of operating lease liabilities as of December 30, 2023, were as follows(1) (in thousands):
2024$106,670 
202597,359 
202685,276 
202769,744 
202857,767 
Thereafter103,541 
Total operating lease payments(2)
520,357 
Less: Interest87,203 
Present value of operating lease liabilities$433,154 
___________________
(1)Total operating lease payments exclude $25 million of legally binding minimum lease payments for leases signed but not yet commenced.
(2)Includes the current portion of $82 million for operating lease liabilities.

Other information related to operating leases was as follows:
 December 30,
2023		December 31,
2022
Weighted-average remaining lease term (years)5.96.2
Weighted-average discount rate6.5 %6.2 %

(in thousands)202320222021
Cash paid for amounts included in present value of operating lease liabilities$108,294 $99,819 $90,198 
Right-of-use assets obtained in exchange for operating lease liabilities$69,396 $82,117 $109,000 
v3.24.0.1
Shareholders' Deficit
 12 Months Ended
Dec. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Shareholders’ Deficit Shareholders’ Deficit
Stock-Based Compensation Expense

Total stock-based compensation expense was as follows (in thousands):
 202320222021
Stock awards(1)
$11,053 $9,471 $20,216 
Stock options3,802 3,752 2,998 
Total stock-based compensation expense(1)
14,855 13,223 23,214 
Income tax benefit3,476 3,319 5,722 
Total stock-based compensation expense, net of tax$11,379 $9,904 $17,492 
____________________
(1)    Changes in annual stock-based compensation expense includes the cumulative impact of the change in the expected achievements of certain performance targets.
Stock Options

A summary of the Company’s stock option activity was as follows (in thousands, except per share amounts and years):
 Stock
Options		Weighted-
Average
Exercise
Price per
Share		Weighted-
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic
Value (1)
Outstanding at December 31, 2022787 $46.02 6.1$829 
Granted305 27.30 
Exercised(20)21.43 
Canceled/Forfeited(26)55.69 
Outstanding at December 30, 20231,046 $40.80 6.2$— 
Exercisable at December 30, 2023654 $42.08 4.5$— 
Vested and expected to vest at December 30, 20231,014 $40.87 6.1$— 
____________________
(1)    Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant.

Other information pertaining to options was as follows (in thousands, except per share amounts):
 202320222021
Weighted-average grant date fair value of stock options granted$16.41 $30.22 $71.93 
Total intrinsic value (at exercise) of stock options exercised$298 $1,298 $16,003 

Cash received from the exercise of stock options for the fiscal year ended December 30, 2023 was $0.4 million. The Company’s tax benefit related to the exercise of stock options for the fiscal year ended December 30, 2023 was $0.1 million.

At December 30, 2023, there was $5.2 million of total stock option compensation expense related to non-vested stock options not yet recognized, which is expected to be recognized over a weighted-average period of 1.9 years.

The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows:
Valuation Assumptions202320222021
Expected dividend yield0.0 %0.0 %0.0 %
Expected volatility64 %57 %58 %
Risk-free interest rate3.8 %2.2 %0.9 %
Expected term (years)5.75.35.2
Stock Awards

Stock award activity was as follows (in thousands, except per share amounts):
Time-
Based
Stock
Awards		Weighted-Average
Grant Date
Fair Value		Performance-
Based
Stock Awards		Weighted-Average
Grant Date
Fair Value
Outstanding at December 31, 2022261 $61.88 501 $66.33 
Granted304 26.10 440 28.85 
Vested(127)57.10 (201)36.84 
Canceled/Forfeited(41)48.64 (41)61.15 
Outstanding at December 30, 2023397 $37.38 699 $51.74 

At December 30, 2023, there was $8.7 million of unrecognized compensation expense related to non-vested time-based stock awards, which is expected to be recognized over a weighted-average period of 1.7 years, and $7.8 million of unrecognized compensation expense related to non-vested performance-based stock awards, which is expected to be recognized over a weighted-average period of 2.1 years.
Repurchases of Common Stock

Repurchases of the Company’s common stock were as follows (in thousands):
 202320222021
Amount repurchased under Board-approved share repurchase program$— $54,868 $364,479 
Amount repurchased in connection with the vesting of employee restricted stock grants3,747 9,320 17,897 
Total amount repurchased (based on trade dates)$3,747 $64,188 $382,376 

As of December 30, 2023, the remaining authorization under the Board-approved $600 million share repurchase program was $348 million.
Net (Loss) Income per Common Share

The components of basic and diluted net (loss) income per share were as follows (in thousands, except per share amounts):
 202320222021
Net (loss) income$(15,287)$36,610 $153,746 
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding22,429 22,396 24,038 
Dilutive effect of stock-based awards— 456 909 
Diluted weighted-average shares outstanding22,429 22,852 24,947 
Net (loss) income per share – basic$(0.68)$1.63 $6.40 
Net (loss) income per share – diluted
$(0.68)$1.60 $6.16 

Additional potential dilutive stock-based awards totaling 1.3 million, 0.6 million and 0.9 million for 2023, 2022 and 2021, respectively, have been excluded from the diluted net (loss) income per share calculations because these stock-based awards were anti-dilutive. For 2023, otherwise dilutive stock-based awards of $0.1 million have been excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on net loss per diluted share.
v3.24.0.1
Revenue Recognition
 12 Months Ended
Dec. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Deferred contract assets and deferred contract liabilities are included in the consolidated balance sheets as follows (in thousands):
 December 30, 2023December 31, 2022
Deferred contract assets included in:  
Other current assets$28,567 $28,121 
Other non-current assets54,795 55,564 
 $83,362 $83,685 

 December 30, 2023December 31, 2022
Deferred contract liabilities included in:  
Other current liabilities$36,421 $36,335 
Other non-current liabilities69,098 70,999 
 $105,519 $107,334 

During the years ended December 30, 2023, December 31, 2022 and January 1, 2022 the Company recognized revenue of $36 million, $34 million and $29 million, respectively, that was included in the deferred contract liability balance at the beginning of the year.

Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of the Company’s revenues for 2023, 2022 and 2021.

Net sales consisted of the following (in thousands):
 202320222021
Retail stores$1,639,073 $1,823,617 $1,904,037 
Online, phone, chat and other248,409 290,680 280,912 
Total Company$1,887,482 $2,114,297 $2,184,949 

Obligation for Sales Returns

The activity in the sales returns liability account for 2023 and 2022 was as follows (in thousands):
 20232022
Balance at beginning of year$25,594 $22,368 
Additions that reduce net sales109,153 103,477 
Deduction from reserves(112,345)(100,251)
Balance at end of period$22,402 $25,594 
v3.24.0.1
Profit Sharing and 401(k) Plan
 12 Months Ended
Dec. 30, 2023
Retirement Benefits [Abstract]  
Profit Sharing and 401(k) Plan Profit Sharing and 401(k) PlanUnder the Company’s profit sharing and 401(k) plan, eligible employees may defer up to 50% of their compensation on a pre-tax basis, subject to Internal Revenue Service limitations. Each year, the Company makes a contribution equal to a percentage of the employee’s contribution. During 2023, 2022 and 2021, the Company’s contributions, net of forfeitures, were $10 million, $10 million and $7 million, respectively.
v3.24.0.1
Restructuring Costs
 12 Months Ended
Dec. 30, 2023
Restructuring and Related Activities [Abstract]  
Restructuring Costs Restructuring Costs
In the fourth quarter of 2023, the Company initiated cost reduction actions to reduce operating expenses and accelerate gross margin initiatives. In addition to the costs incurred in 2023, the Company expects an additional $12 million of restructuring costs to be incurred in 2024, including product value engineering, service simplification, streamlining suppliers and re-prioritizing spend to accelerate near-term growth and efficiency. Charges incurred related to this initiative in 2023 were comprised of contract termination costs, severance and employee-related benefits, professional fees and other, and asset impairment charges and are included in the restructuring costs line in the Company’s consolidated statement of operations.

During the fourth quarter of fiscal 2023, the Company recognized $15.7 million of restructuring costs, as follows (in thousands):
2023
Cash restructuring costs:
Contract termination costs (1)
$7,410 
Severance and employee-related benefits4,966 
Professional fees and other1,110 
Total cash restructuring costs
13,486 
Non-cash restructuring costs:
Asset impairments (2)
2,242 
Total restructuring costs
$15,728 
____________________
(1)Primarily comprised of lease termination costs.
(2) Includes impairments of both lease right-of-use assets and property and equipment.

The following table provides the activity in the Company’s restructuring related liabilities, which are included within accounts payable, compensation and benefits and other current liabilities on the consolidated balance sheet (in thousands):
2023
Balance at December 31, 2022$— 
Expenses13,486 
Cash payments(4,766)
Balance at December 30, 2023$8,720 
v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense (benefit) consisted of the following (in thousands):
202320222021
Current:
Federal$5,474 $15,518 $17,019 
State3,106 5,174 4,568 
8,580 20,692 21,587 
Deferred:
Federal(10,151)(7,264)10,954 
State(2,895)(1,143)1,004 
(13,046)(8,407)11,958 
Income tax (benefit) expense
$(4,466)$12,285 $33,545 
The following table provides a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:
202320222021
Statutory federal income tax21.0 %21.0 %21.0 %
State income taxes, net of federal benefit(3.5)6.4 3.0 
R&D tax credits14.1 (5.5)(1.4)
Return to provision
6.1 0.8 0.1 
Investment tax credit
1.1 — — 
Stock-based compensation(6.2)(1.2)(6.3)
Non-deductible compensation(5.7)1.7 1.5 
Non-deductible expenses
(2.8)1.3 0.3 
Changes in unrecognized tax benefits(0.5)(0.4)(0.1)
Other(1.0)1.0 (0.2)
Effective income tax rate22.6 %25.1 %17.9 %

The Company files income tax returns with the U.S. federal government and various state jurisdictions. In the normal course of business, the Company is subject to examination by federal and state taxing authorities. The Company is no longer subject to federal income tax examinations for years prior to 2020 or state income tax examinations prior to 2019.

Deferred Income Taxes

The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands):
20232022
Deferred tax assets:
Stock-based compensation$7,006 $6,896 
Operating lease liabilities108,952 109,144 
Warranty and returns liabilities6,894 7,881 
Net operating loss carryforwards and credits1,738 2,051 
Compensation and benefits7,484 7,678 
Research and development18,079 13,860 
Other8,931 6,110 
Total gross deferred tax assets159,084 153,620 
Valuation allowance(48)(615)
Total gross deferred tax assets after valuation allowance159,036 153,005 
Deferred tax liabilities:
Property and equipment33,772 38,442 
Operating lease right-of-use assets99,351 99,311 
Deferred revenue3,065 4,394 
Other2,595 2,900 
Total gross deferred tax liabilities138,783 145,047 
Net deferred tax assets
$20,253 $7,958 

At December 30, 2023, the Company had net operating loss carryforwards for federal purposes of $0.4 million, which will expire between 2025 and 2027.
The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required. As part of this evaluation, the Company assess whether valuation allowances should be established for any deferred tax assets that are not considered more likely than not to be realized, using all available evidence, both positive and negative. This assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. The Company has provided a $48 thousand valuation allowance resulting primarily from its inability to utilize certain net operating losses.

Unrecognized Tax Benefits

Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands):
Federal and State Tax
202320222021
Beginning balance$3,645 $3,869 $3,912 
Increases related to current-year tax positions753 910 831 
Increases related to prior-year tax positions40 252 4 
Decreases related to prior-year tax positions— (328)(33)
Lapse of statute of limitations(601)(1,058)(845)
Settlements with taxing authorities(166)— — 
Ending balance$3,671 $3,645 $3,869 

At December 30, 2023 and December 31, 2022, the Company had $3.4 million and $3.2 million, respectively, of unrecognized tax benefits, which if recognized, would affect its effective tax rate. The amount of unrecognized tax benefits is not expected to change materially within the next 12 months.
v3.24.0.1
Commitments and Contingencies
 12 Months Ended
Dec. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Legal Proceedings

The Company is involved from time to time in various legal proceedings arising in the ordinary course of its business, including primarily commercial, product liability, employment and intellectual property claims. In accordance with U.S. generally accepted accounting principles, the Company records a liability in its consolidated financial statements with respect to any of these matters when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated. If a material loss is reasonably possible but not known or probable, and may be reasonably estimated, the estimated loss or range of loss is disclosed. With respect to currently pending legal proceedings, the Company has not established an estimated range of reasonably possible material losses either because it believes that is has valid defenses to claims asserted against it, the proceeding has not advanced to a stage of discovery that would enable it to establish an estimate, or the potential loss is not material. The Company currently does not expect the outcome of pending legal proceedings to have a material effect on its consolidated results of operations, financial position or cash flows. Litigation, however, is inherently unpredictable, and it is possible that the ultimate outcome of one or more claims asserted against the Company could adversely impact its consolidated results of operations, financial position or cash flows. The Company expenses legal costs as incurred.

Purported Class Action Complaint

On December 15, 2023, a former Field Services team member filed a purported class action Complaint in the Superior Court of California, County of Santa Clara, alleging violations of California’s meal and rest break law and additional wage and hour derivative claims under the California Labor Code. While the representative plaintiff was in the Field Services workforce, the Complaint does not limit the purported plaintiff class to that group, but rather extends to all non-exempt Sleep Number employees in the state. The plaintiff alleges that Sleep Number failed to provide compliant meal or rest breaks, failed to pay wages owed due to alleged off the clock work, failed to pay overtime, minimum wage and wages due at termination, thus resulting in inaccurate wage statements, all in violation of California law. The Complaint seeks
damages in the form of unpaid regular and premium wages, statutory penalties, pre-judgment and post-judgment interest, plaintiffs’ attorneys’ fees and costs.

Shareholder Class Action Complaints

On December 14, 2021, purported Sleep Number shareholder, Steamfitters Local 449 Pension & Retirement Security Funds (Steamfitters), filed a putative class action complaint in the United States District Court for the District of Minnesota (the District of Minnesota) on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021, inclusive, against Sleep Number, Shelly Ibach and David Callen, the Company’s former Executive Vice President and Chief Financial Officer. Steamfitters alleges material misstatements and omissions in certain of Sleep Number’s public disclosures during the purported class period, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The complaint seeks, among other things, unspecified monetary damages, reasonable costs and expenses and equitable/injunctive or other relief as deemed appropriate by the District of Minnesota.

On February 14, 2022, a second purported Sleep Number shareholder, Ricardo Dario Schammas, moved for appointment as lead plaintiff in the action. On March 24, 2022, the District of Minnesota heard argument on Schammas’s motion, and subsequently appointed Steamfitters and Schammas as Co-Lead Plaintiffs (together, Co-Lead Plaintiffs). On July 19, 2022, Co-Lead Plaintiffs filed a consolidated amended complaint, which, like the predecessor complaint, asserts claims against Sleep Number, Shelly Ibach, and David Callen under Sections 10(b) and 20(a) of the Exchange Act. Co- Lead Plaintiffs purport to assert these claims on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021. On September 19, 2022, Defendants moved to dismiss the consolidated amended complaint, which motion was heard by the Court on January 17, 2023. On July 10, 2023, the Court issued an order dismissing the Plaintiffs’ consolidated amended complaint with prejudice.

Shareholder Derivative Complaint

On May 12, 2022, Gwendolyn Calla Moore, as the appointed representative of purported Sleep Number shareholder
Matthew Gelb, filed a derivative action (the Derivative Action) in the District of Minnesota against Jean-Michel Valette,
Shelly Ibach, Barbara Matas, Brenda Lauderback, Daniel Alegre, Deborah Kilpatrick, Julie Howard, Kathleen Nedorostek,
Michael Harrison, Stephen Gulis, Jr., David Callen, and Kevin Brown. Moore purports to assert claims on behalf of Sleep
Number for breaches of fiduciary duty, waste, and contribution under Sections 10(b) and 21(d) of the Exchange Act.
Moore’s allegations generally mirror those asserted in the securities complaint described above. The Moore complaint
seeks damages in an unspecified amount, disgorgement, interest, and costs and expenses, including attorneys’ and
experts’ fees.

On September 13, 2022, the District of Minnesota entered a joint stipulation staying all proceedings in the Derivative
Action pending the outcome of any motion to dismiss the Steamfitters consolidated amended complaint. On July 10, 2023, the District of Minnesota in the Steamfitters case dismissed the consolidated amended complaint with prejudice, as noted above. The Plaintiff in the Derivative Action subsequently moved the Court to voluntarily dismiss its the Complaint and on January 22, 2024, the District of Minnesota dismissed the Derivative Action without prejudice.

Stockholder Demand

On March 25, 2022, Sleep Number received a shareholder litigation demand (the “Demand”), requesting that the Board
investigate the allegations in the Steamfitters complaint and pursue claims on Sleep Number’s behalf based on
those allegations. On May 12, 2022, the Board established a special litigation committee to investigate the demand.

On October 5 and October 12, 2022, Sleep Number received two additional shareholder litigation demands, which
adopted and incorporated the allegations and requests in the Demand. Both of these additional litigation demands were
referred to the special litigation committee.

The special litigation committee has concluded that it would not be in the best interests of Sleep Number and its
shareholders to take any of the actions requested in the demands at this time.
Consumer Credit Arrangements

The Company refers customers seeking extended financing to certain third-party financiers (Card Servicers). The Card Servicers, if credit is granted, establish the interest rates, fees, and all other terms and conditions of the customer’s account based on their evaluation of the creditworthiness of the customer. As the accounts are owned by the Card Servicers, at no time are the accounts purchased or acquired from Sleep Number. The Company is not liable to the Card Servicers for its customers’ credit defaults.

Commitments

As of December 30, 2023, the Company has $35 million of inventory purchase commitments. As part of the normal course of business, there are a limited number of inventory supply contracts that contain penalty provisions for failure to purchase contracted quantities. The Company does not currently expect any material payments under these provisions. At December 30, 2023, the Company had entered into 16 lease commitments primarily for future retail store locations. These lease commitments provide for total lease payments over the next six to 10 years, which if consummated based on current cost estimates, would approximate $25 million over the initial lease term. The future lease payments for these lease commitments have been excluded in the total operating lease payments in Note 7, Leases.
v3.24.0.1
Schedule II - Valuation and Qualifying Accounts
 12 Months Ended
Dec. 30, 2023
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]  
Schedule II - Valuation and Qualifying Accounts
Description202320222021
Allowances for credit losses
Balance at beginning of period$1,267 $924 $1,046 
Additions charged to costs and expenses1,437 2,294 1,750 
Deductions from reserves(1,267)(1,951)(1,872)
Balance at end of period$1,437 $1,267 $924 
v3.24.0.1
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Pay vs Performance Disclosure      
Net (loss) income $ (15,287) $ 36,610 $ 153,746
v3.24.0.1
Insider Trading Arrangements
 3 Months Ended
Dec. 30, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.0.1
Business and Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Dec. 30, 2023
Accounting Policies [Abstract]  
Business and Basis of Presentation
Business & Basis of Presentation

Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of Sleep Number beds which allows it to offer consumers high-quality, individualized sleep solutions and services. Sleep Number also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products.

Sleep Number generates revenue by marketing its innovations directly to new and existing customers, and selling products through its Stores, Online, Phone, Chat (Total Retail) and Other.

The consolidated financial statements include the accounts of Sleep Number Corporation and its 100%-owned subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation.
Fiscal Year
Fiscal Year

The Company’s fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2023 ended December 30, 2023; fiscal 2022 ended December 31, 2022; and fiscal 2021 ended January 1, 2022. Fiscal 2023, 2022 and 2021 each had 52 weeks.
Use of Estimates in the Preparation of Financial Statements
Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material.

The Company’s critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition.
Cash and Cash Equivalents
Cash and Cash Equivalents
Cash and cash equivalents include highly-liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in the consolidated balance sheets and in net increase (decrease) in short-term borrowings in the financing activities section of the Company’s consolidated statements of cash flows.
Accounts Receivable
Accounts Receivable

Accounts receivable are recorded net of an allowance for expected credit losses and consist primarily of receivables from third-party financiers for customer credit purchases. The allowance is recognized in an amount equal to anticipated future write-offs. The Company estimates future write-offs based on delinquencies, aging trends, industry risk trends, its historical experience and current trends. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.
Inventories
Inventories

Inventories include materials, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company reviews inventory quantities on hand and record reserves for obsolescence based on historical selling prices, current market conditions and forecasted product demand, to reduce inventory to net realizable value.
Property and Equipment
Property and Equipment

Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net (loss) income in the consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized.

Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable.

Estimated useful lives of the Company’s property and equipment by major asset category are as follows:
Leasehold improvements
5 to 15 years
Furniture and equipment
3 to 15 years
Production machinery
3 to 7 years
Computer equipment and software
3 to 12 years
Goodwill and Intangible Assets, Net
Goodwill and Intangible Assets, Net

Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net identifiable assets. The Company’s intangible assets include developed technologies and trade names/trademarks. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 8-10 years.
Asset Impairment Charges
Asset Impairment Charges

Long-lived Assets and Definite-lived Intangible Assets - the Company reviews its long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, the Company first compares the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, the Company calculates an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When the Company recognizes an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. The Company reviews retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If the Company recognizes an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset.

Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The goodwill impairment test involves a comparison of the fair value of a reporting unit with its carrying value. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and the Company’s market capitalization. The Company has only one reporting unit, which has a negative carrying value. The reporting unit had a goodwill balance of $64 million at December 30, 2023 and December 31, 2022. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the
carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess.
Other Investments
Other Investments
The Company has an investment in non-marketable equity securities of $1.2 million at December 30, 2023. This investment was made in a strategic product-development partner and is included in other non-current assets in the consolidated balance sheet. Non-marketable equity securities are equity securities without readily determinable fair value that are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.
Warranty Liabilities
Warranty Liabilities

The Company provides a limited warranty on most of the products it sells. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by the Company and are adjusted for any current trends as appropriate. The majority of the Company’s warranty claims are incurred within the first year. The Company’s warranty liability contains uncertainties because its warranty obligations cover an extended period of time and require management to make estimates for claim rates and the projected cost of materials and freight associated with sending replacement parts to customers. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. The warranty liabilities are included in other current liabilities and other non-current liabilities in the consolidated balance sheet.
The Company classifies as non-current those estimated warranty costs expected to be paid out in greater than one year.
Fair Value Measurements
Fair Value Measurements

Fair value measurements are reported in one of three levels based on the lowest level of significant input used:
•Level 1 – observable inputs such as quoted prices in active markets;
•Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
•Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company generally estimates fair value of long-lived assets, including its retail stores, using the income approach, which the Company based on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date.
Shareholders’ Deficit
Shareholders’ Deficit

Dividends

The Company is not restricted from paying cash dividends under the Credit Agreement so long as it is not in default under the Credit Agreement, the Company’s leverage ratio (as defined in the Credit Agreement) after giving effect to such restricted payments (as defined in the Credit Agreement) would not exceed 3.00:1.00 and no default or event of default (as defined in the Credit Agreement) would result therefrom. At December 30, 2023, the Company exceeded the 3.00:1.00 leverage ratio. However, Sleep Number has not historically paid, and has no current plans to pay, cash dividends on the Company’s common stock.

Share Repurchases

At December 30, 2023, there was $348 million remaining authorization under the $600 million board-approved share repurchase program. There is no expiration date governing the period over which the Company can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to accumulated deficit.
Revenue Recognition
Revenue Recognition

The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. Revenue recognized excludes sales taxes. Amounts billed to customers for delivery and setup are included in net sales. For most products, the Company receives payment before or promptly after, the products or services are delivered to the customer.

The Company accepts sales returns of most products during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that the Company does not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period the Company remeasures the liability to reflect changes in the estimate, with a corresponding adjustment to net sales.

Sleep Number beds sold with SleepIQ technology contain multiple performance obligations including the bed, and SleepIQ hardware and software. The Company analyzes its multiple performance obligation(s) to determine whether they are distinct and can be separated or whether they must be accounted for as a single performance obligation. The Company determined that beds sold with the SleepIQ technology have two performance obligations consisting of: (i) the bed; and (ii) SleepIQ hardware and software. SleepIQ hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. The Company determined the transaction price for multiple performance obligations based on their relative standalone selling prices. The performance obligation related to the bed is satisfied at a point in time. The performance obligation related to SleepIQ technology is satisfied over time based on the ongoing access and usage by the customer of software essential to the functionality of SleepIQ technology. The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the estimated period of benefit to the customer of 4.5 to 5.0 years because its inputs are generally expended evenly throughout the performance period.
Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses
Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses

The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within the Company’s industry):
Cost of SalesSales & Marketing
•
Costs associated with purchasing, manufacturing, shipping, handling and delivering the Company’s products to its retail stores and customers;
•Advertising, marketing and media production;
•Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage;
•Physical inventory losses, scrap and obsolescence;•Payroll and benefits for sales and customer service staff;
•Related occupancy and depreciation expenses;•Store occupancy costs;
•Costs associated with returns and exchanges; and•Store depreciation expense;
•Estimated costs to service customer warranty claims.•Credit card processing fees; and
•Promotional financing costs.
G&A
R&D(1)
•Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management;•Internal labor and benefits related to research and development activities;
•Outside consulting services related to research and development activities; and
•Testing equipment related to research and development activities.
•Occupancy costs of corporate facilities;
___________________________
(1) Costs incurred in connection with R&D are charged to expense as incurred.
•Depreciation related to corporate assets;
•Information hardware, software and maintenance;
•Insurance;
•Investor relations costs; and
• Other overhead costs.
Leases
Leases

The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of future lease payments over the lease term. The Company elected the option to not separate lease and non-lease components for all of its leases. Most of the Company’s leases do not provide an implicit interest rate nor is the rate available to it from its lessors. As an alternative, the Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet as an ROU asset or operating lease liability. The Company recognizes operating lease costs for these short-term leases, primarily small equipment leases, on a straight-line basis over the lease term. At December 30, 2023, the Company’s finance lease ROU assets and associated lease liabilities were not significant.

See Note 7, Leases, for further information regarding the Company’s operating leases.
Pre-Opening Costs
Pre-opening Costs

Costs associated with the start-up and promotion of new retail store openings are expensed as incurred.
Advertising Costs
Advertising Costs
The Company incurs advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs.
Insurance
Insurance
The Company is self-insured for certain losses related to health and workers’ compensation claims, although the Company obtains third-party insurance coverage to limit exposure to these claims. The Company estimates its self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims.
Software Capitalization
Software Capitalization

For software developed or obtained for internal use, the Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company capitalizes certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. The Company expenses any data conversion or training costs as incurred. Capitalized software costs are included in property and equipment, net in the consolidated balance sheet.

The Company capitalizes costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with its policy for software developed or obtained for internal use. The capitalized implementation costs of cloud computing arrangements are expensed over the term of the cloud computing arrangement in the same line item in the statement of operations as the associated hosting fees. Capitalized costs incurred with the implementation of a cloud computing arrangement are included in prepaid expenses and other non-current assets in the Company’s consolidated balance sheet, and in operating cash flows in its consolidated statement of cash flows.
Stock-Based Compensation
Stock-based Compensation

The Company compensates officers, directors and key employees with stock-based compensation under stock plans approved by its shareholders and administered under the supervision of the Company’s Board of Directors (Board). At December 30, 2023, a total of 1.2 million shares were available for future grant. These plans include non-qualified stock options and stock awards.

The Company records stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. The Company recognizes stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. The Company reduces compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. The Company includes, as part of cash flows from operating activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. In addition, excess tax benefits or deficiencies are recorded as discrete adjustments to income tax expense.

Stock Options - stock option awards are granted at exercise prices equal to the closing price of the Company’s stock on the grant date. Generally, options vest proportionally over three years and expire after 10 years. Compensation expense is recognized ratably over the vesting period.

The Company determines the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows:

Expected Volatility – expected volatility was determined based on implied volatility of the Company’s traded options and historical volatility of the Company’s stock price.
Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term.
Expected Term – expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards.

Stock Awards - the Company issues stock awards to certain employees in conjunction with its stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time-based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of the Company’s common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options.

Certain time-based stock awards have a performance condition (performance-based). The final number of shares earned for performance-based stock awards and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2023, 2022 and 2021 awards. The Company evaluates the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2023, 2022 and 2021, the performance targets are based on growth in net sales and in operating profit, and the performance periods are fiscal 2023 through 2025, 2022 through 2024 and fiscal 2021 through 2023, respectively.
Income Taxes
Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. The Company evaluates all available positive and negative evidence, including its forecast of future taxable income, to assess the need for a valuation allowance on its deferred tax assets.

The Company records a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in the Company’s tax returns. The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes.

The Company classifies net interest and penalties related to income taxes as a component of income tax expense in its consolidated statements of operations.
Net (Loss) Income Per Share
Net (Loss) Income Per Share

The Company calculates basic net (loss) income per share by dividing net (loss) income by the weighted-average number of common shares outstanding during the period. It calculates diluted net (loss) income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards.
Sources of Supply
Sources of Supply

The Company currently obtains materials and components used to produce its beds from outside sources. As a result, the Company is dependent upon suppliers that in some instances, are its sole source of supply, or supply the vast majority of the particular component or material. The Company continuously evaluates opportunities to dual-source key components and materials. The failure of one or more of the Company’s suppliers to provide it with materials or components on a timely basis could significantly impact the consolidated results of operations and net (loss) income per share. While the Company believes that these materials and components, or suitable replacements, could be obtained from other sources in the event of a disruption or loss of supply, it may not be able to find alternative sources of supply or alternative sources of supply on comparable terms and an unexpected loss of supply over a short period of time may not allow the Company to replace these sources in the ordinary course of business.
v3.24.0.1
Business and Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 30, 2023
Accounting Policies [Abstract]  
Estimated Useful Lives of Property and Equipment
Estimated useful lives of the Company’s property and equipment by major asset category are as follows:
Leasehold improvements
5 to 15 years
Furniture and equipment
3 to 15 years
Production machinery
3 to 7 years
Computer equipment and software
3 to 12 years
Warranty Liabilities The activity in the accrued warranty liabilities account was as follows (in thousands):
 202320222021
Balance at beginning of period$8,997 $10,069 $12,152 
Additions charged to costs and expenses for current-year sales15,939 16,694 16,732 
Deductions from reserves(16,438)(17,157)(18,134)
Change in liabilities for pre-existing warranties during the current
   year, including expirations		5 (609)(681)
Balance at end of period$8,503 $8,997 $10,069 
v3.24.0.1
Inventories (Tables)
 12 Months Ended
Dec. 30, 2023
Inventory Disclosure [Abstract]  
Schedule of Inventories
Inventories consisted of the following (in thousands):
 December 30,
2023		December 31,
2022
Raw Materials$9,092 $7,785 
Work in Progress92 102 
Finished goods106,249 106,147 
$115,433 $114,034 
Schedule of Finished Goods Inventories
Finished goods inventories consisted of the following (in thousands):
 December 30,
2023		December 31,
2022
Finished beds, including deliveries in-transit to those customers who have utilized home delivery services
$39,235 $36,708 
Finished components that were ready for assembly for the completion of beds46,179 45,722 
Retail accessories20,835 23,717 
 $106,249 $106,147 
v3.24.0.1
Property and Equipment (Tables)
 12 Months Ended
Dec. 30, 2023
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
Property and equipment consisted of the following (in thousands):
 December 30, 2023December 31,
2022
Leasehold improvements$143,006 $140,344 
Furniture and equipment158,309 151,202 
Production machinery, computer equipment and software306,972 287,834 
Construction in progress6,552 11,568 
Less: Accumulated depreciation and amortization(435,336)(390,343)
$179,503 $200,605 
v3.24.0.1
Goodwill and Intangible Assets, Net (Tables)
 12 Months Ended
Dec. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Definite-Lived Intangible Assets
Definite-lived Intangible Assets

December 30, 2023December 31, 2022
Gross Carrying
Amount		Accumulated
Amortization		Gross Carrying
Amount		Accumulated
Amortization
Developed technologies$18,851 $18,851 $18,851 $17,641 
Patents1,972 780 1,972 559 
$20,823 $19,631 $20,823 $18,200 
Schedule of Annual Amortization for Definite-Lived Intangible Assets
Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands):
2024$222 
2025226 
2026222 
2027222 
2028155 
Thereafter145 
Total future amortization for definite-lived intangible assets$1,192 
v3.24.0.1
Credit Agreement (Tables)
 12 Months Ended
Dec. 30, 2023
Debt Disclosure [Abstract]  
Schedule of Borrowings Under Credit Facility
The following tables summarizes the Company’s borrowings under the credit facility ($ in thousands):
 December 30, 2023December 31, 2022
Outstanding borrowings$539,500 $459,600 
Outstanding letters of credit$7,147 $5,947 
Additional borrowing capacity$138,353 $359,453 
Weighted-average interest rate8.5 %6.7 %
v3.24.0.1
Leases (Tables)
 12 Months Ended
Dec. 30, 2023
Leases [Abstract]  
Schedule of Operating Lease Costs
Lease costs were as follows (in thousands):
202320222021
Operating lease costs(1)
$113,510 $109,766 $99,474 
Variable lease costs$278 $877 $2,205 
____________________
(1)Includes short-term lease costs which are not significant.
Schedule of Maturities of Operating Lease Liabilities
The maturities of operating lease liabilities as of December 30, 2023, were as follows(1) (in thousands):
2024$106,670 
202597,359 
202685,276 
202769,744 
202857,767 
Thereafter103,541 
Total operating lease payments(2)
520,357 
Less: Interest87,203 
Present value of operating lease liabilities$433,154 
___________________
(1)Total operating lease payments exclude $25 million of legally binding minimum lease payments for leases signed but not yet commenced.
(2)Includes the current portion of $82 million for operating lease liabilities.
Schedule of Other Information Related Operating Leases
Other information related to operating leases was as follows:
 December 30,
2023		December 31,
2022
Weighted-average remaining lease term (years)5.96.2
Weighted-average discount rate6.5 %6.2 %

(in thousands)202320222021
Cash paid for amounts included in present value of operating lease liabilities$108,294 $99,819 $90,198 
Right-of-use assets obtained in exchange for operating lease liabilities$69,396 $82,117 $109,000 
v3.24.0.1
Shareholders' Deficit (Tables)
 12 Months Ended
Dec. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Schedule of Stock-Based Compensation Expense
Total stock-based compensation expense was as follows (in thousands):
 202320222021
Stock awards(1)
$11,053 $9,471 $20,216 
Stock options3,802 3,752 2,998 
Total stock-based compensation expense(1)
14,855 13,223 23,214 
Income tax benefit3,476 3,319 5,722 
Total stock-based compensation expense, net of tax$11,379 $9,904 $17,492 
____________________
(1)    Changes in annual stock-based compensation expense includes the cumulative impact of the change in the expected achievements of certain performance targets.
Summary of Stock Option Activity
A summary of the Company’s stock option activity was as follows (in thousands, except per share amounts and years):
 Stock
Options		Weighted-
Average
Exercise
Price per
Share		Weighted-
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic
Value (1)
Outstanding at December 31, 2022787 $46.02 6.1$829 
Granted305 27.30 
Exercised(20)21.43 
Canceled/Forfeited(26)55.69 
Outstanding at December 30, 20231,046 $40.80 6.2$— 
Exercisable at December 30, 2023654 $42.08 4.5$— 
Vested and expected to vest at December 30, 20231,014 $40.87 6.1$— 
____________________
(1)    Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant.
Other Information Pertaining to Options
Other information pertaining to options was as follows (in thousands, except per share amounts):
 202320222021
Weighted-average grant date fair value of stock options granted$16.41 $30.22 $71.93 
Total intrinsic value (at exercise) of stock options exercised$298 $1,298 $16,003 
Assumptions Used to Calculate Fair Value of Options Granted Using Black-Scholes-Merton Option-Pricing Model
The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows:
Valuation Assumptions202320222021
Expected dividend yield0.0 %0.0 %0.0 %
Expected volatility64 %57 %58 %
Risk-free interest rate3.8 %2.2 %0.9 %
Expected term (years)5.75.35.2
Stock Award Activity
Stock award activity was as follows (in thousands, except per share amounts):
Time-
Based
Stock
Awards		Weighted-Average
Grant Date
Fair Value		Performance-
Based
Stock Awards		Weighted-Average
Grant Date
Fair Value
Outstanding at December 31, 2022261 $61.88 501 $66.33 
Granted304 26.10 440 28.85 
Vested(127)57.10 (201)36.84 
Canceled/Forfeited(41)48.64 (41)61.15 
Outstanding at December 30, 2023397 $37.38 699 $51.74 
Schedule of Repurchase of Common Stock
Repurchases of the Company’s common stock were as follows (in thousands):
 202320222021
Amount repurchased under Board-approved share repurchase program$— $54,868 $364,479 
Amount repurchased in connection with the vesting of employee restricted stock grants3,747 9,320 17,897 
Total amount repurchased (based on trade dates)$3,747 $64,188 $382,376 
Net Income per Common Share
The components of basic and diluted net (loss) income per share were as follows (in thousands, except per share amounts):
 202320222021
Net (loss) income$(15,287)$36,610 $153,746 
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding22,429 22,396 24,038 
Dilutive effect of stock-based awards— 456 909 
Diluted weighted-average shares outstanding22,429 22,852 24,947 
Net (loss) income per share – basic$(0.68)$1.63 $6.40 
Net (loss) income per share – diluted
$(0.68)$1.60 $6.16 
v3.24.0.1
Revenue Recognition (Tables)
 12 Months Ended
Dec. 30, 2023
Revenue from Contract with Customer [Abstract]  
Schedule of Deferred Contract Liabilities and Deferred Contract Assets
Deferred contract assets and deferred contract liabilities are included in the consolidated balance sheets as follows (in thousands):
 December 30, 2023December 31, 2022
Deferred contract assets included in:  
Other current assets$28,567 $28,121 
Other non-current assets54,795 55,564 
 $83,362 $83,685 

 December 30, 2023December 31, 2022
Deferred contract liabilities included in:  
Other current liabilities$36,421 $36,335 
Other non-current liabilities69,098 70,999 
 $105,519 $107,334 
Disaggregation of Revenue
Net sales consisted of the following (in thousands):
 202320222021
Retail stores$1,639,073 $1,823,617 $1,904,037 
Online, phone, chat and other248,409 290,680 280,912 
Total Company$1,887,482 $2,114,297 $2,184,949 
Schedule of Sales Return Liability
The activity in the sales returns liability account for 2023 and 2022 was as follows (in thousands):
 20232022
Balance at beginning of year$25,594 $22,368 
Additions that reduce net sales109,153 103,477 
Deduction from reserves(112,345)(100,251)
Balance at end of period$22,402 $25,594 
v3.24.0.1
Restructuring Costs (Tables)
 12 Months Ended
Dec. 30, 2023
Restructuring and Related Activities [Abstract]  
Restructuring and Related Costs
During the fourth quarter of fiscal 2023, the Company recognized $15.7 million of restructuring costs, as follows (in thousands):
2023
Cash restructuring costs:
Contract termination costs (1)
$7,410 
Severance and employee-related benefits4,966 
Professional fees and other1,110 
Total cash restructuring costs
13,486 
Non-cash restructuring costs:
Asset impairments (2)
2,242 
Total restructuring costs
$15,728 
____________________
(1)Primarily comprised of lease termination costs.
(2) Includes impairments of both lease right-of-use assets and property and equipment.
Schedule of Restructuring Reserve by Type of Cost
The following table provides the activity in the Company’s restructuring related liabilities, which are included within accounts payable, compensation and benefits and other current liabilities on the consolidated balance sheet (in thousands):
2023
Balance at December 31, 2022$— 
Expenses13,486 
Cash payments(4,766)
Balance at December 30, 2023$8,720 
v3.24.0.1
Income Taxes (Tables)
 12 Months Ended
Dec. 30, 2023
Income Tax Disclosure [Abstract]  
Summary of Income Tax Expense (Benefit)
Income tax expense (benefit) consisted of the following (in thousands):
202320222021
Current:
Federal$5,474 $15,518 $17,019 
State3,106 5,174 4,568 
8,580 20,692 21,587 
Deferred:
Federal(10,151)(7,264)10,954 
State(2,895)(1,143)1,004 
(13,046)(8,407)11,958 
Income tax (benefit) expense
$(4,466)$12,285 $33,545 
Reconciliation of Income Tax Expense (Benefit) at the Statutory Federal Rate
The following table provides a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:
202320222021
Statutory federal income tax21.0 %21.0 %21.0 %
State income taxes, net of federal benefit(3.5)6.4 3.0 
R&D tax credits14.1 (5.5)(1.4)
Return to provision
6.1 0.8 0.1 
Investment tax credit
1.1 — — 
Stock-based compensation(6.2)(1.2)(6.3)
Non-deductible compensation(5.7)1.7 1.5 
Non-deductible expenses
(2.8)1.3 0.3 
Changes in unrecognized tax benefits(0.5)(0.4)(0.1)
Other(1.0)1.0 (0.2)
Effective income tax rate22.6 %25.1 %17.9 %
Summary of Deferred Income Taxes
The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands):
20232022
Deferred tax assets:
Stock-based compensation$7,006 $6,896 
Operating lease liabilities108,952 109,144 
Warranty and returns liabilities6,894 7,881 
Net operating loss carryforwards and credits1,738 2,051 
Compensation and benefits7,484 7,678 
Research and development18,079 13,860 
Other8,931 6,110 
Total gross deferred tax assets159,084 153,620 
Valuation allowance(48)(615)
Total gross deferred tax assets after valuation allowance159,036 153,005 
Deferred tax liabilities:
Property and equipment33,772 38,442 
Operating lease right-of-use assets99,351 99,311 
Deferred revenue3,065 4,394 
Other2,595 2,900 
Total gross deferred tax liabilities138,783 145,047 
Net deferred tax assets
$20,253 $7,958 
Summary of Reconciliations Unrecognized Tax Benefits
Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands):
Federal and State Tax
202320222021
Beginning balance$3,645 $3,869 $3,912 
Increases related to current-year tax positions753 910 831 
Increases related to prior-year tax positions40 252 4 
Decreases related to prior-year tax positions— (328)(33)
Lapse of statute of limitations(601)(1,058)(845)
Settlements with taxing authorities(166)— — 
Ending balance$3,671 $3,645 $3,869 
v3.24.0.1
Business and Summary of Significant Accounting Policies - Cash and Cash Equivalents - Narrative (Details) - USD ($)
$ in Millions
Dec. 30, 2023
Dec. 31, 2022
Accounts Payable    
Cash and Cash Equivalents [Line Items]    
Book overdrafts $ 30 $ 36
v3.24.0.1
Business and Summary of Significant Accounting Policies - Property and Equipment, Estimated Useful Lives of Property and Equipment (Details)
Dec. 30, 2023
Leasehold improvements | Minimum  
Property and equipment [Line Items]  
Estimated useful lives 5 years
Leasehold improvements | Maximum  
Property and equipment [Line Items]  
Estimated useful lives 15 years
Furniture and equipment | Minimum  
Property and equipment [Line Items]  
Estimated useful lives 3 years
Furniture and equipment | Maximum  
Property and equipment [Line Items]  
Estimated useful lives 15 years
Production machinery | Minimum  
Property and equipment [Line Items]  
Estimated useful lives 3 years
Production machinery | Maximum  
Property and equipment [Line Items]  
Estimated useful lives 7 years
Computer equipment and software | Minimum  
Property and equipment [Line Items]  
Estimated useful lives 3 years
Computer equipment and software | Maximum  
Property and equipment [Line Items]  
Estimated useful lives 12 years
v3.24.0.1
Business and Summary of Significant Accounting Policies - Goodwill and Intangible Assets, Net - Narrative (Details)
Dec. 30, 2023
Minimum  
Definite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 8 years
Maximum  
Definite-Lived Intangible Assets [Line Items]  
Finite-lived intangible asset, useful life 10 years
v3.24.0.1
Business and Summary of Significant Accounting Policies - Goodwill and Indefinite-lived Intangible Assets, Narrative (Details)
$ in Millions
 12 Months Ended
Dec. 30, 2023
USD ($)
reporting_unit
Dec. 31, 2022
USD ($)
Accounting Policies [Abstract]    
Number of reporting units | reporting_unit 1  
Goodwill | $ $ 64 $ 64
v3.24.0.1
Business and Summary of Significant Accounting Policies - Asset Impairment Charges - Narrative (Details)
 12 Months Ended
Dec. 30, 2023
USD ($)
Accounting Policies [Abstract]  
Impairment of goodwill and intangible assets $ 0
v3.24.0.1
Business and Summary of Significant Accounting Policies - Other Investments, Narrative (Details)
$ in Millions
Dec. 30, 2023
USD ($)
Accounting Policies [Abstract]  
Non-marketable equity securities $ 1.2
v3.24.0.1
Business and Summary of Significant Accounting Policies - Warranty Liabilities (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Warranty Liabilities [Roll Forward]      
Balance at beginning of period $ 8,997 $ 10,069 $ 12,152
Additions charged to costs and expenses for current-year sales 15,939 16,694 16,732
Deductions from reserves (16,438) (17,157) (18,134)
Change in liabilities for pre-existing warranties during the current    year, including expirations 5 (609) (681)
Balance at end of period $ 8,503 $ 8,997 $ 10,069
v3.24.0.1
Business and Summary of Significant Accounting Policies - Dividends - Narrative (Details)
 12 Months Ended
Dec. 30, 2023
Accounting Policies [Abstract]  
Leverage ratio 300.00%
v3.24.0.1
Business and Summary of Significant Accounting Policies - Share Repurchases - Narrative (Details)
Dec. 30, 2023
USD ($)
Accounting Policies [Abstract]  
Remaining authorized stock purchase plan $ 348,000,000
Approved share repurchase program $ 600,000,000
v3.24.0.1
Business and Summary of Significant Accounting Policies - Revenue Recognition - Narrative (Details) - SleepIQ Technology
 12 Months Ended
Dec. 30, 2023
Minimum  
Disaggregation of Revenue [Line Items]  
Estimated product life 4 years 6 months
Maximum  
Disaggregation of Revenue [Line Items]  
Estimated product life 5 years
v3.24.0.1
Business and Summary of Significant Accounting Policies - Advertising Costs - Narrative (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Accounting Policies [Abstract]      
Advertising expense $ 272 $ 309 $ 323
v3.24.0.1
Business and Summary of Significant Accounting Policies - Insurance - Narrative (Details) - USD ($)
$ in Millions
Dec. 30, 2023
Dec. 31, 2022
Accounting Policies [Abstract]    
Self-insurance liability $ 13 $ 13
Self-insurance liability, current 8 9
Self-insurance liability, noncurrent $ 5 $ 4
v3.24.0.1
Business and Summary of Significant Accounting Policies - Stock-Based Compensation - Narrative (Details) - shares
shares in Millions
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Number of shares available for grant 1.2    
Stock Options      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Award option vesting period 3 years    
Award expiration period 10 years    
Time-Based Stock Awards      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Award option vesting period 3 years    
Performance- Based Stock Awards | Minimum      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Stock awards - shares awarded (as a percent) 0.00% 0.00% 0.00%
Performance- Based Stock Awards | Maximum      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Stock awards - shares awarded (as a percent) 200.00% 200.00% 200.00%
v3.24.0.1
Fair Value Measurements (Details) - Recurring - Level 1 - USD ($)
$ in Millions
Dec. 30, 2023
Dec. 31, 2022
Other non-current assets    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities assets funding the deferred compensation plan $ 19 $ 17
Other non-current liabilities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred compensation plan liability $ 19 $ 17
v3.24.0.1
Inventories - Schedule of Inventories (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Raw Materials $ 9,092 $ 7,785
Work in Progress 92 102
Finished goods 106,249 106,147
Inventories $ 115,433 $ 114,034
v3.24.0.1
Inventories - Schedule of Finished Goods Inventories (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Finished beds, including deliveries in-transit to those customers who have utilized home delivery services $ 39,235 $ 36,708
Finished components that were ready for assembly for the completion of beds 46,179 45,722
Retail accessories 20,835 23,717
Finished goods inventory $ 106,249 $ 106,147
v3.24.0.1
Property and Equipment - Summary of Property and Equipment (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Property and equipment [Line Items]    
Less: Accumulated depreciation and amortization $ (435,336) $ (390,343)
Property and equipment, net 179,503 200,605
Leasehold improvements    
Property and equipment [Line Items]    
Property and equipment, gross 143,006 140,344
Furniture and equipment    
Property and equipment [Line Items]    
Property and equipment, gross 158,309 151,202
Production machinery, computer equipment and software    
Property and equipment [Line Items]    
Property and equipment, gross 306,972 287,834
Construction in progress    
Property and equipment [Line Items]    
Property and equipment, gross $ 6,552 $ 11,568
v3.24.0.1
Property and Equipment - Narrative (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Property, Plant and Equipment [Abstract]      
Depreciation $ 71 $ 64 $ 57
v3.24.0.1
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Goodwill And Intangible Assets [Line Items]      
Goodwill $ 64,000 $ 64,000  
Gross Carrying Amount 20,823 20,823  
Accumulated Amortization 19,631 18,200  
Developed technologies      
Goodwill And Intangible Assets [Line Items]      
Gross Carrying Amount 18,851 18,851  
Accumulated Amortization 18,851 17,641  
Amortization expense definite-lived intangible assets 1,200 2,000 $ 2,000
Patents      
Goodwill And Intangible Assets [Line Items]      
Gross Carrying Amount 1,972 1,972  
Accumulated Amortization 780 559  
Amortization expense definite-lived intangible assets 200 200 $ 200
Trade Names      
Goodwill And Intangible Assets [Line Items]      
Indefinite-lived trade name/trademarks $ 1,400 $ 1,400  
v3.24.0.1
Goodwill and Intangible Assets, Net - Definite-lived Intangible Assets (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Definite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount $ 20,823 $ 20,823
Accumulated Amortization 19,631 18,200
Developed technologies    
Definite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount 18,851 18,851
Accumulated Amortization 18,851 17,641
Patents    
Definite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount 1,972 1,972
Accumulated Amortization $ 780 $ 559
v3.24.0.1
Goodwill and Intangible Assets, Net - Schedule of Annual Amortization for Definite-Lived Intangible Assets (Details)
$ in Thousands
Dec. 30, 2023
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2024 $ 222
2025 226
2026 222
2027 222
2028 155
Thereafter 145
Total future amortization for definite-lived intangible assets $ 1,192
v3.24.0.1
Credit Agreement - Narrative (Details) - Line of Credit
$ in Millions
Nov. 02, 2023
USD ($)
Oct. 26, 2022
Dec. 30, 2023
USD ($)
Sep. 30, 2023
USD ($)
Jul. 24, 2023
Oct. 25, 2022
Line of Credit Facility [Line Items]            
Current borrowing capacity $ 685.0   $ 685.0 $ 825.0    
Net leverage ratio, maximum threshold 4.50 4.5       3.75
Net leverage ratio, maximum threshold for three consecutive quarterly reporting periods   5.0        
Commitment fee percentage 0.50% 0.50%        
Debt instrument, basis spread on variable rate 0.75% 0.50%        
Accordion feature, increase limit $ 342.5     $ 400.0    
Net Leverage ratio, minimum threshold for commitment fee rate increase 3.50          
Increase (decrease) in basis spread on variable rate 0.25%          
Net leverage ratio, minimum threshold 4.00          
Requisite net leverage ratio 3.00     3.75    
Amendment fee percentage 0.20%          
Total availability     $ 1,000.0      
Debt Covenant Period One            
Line of Credit Facility [Line Items]            
Net leverage ratio, maximum threshold 5.00          
Interest coverage ratio, maximum threshold 1.50          
Debt Covenant Period Two            
Line of Credit Facility [Line Items]            
Net leverage ratio, maximum threshold 5.50          
Interest coverage ratio, maximum threshold 1.25          
Debt Covenant Period Three            
Line of Credit Facility [Line Items]            
Net leverage ratio, maximum threshold 5.00          
Interest coverage ratio, maximum threshold 1.50          
Debt Covenant Period Four            
Line of Credit Facility [Line Items]            
Net leverage ratio, maximum threshold 4.80          
Interest coverage ratio, maximum threshold 3.00          
Debt Covenant Period Five            
Line of Credit Facility [Line Items]            
Net leverage ratio, maximum threshold 4.00          
Debt Instrument, Agreement, Period One            
Line of Credit Facility [Line Items]            
Maximum cash add back $ 30.0          
Debt Instrument, Redemption, Period Two            
Line of Credit Facility [Line Items]            
Maximum cash add back 20.0          
Secured Overnight Financing Rate (SOFR)            
Line of Credit Facility [Line Items]            
Debt instrument, basis spread on variable rate   0.10%        
Revolving Credit Facility            
Line of Credit Facility [Line Items]            
Current borrowing capacity $ 485.0     $ 625.0    
Net leverage ratio, maximum threshold         5.0  
Net leverage ratio, maximum threshold for future quarterly reporting periods         4.5  
v3.24.0.1
Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Debt Disclosure [Abstract]    
Outstanding borrowings $ 539,500 $ 459,600
Outstanding letters of credit 7,147 5,947
Additional borrowing capacity $ 138,353 $ 359,453
Weighted-average interest rate 8.50% 6.70%
v3.24.0.1
Leases - Additional Information (Details)
Dec. 30, 2023
Retail Store Leases | Minimum  
Lessee, Lease, Description [Line Items]  
Lease term 5 years
Retail Store Leases | Maximum  
Lessee, Lease, Description [Line Items]  
Lease term 10 years
Office and Manufacturing Leases | Maximum  
Lessee, Lease, Description [Line Items]  
Lease term 15 years
Lease Vehicles and Certain Equipment Under Operating Leases | Minimum  
Lessee, Lease, Description [Line Items]  
Lease term 3 years
Lease Vehicles and Certain Equipment Under Operating Leases | Maximum  
Lessee, Lease, Description [Line Items]  
Lease term 6 years
v3.24.0.1
Leases - Schedule of Lease Costs (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Leases [Abstract]      
Operating lease costs $ 113,510 $ 109,766 $ 99,474
Variable lease costs $ 278 $ 877 $ 2,205
v3.24.0.1
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Leases [Abstract]    
2024 $ 106,670  
2025 97,359  
2026 85,276  
2027 69,744  
2028 57,767  
Thereafter 103,541  
Total operating lease payments 520,357  
Less: Interest 87,203  
Present value of operating lease liabilities 433,154  
Amount leases executed, not yet commenced, excluded from table 25,000  
Operating lease liabilities $ 81,760 $ 79,533
v3.24.0.1
Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Leases [Abstract]      
Weighted-average remaining lease term (years) 5 years 10 months 24 days 6 years 2 months 12 days  
Weighted-average discount rate 6.50% 6.20%  
Cash paid for amounts included in present value of operating lease liabilities $ 108,294 $ 99,819 $ 90,198
Right-of-use assets obtained in exchange for operating lease liabilities $ 69,396 $ 82,117 $ 109,000
v3.24.0.1
Shareholders' Deficit - Schedule of Stock-Based Compensation Expense (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total stock-based compensation expense $ 14,855 $ 13,223 $ 23,214
Income tax benefit 3,476 3,319 5,722
Total stock-based compensation expense, net of tax 11,379 9,904 17,492
Stock awards      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total stock-based compensation expense 11,053 9,471 20,216
Stock options      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Total stock-based compensation expense $ 3,802 $ 3,752 $ 2,998
v3.24.0.1
Shareholders' Deficit - Summary of Stock Option Activity (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Stock Options    
Beginning balance, outstanding (in shares) 787  
Granted (in shares) 305  
Exercised (in shares) (20)  
Canceled/Forfeited (in shares) (26)  
Ending balance, outstanding (in shares) 1,046 787
Ending balance, exercisable (in shares) 654  
Vested and expected to vest, ending balance (in shares) 1,014  
Weighted- Average Exercise Price per Share    
Outstanding, beginning balance (in dollars per share) $ 46.02  
Granted (in dollars per share) 27.30  
Exercised (in dollars per share) 21.43  
Canceled/Forfeited (in dollars per share) 55.69  
Outstanding, ending balance (in dollars per share) 40.80 $ 46.02
Exercisable, ending balance (in dollars per share) 42.08  
Vested and expected to vest, ending balance (in dollars per share) $ 40.87  
Weighted- Average Remaining Contractual Term    
Weighted-average remaining contractual term - outstanding (years) 6 years 2 months 12 days 6 years 1 month 6 days
Weighted-average remaining contractual term - exercisable (years) 4 years 6 months  
Weighted-average remaining contractual term - vested and expected to vest (years) 6 years 1 month 6 days  
Aggregate Intrinsic Value    
Aggregate intrinsic value - outstanding $ 0 $ 829
Aggregate intrinsic Value - exercisable 0  
Aggregate intrinsic value - vested and expected to vest $ 0  
v3.24.0.1
Shareholders' Deficit - Other Information Pertaining to Options (Details) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-Based Payment Arrangement [Abstract]      
Weighted-average grant date fair value of stock options granted (in dollars per share) $ 16.41 $ 30.22 $ 71.93
Total intrinsic value (at exercise) of stock options exercised $ 298 $ 1,298 $ 16,003
v3.24.0.1
Shareholders' Deficit - Narrative (Details) - USD ($)
shares in Millions
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Approved share repurchase program $ 600,000,000    
Remaining authorized stock purchase plan $ 348,000,000    
Stock Award      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Antidilutive securities excluded from computation of earnings per share, amount (in shares) 1.3 0.6 0.9
Antidilutive securities excluded from calculation of earnings per share $ 100,000    
Stock Options      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Proceeds from stock options exercised 400,000    
Tax benefit from exercise of stock options 100,000    
Stock-based compensation expense related to non-vested awards $ 5,200,000    
Weighted average period to recognize remaining expense over 1 year 10 months 24 days    
Time- Based Stock Awards      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Stock-based compensation expense related to non-vested awards $ 8,700,000    
Weighted average period to recognize remaining expense over 1 year 8 months 12 days    
Performance- Based Stock Awards      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Stock-based compensation expense related to non-vested awards $ 7,800,000    
Weighted average period to recognize remaining expense over 2 years 1 month 6 days    
v3.24.0.1
Shareholders' Deficit - Assumptions Used to Calculate Fair Value of Options Granted Using Black-Scholes-Merton Option-Pricing Model (Details) - Stock options
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Expected dividend yield (as a percent) 0.00% 0.00% 0.00%
Expected volatility (as a percent) 64.00% 57.00% 58.00%
Risk-free interest rate 3.80% 2.20% 0.90%
Expected term (years) 5 years 8 months 12 days 5 years 3 months 18 days 5 years 2 months 12 days
v3.24.0.1
Shareholders' Deficit - Stock Award Activity (Details)
shares in Thousands
 12 Months Ended
Dec. 30, 2023
$ / shares
shares
Time- Based Stock Awards  
Stock Awards  
Outstanding at beginning of period (in shares) | shares 261
Granted (in shares) | shares 304
Vested (in shares) | shares (127)
Canceled/Forfeited (in shares) | shares (41)
Outstanding at end of period (in shares) | shares 397
Weighted-Average Grant Date Fair Value  
Outstanding at beginning of period (in dollars per share) | $ / shares $ 61.88
Granted (in dollars per share) | $ / shares 26.10
Vested (in dollars per share) | $ / shares 57.10
Canceled/Forfeited (in dollars per share) | $ / shares 48.64
Outstanding at end of period (in dollars per share) | $ / shares $ 37.38
Performance- Based Stock Awards  
Stock Awards  
Outstanding at beginning of period (in shares) | shares 501
Granted (in shares) | shares 440
Vested (in shares) | shares (201)
Canceled/Forfeited (in shares) | shares (41)
Outstanding at end of period (in shares) | shares 699
Weighted-Average Grant Date Fair Value  
Outstanding at beginning of period (in dollars per share) | $ / shares $ 66.33
Granted (in dollars per share) | $ / shares 28.85
Vested (in dollars per share) | $ / shares 36.84
Canceled/Forfeited (in dollars per share) | $ / shares 61.15
Outstanding at end of period (in dollars per share) | $ / shares $ 51.74
v3.24.0.1
Shareholders' Deficit - Schedule of Repurchase of Common Stock (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-Based Payment Arrangement [Abstract]      
Amount repurchased under Board-approved share repurchase program $ 0 $ 54,868 $ 364,479
Amount repurchased in connection with the vesting of employee restricted stock grants 3,747 9,320 17,897
Total amount repurchased (based on trade dates) $ 3,747 $ 64,188 $ 382,376
v3.24.0.1
Shareholders' Deficit - Components of Basic and Diluted Net Income per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Share-Based Payment Arrangement [Abstract]      
Net (loss) income $ (15,287) $ 36,610 $ 153,746
Basic weighted-average shares outstanding (in shares) 22,429 22,396 24,038
Dilutive effect of stock-based awards (in shares) 0 456 909
Diluted weighted-average shares outstanding (in shares) 22,429 22,852 24,947
Net (loss) income per share - basic (in dollars per share) $ (0.68) $ 1.63 $ 6.40
Net (loss) income per share - diluted (in dollars per share) $ (0.68) $ 1.60 $ 6.16
v3.24.0.1
Revenue Recognition - Schedule of Deferred Contract Liabilities and Deferred Contract Assets (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Deferred contract assets included in:    
Deferred contract assets $ 83,362 $ 83,685
Deferred contract liabilities included in:    
Deferred contract liabilities 105,519 107,334
Other current assets    
Deferred contract assets included in:    
Other current assets 28,567 28,121
Other non-current assets    
Deferred contract assets included in:    
Other non-current assets 54,795 55,564
Other current liabilities    
Deferred contract liabilities included in:    
Other current liabilities 36,421 36,335
Other non-current liabilities    
Deferred contract liabilities included in:    
Other non-current liabilities $ 69,098 $ 70,999
v3.24.0.1
Revenue Recognition - Additional Information (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Disaggregation of Revenue [Line Items]      
Revenue recognized, included in beginning deferred contract liability balance $ 36 $ 34 $ 29
Revenue from Contract with Customer Benchmark | Timing of Transfer of Goods or Services Concentration Risk | Transferred at Point in Time      
Disaggregation of Revenue [Line Items]      
Revenue recognized at a point in time (as a percent) 98.00% 98.00% 98.00%
v3.24.0.1
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Disaggregation of Revenue [Line Items]      
Net sales $ 1,887,482 $ 2,114,297 $ 2,184,949
Retail stores      
Disaggregation of Revenue [Line Items]      
Net sales 1,639,073 1,823,617 1,904,037
Online, phone, chat and other      
Disaggregation of Revenue [Line Items]      
Net sales $ 248,409 $ 290,680 $ 280,912
v3.24.0.1
Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Sales Return Liability [Roll Forward]    
Balance at beginning of year $ 25,594 $ 22,368
Additions that reduce net sales 109,153 103,477
Deduction from reserves (112,345) (100,251)
Balance at end of period $ 22,402 $ 25,594
v3.24.0.1
Profit Sharing and 401(k) Plan (Details) - USD ($)
$ in Millions
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Retirement Benefits [Abstract]      
Employee compensation deferral (as a percent) 50.00%    
Employer contributions $ 10 $ 10 $ 7
v3.24.0.1
Restructuring Costs - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 30, 2023
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Restructuring and Related Activities [Abstract]        
Remaining expected restructuring $ 12,000 $ 12,000    
Restructuring costs $ 15,728 $ 15,728 $ 0 $ 0
v3.24.0.1
Restructuring Costs - Summary of Restructuring Expenses (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 30, 2023
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Restructuring Cost and Reserve [Line Items]        
Total cash restructuring costs $ 13,486 $ 13,486    
Asset impairments 2,242      
Total restructuring costs 15,728 $ 15,728 $ 0 $ 0
Contract termination costs        
Restructuring Cost and Reserve [Line Items]        
Total cash restructuring costs 7,410      
Severance and employee-related benefits        
Restructuring Cost and Reserve [Line Items]        
Total cash restructuring costs 4,966      
Professional fees and other        
Restructuring Cost and Reserve [Line Items]        
Total cash restructuring costs $ 1,110      
v3.24.0.1
Restructuring Costs - Restructuring Accrual Activity (Details) - USD ($)
$ in Thousands
 3 Months Ended 12 Months Ended
Dec. 30, 2023
Dec. 30, 2023
Restructuring Reserve [Roll Forward]    
Balance at December 31, 2022   $ 0
Expenses $ 13,486 13,486
Cash payments   (4,766)
Balance at December 30, 2023 $ 8,720 $ 8,720
v3.24.0.1
Income Taxes - Summary of Income Tax Expense (Benefit) (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Current:      
Federal $ 5,474 $ 15,518 $ 17,019
State 3,106 5,174 4,568
Current income tax expense 8,580 20,692 21,587
Deferred:      
Federal (10,151) (7,264) 10,954
State (2,895) (1,143) 1,004
Deferred income tax expense (13,046) (8,407) 11,958
Income tax (benefit) expense $ (4,466) $ 12,285 $ 33,545
v3.24.0.1
Income Taxes - Reconciliation of Income Tax Expense (Benefit) at the Statutory Federal Rate (Details)
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Income Tax Disclosure [Abstract]      
Statutory federal income tax 21.00% 21.00% 21.00%
State income taxes, net of federal benefit (3.50%) 6.40% 3.00%
R&D tax credits 14.10% (5.50%) (1.40%)
Return to provision 6.10% 0.80% 0.10%
Investment tax credit 1.10% 0.00% 0.00%
Stock-based compensation (6.20%) (1.20%) (6.30%)
Non-deductible compensation (5.70%) 1.70% 1.50%
Non-deductible expenses (2.80%) 1.30% 0.30%
Changes in unrecognized tax benefits (0.50%) (0.40%) (0.10%)
Other (1.00%) 1.00% (0.20%)
Effective income tax rate 22.60% 25.10% 17.90%
v3.24.0.1
Income Taxes - Additional Information (Details) - USD ($)
Dec. 30, 2023
Dec. 31, 2022
Income Taxes [Line Items]    
Valuation allowance $ 48,000 $ 615,000
Unrecognized tax benefits that would impact effective tax rate 3,400,000 $ 3,200,000
Federal    
Income Taxes [Line Items]    
Operating loss carryforwards $ 400,000  
v3.24.0.1
Income Taxes - Summary of Deferred Income Taxes (Details) - USD ($)
$ in Thousands
Dec. 30, 2023
Dec. 31, 2022
Deferred tax assets:    
Stock-based compensation $ 7,006 $ 6,896
Operating lease liabilities 108,952 109,144
Warranty and returns liabilities 6,894 7,881
Net operating loss carryforwards and credits 1,738 2,051
Compensation and benefits 7,484 7,678
Research and development 18,079 13,860
Other 8,931 6,110
Total gross deferred tax assets 159,084 153,620
Valuation allowance (48) (615)
Total gross deferred tax assets after valuation allowance 159,036 153,005
Deferred tax liabilities:    
Property and equipment 33,772 38,442
Operating lease right-of-use assets 99,351 99,311
Deferred revenue 3,065 4,394
Other 2,595 2,900
Total gross deferred tax liabilities 138,783 145,047
Net deferred tax assets $ 20,253 $ 7,958
v3.24.0.1
Income Taxes - Summary of Reconciliations Unrecognized Tax Benefits (Details) - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]      
Beginning balance $ 3,645 $ 3,869 $ 3,912
Increases related to current-year tax positions 753 910 831
Increases related to prior-year tax positions 40 252 4
Decreases related to prior-year tax positions 0 (328) (33)
Lapse of statute of limitations (601) (1,058) (845)
Settlements with taxing authorities (166) 0 0
Ending balance $ 3,671 $ 3,645 $ 3,869
v3.24.0.1
Commitments and Contingencies (Details)
$ in Millions
 12 Months Ended
Oct. 12, 2022
litigationDemand
Dec. 30, 2023
USD ($)
lease_commitment
Purchase Commitment, Excluding Long-term Commitment [Line Items]    
Number of shareholder litigation demands | litigationDemand 2  
Inventory purchase commitments   $ 35
Purchase Commitment | Future Retail Sites    
Purchase Commitment, Excluding Long-term Commitment [Line Items]    
Number of future retail store and other lease commitments | lease_commitment   16
Future retail store and other leases, total lease payments   $ 25
Purchase Commitment | Future Retail Sites | Minimum    
Purchase Commitment, Excluding Long-term Commitment [Line Items]    
Future retail store and other lease commitments term   6 years
Purchase Commitment | Future Retail Sites | Maximum    
Purchase Commitment, Excluding Long-term Commitment [Line Items]    
Future retail store and other lease commitments term   10 years
v3.24.0.1
Schedule II - Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($)
$ in Thousands
 12 Months Ended
Dec. 30, 2023
Dec. 31, 2022
Jan. 01, 2022
Movement in Valuation Allowances and Reserves [Roll Forward]      
Balance at beginning of period $ 1,267 $ 924 $ 1,046
Additions charged to costs and expenses 1,437 2,294 1,750
Deductions from reserves (1,267) (1,951) (1,872)
Balance at end of period $ 1,437 $ 1,267 $ 924