SLEEP NUMBER CORP, 10-Q filed on 11/5/2024
Quarterly Report
v3.24.3
Cover Page
 9 Months Ended
Sep. 28, 2024
shares
Cover [Abstract]  
Document Type 10-Q
Document Quarterly Report true
Document Period End Date Sep. 28, 2024
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 $0.01 per share
Trading Symbol SNBR
Security Exchange Name NASDAQ
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Accelerated Filer
Entity Small Business false
Entity Emerging Growth Company false
Entity Shell Company false
Entity Common Stock, Shares Outstanding 22,371,000
Entity Central Index Key 0000827187
Current Fiscal Year End Date --12-28
Document Fiscal Year Focus 2024
Document Fiscal Period Focus Q3
Amendment Flag false
v3.24.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 28, 2024
Dec. 30, 2023
Current assets:    
Cash and cash equivalents $ 1,592 $ 2,539
Accounts receivable, net of allowances of $1,134 and $1,437, respectively 17,026 26,859
Inventories 93,039 115,433
Prepaid expenses 17,827 16,660
Other current assets 40,784 44,637
Total current assets 170,268 206,128
Non-current assets:    
Property and equipment, net 140,406 179,503
Operating lease right-of-use assets 367,133 395,411
Goodwill and intangible assets, net 66,468 66,634
Deferred income taxes 27,267 20,253
Other non-current assets 93,109 82,951
Total assets 864,651 950,880
Current liabilities:    
Borrowings under revolving credit facility 516,500 539,500
Accounts payable 127,990 135,901
Customer prepayments 43,514 49,143
Accrued sales returns 19,688 22,402
Compensation and benefits 28,909 28,273
Taxes and withholding 17,685 17,134
Operating lease liabilities 82,488 81,760
Other current liabilities 57,268 61,958
Total current liabilities 894,042 936,071
Non-current liabilities:    
Operating lease liabilities 318,665 351,394
Other non-current liabilities 100,728 105,343
Total liabilities 1,313,435 1,392,808
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, 22,371 and 22,235 shares issued and outstanding, respectively 224 222
Additional paid-in capital 25,527 16,716
Accumulated deficit (474,535) (458,866)
Total shareholders’ deficit (448,784) (441,928)
Total liabilities and shareholders’ deficit $ 864,651 $ 950,880
v3.24.3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 28, 2024
Dec. 30, 2023
Current assets:    
Allowances $ 1,134 $ 1,437
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) 22,371,000 22,235,000
Common stock, shares outstanding (in shares) 22,371,000 22,235,000
v3.24.3
Condensed Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Income Statement [Abstract]        
Net sales $ 426,617 $ 472,648 $ 1,305,479 $ 1,457,964
Cost of sales 167,089 201,537 528,287 612,343
Gross profit 259,528 271,111 777,192 845,621
Operating expenses:        
Sales and marketing 205,480 221,143 596,392 649,410
General and administrative 33,070 31,948 111,722 111,144
Research and development 10,583 12,633 34,602 42,521
Restructuring costs 1,963 0 14,382 0
Total operating expenses 251,096 265,724 757,098 803,075
Operating income 8,432 5,387 20,094 42,546
Interest expense, net 12,057 10,958 36,626 30,008
(Loss) income before income taxes (3,625) (5,571) (16,532) 12,538
Income tax (benefit) expense (489) (3,253) (863) 2,637
Net (loss) income $ (3,136) $ (2,318) $ (15,669) $ 9,901
Basic net (loss) income per share:        
Net (loss) income per share – basic (in dollars per share) $ (0.14) $ (0.10) $ (0.69) $ 0.44
Weighted-average shares – basic (in shares) 22,643 22,479 22,588 22,412
Diluted net (loss) income per share:        
Net (loss) income per share – diluted (in dollars per share) $ (0.14) $ (0.10) $ (0.69) $ 0.44
Weighted-average shares – diluted (in shares) 22,643 22,479 22,588 22,558
v3.24.3
Condensed Consolidated Statements of Shareholders' Deficit - USD ($)
shares in Thousands, $ in Thousands
Total
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2022   22,014    
Beginning balance at Dec. 31, 2022 $ (438,177) $ 220 $ 5,182 $ (443,579)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income 11,465     11,465
Exercise of common stock options (in shares)   17    
Exercise of common stock options 389   389  
Stock-based compensation (in shares)   271    
Stock-based compensation 4,639 $ 3 4,636  
Repurchases of common stock (in shares)   (118)    
Repurchases of common stock (3,363) $ (1) (3,362)  
Ending balance (in shares) at Apr. 01, 2023   22,184    
Ending balance at Apr. 01, 2023 (425,047) $ 222 6,845 (432,114)
Beginning balance (in shares) at Dec. 31, 2022   22,014    
Beginning balance at Dec. 31, 2022 (438,177) $ 220 5,182 (443,579)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income 9,901      
Ending balance (in shares) at Sep. 30, 2023   22,228    
Ending balance at Sep. 30, 2023 (420,687) $ 222 12,769 (433,678)
Beginning balance (in shares) at Apr. 01, 2023   22,184    
Beginning balance at Apr. 01, 2023 (425,047) $ 222 6,845 (432,114)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income 754     754
Exercise of common stock options (in shares)   3    
Exercise of common stock options 39   39  
Stock-based compensation (in shares)   33    
Stock-based compensation 5,251   5,251  
Repurchases of common stock (in shares)   (6)    
Repurchases of common stock (138)   (138)  
Ending balance (in shares) at Jul. 01, 2023   22,214    
Ending balance at Jul. 01, 2023 (419,141) $ 222 11,997 (431,360)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income (2,318)     (2,318)
Stock-based compensation (in shares)   22    
Stock-based compensation 982   982  
Repurchases of common stock (in shares)   (8)    
Repurchases of common stock (210)   (210)  
Ending balance (in shares) at Sep. 30, 2023   22,228    
Ending balance at Sep. 30, 2023 $ (420,687) $ 222 12,769 (433,678)
Beginning balance (in shares) at Dec. 30, 2023 22,235 22,235    
Beginning balance at Dec. 30, 2023 $ (441,928) $ 222 16,716 (458,866)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income (7,482)     (7,482)
Stock-based compensation (in shares)   134    
Stock-based compensation 4,117 $ 1 4,116  
Repurchases of common stock (in shares)   (43)    
Repurchases of common stock (570)   (570)  
Ending balance (in shares) at Mar. 30, 2024   22,326    
Ending balance at Mar. 30, 2024 $ (445,863) $ 223 20,262 (466,348)
Beginning balance (in shares) at Dec. 30, 2023 22,235 22,235    
Beginning balance at Dec. 30, 2023 $ (441,928) $ 222 16,716 (458,866)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income $ (15,669)      
Ending balance (in shares) at Sep. 28, 2024 22,371 22,371    
Ending balance at Sep. 28, 2024 $ (448,784) $ 224 25,527 (474,535)
Beginning balance (in shares) at Mar. 30, 2024   22,326    
Beginning balance at Mar. 30, 2024 (445,863) $ 223 20,262 (466,348)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income (5,051)     (5,051)
Stock-based compensation (in shares)   32    
Stock-based compensation 3,992 $ 1 3,991  
Repurchases of common stock (in shares)   (3)    
Repurchases of common stock (42)   (42)  
Ending balance (in shares) at Jun. 29, 2024   22,355    
Ending balance at Jun. 29, 2024 (446,964) $ 224 24,211 (471,399)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Net (loss) income (3,136)     (3,136)
Stock-based compensation (in shares)   24    
Stock-based compensation 1,432   1,432  
Repurchases of common stock (in shares)   (8)    
Repurchases of common stock $ (116)   (116)  
Ending balance (in shares) at Sep. 28, 2024 22,371 22,371    
Ending balance at Sep. 28, 2024 $ (448,784) $ 224 $ 25,527 $ (474,535)
v3.24.3
Condensed Consolidated Statement of Cash Flows - USD ($)
$ in Thousands
 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Cash flows from operating activities:    
Net (loss) income $ (15,669) $ 9,901
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation and amortization 50,379 55,196
Stock-based compensation 9,541 10,872
Net loss on disposals and impairments of assets 2,457 464
Deferred income taxes (7,014) (13,433)
Changes in operating assets and liabilities:    
Accounts receivable 9,833 7,374
Inventories 22,394 (2,190)
Income taxes 1,708 3,571
Prepaid expenses and other assets (8,012) (5,903)
Accounts payable 4,980 5,199
Customer prepayments (5,629) (27,279)
Accrued compensation and benefits 788 (6,923)
Other taxes and withholding (1,157) 5
Other accruals and liabilities (13,775) (5,038)
Net cash provided by operating activities 50,824 31,816
Cash flows from investing activities:    
Purchases of property and equipment (17,218) (48,022)
Issuance of note receivable (2,942) (1,317)
Proceeds from sales of property and equipment 156 10
Net cash used in investing activities (20,004) (49,329)
Cash flows from financing activities:    
Net (decrease) increase in short-term borrowings (31,039) 20,334
Repurchases of common stock (728) (3,711)
Proceeds from issuance of common stock 0 428
Debt issuance costs 0 (424)
Net cash (used in) provided by financing activities (31,767) 16,627
Net decrease in cash and cash equivalents (947) (886)
Cash and cash equivalents, at beginning of period 2,539 1,792
Cash and cash equivalents, at end of period $ 1,592 $ 906
v3.24.3
Business and Summary of Significant Accounting Policies
 9 Months Ended
Sep. 28, 2024
Accounting Policies [Abstract]  
Business and Summary of Significant Accounting Policies Business and Summary of Significant Accounting Policies
Business & Basis of Presentation
The Company prepared the condensed consolidated financial statements as of and for the three and nine months ended
September 28, 2024 of Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company),
without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in
the opinion of management, all normal recurring adjustments, including the elimination of all significant intra-entity
balances and transactions, necessary to present fairly its financial position as of September 28, 2024 and December 30,
2023, and the consolidated results of operations and cash flows for the periods presented. The historical and quarterly
consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future
period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.
generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and
regulations. These condensed consolidated financial statements should be read in conjunction with the most recent
audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 30, 2023 and other recent filings with the SEC.
The preparation of condensed consolidated financial statements in conformity with U.S. 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 condensed 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.
Income Taxes
Income tax benefit totaled $0.9 million for the nine months ended September 28, 2024, compared with income tax
expense of $3 million last year. The change in income tax expense was primarily due to the change in (loss) income
before income taxes levels and the impact of discrete tax expenses. Discrete tax expense, primarily stock-based
compensation tax shortfalls, was $2.6 million for the nine months ended September 28, 2024, compared to $1.1 million
for the same period last year.
Recent Issued Accounting Pronouncements Not Yet Adopted
Segment Reporting (Topic 280)
In November 2023, the Financial Accounting Standards Board issued guidance within Accounting Standards Update
(ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires
that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this
ASU and all existing disclosures in Topic 280. The Company has determined that its current business and operations
consist of a single business segment and a single reporting unit.
The amendments in this ASU are intended to improve segment disclosure requirements, primarily through enhanced
disclosures about significant segment expenses. The key amendments included in this ASU:
•Require disclosure on an annual and interim basis, of significant segment expenses that are regularly provided to
the chief operating decision maker (CODM) and are included within each reported measure of segment profit
and loss.
•Require disclosure on an annual and interim basis, an amount for other segment items (defined in this ASU) and
a description of its composition.
•Clarify that if the CODM uses more than one measure of the segment’s profit or loss in assessing performance,
one or more of those additional measures may be reported.
•Require disclosure of the title and position of the CODM and an explanation of how the CODM uses the
reported measure(s) of segment profit or loss in assessing performance.
This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024, with early adoption permitted. This guidance is required to be adopted by the Company
beginning with the annual period of 2024. The amendments should be applied retrospectively to all prior periods
presented in the consolidated financial statements. The Company is currently evaluating the impact of this ASU on the
Company’s consolidated financial statements.
Currently, management does not believe that any other recently issued, but not yet effective accounting
pronouncements, if currently adopted, would have a material impact on the Company’s unaudited condensed
consolidated financial statements.
v3.24.3
Fair Value Measurements
 9 Months Ended
Sep. 28, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
At September 28, 2024 and December 30, 2023, the Company had $20 million and $19 million, respectively, of debt
and equity securities that fund the deferred compensation plan and are classified in other non-current assets. The
Company also had corresponding deferred compensation plan liabilities of $20 million and $19 million at September 28,
2024 and December 30, 2023, 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 the Company 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.
v3.24.3
Inventories
 9 Months Ended
Sep. 28, 2024
Inventory Disclosure [Abstract]  
Inventories Inventories
Inventories consisted of the following (in thousands):
September 28,
2024
December 30,
2023
Raw materials
$6,638
$9,092
Work in progress
133
92
Finished goods
86,268
106,249
$93,039
$115,433
v3.24.3
Goodwill and Intangible Assets, Net
 9 Months Ended
Sep. 28, 2024
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 September 28, 2024 and December 30, 2023. Indefinite-lived trade name/trademarks
totaled $1.4 million at both September 28, 2024 and December 30, 2023.
Definite-lived Intangible Assets
Patents were $2.0 million at both September 28, 2024 and December 30, 2023. Accumulated amortization was $0.9
million at September 28, 2024 and $0.8 million at December 30, 2023. Amortization expense for both the three months
ended September 28, 2024 and September 30, 2023, was $55 thousand, and for both the nine months ended
September 28, 2024 and September 30, 2023 was $0.2 million.
Annual amortization for patents for subsequent years are as follows (in thousands):
2024 (excluding the nine months ended September 28, 2024 )
$55
2025
226
2026
222
2027
222
2028
155
2029
99
Thereafter
46
Total future amortization for definite-lived intangible assets
$1,025
v3.24.3
Credit Agreement
 9 Months Ended
Sep. 28, 2024
Debt Disclosure [Abstract]  
Credit Agreement Credit Agreement
As of September 28, 2024, the Company’s credit facility had a total commitment amount of $680 million. The credit
facility is for general corporate purposes and to meet seasonal working capital requirements. The Amended and
Restated Credit and Security Agreement, dated February 14, 2018, among the Company, U.S. Bank National Association
and the several banks and other financial institutions from time to time party thereto (as amended, the Credit
Agreement), includes an accordion feature which allows the Company to increase the amount of the credit facility from
$680 million to $1.0 billion, subject to lenders’ approval. The Credit Agreement provides the lenders with a collateral
security interest in substantially all of the Company’s assets and those of its subsidiaries and requires the Company to
comply with, among other things, a maximum net leverage ratio and a minimum interest coverage ratio.
The maximum net leverage ratio permitted by the Credit Agreement is 5.00 to 1.00 for the quarterly period ended
September 28, 2024; 4.80 to 1.00 for the quarterly reporting period ending December 28, 2024; and 4.00 to 1.00 for
each quarterly reporting period occurring thereafter until maturity.
The minimum interest coverage ratio permitted by the Credit Agreement is 1.50 to 1.00 for both quarterly reporting
periods ending September 28, 2024 and December 28, 2024; and 3.00 to 1.00 for each quarterly reporting period
occurring thereafter until maturity.
The carrying amount of the outstanding borrowings under the Credit Agreement approximates fair value because
interest rates approximate the current rates available to the Company. Under the terms of the Credit Agreement, the
Company pays a variable rate of interest and a commitment fee based on its leverage ratio. The Credit Agreement
matures in December 2026. The Company was in compliance with all financial covenants as of September 28, 2024.
The following table summarizes the Company’s borrowings under the credit facility ($ in thousands):
September 28,
2024
December 30,
2023
Outstanding borrowings
$516,500
$539,500
Outstanding letters of credit
$7,147
$7,147
Additional borrowing capacity
$156,353
$138,353
Weighted-average interest rate
8.2%
8.5%
v3.24.3
Leases
 9 Months Ended
Sep. 28, 2024
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, the retail store leases generally provide for an initial lease term of five to ten years. The Company’s office and
manufacturing leases provide for an initial lease term of up to fifteen years. In addition, the Company’s 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’s 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.
At September 28, 2024, the Company’s finance right-of-use assets and lease liabilities were not significant.
Lease costs were as follows (in thousands):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Operating lease costs(1)
$26,445
$28,517
$80,180
$84,889
Variable lease costs(2)
$42
$48
$1
$230
___________________________
(1)Includes short-term lease costs which are not significant.
(2)Variable lease costs include adjustments to percentage rent.
The maturities of operating lease liabilities as of September 28, 2024, were as follows(1) (in thousands):
2024 (excluding the nine months ended September 28, 2024)
$26,997
2025
103,848
2026
91,716
2027
75,205
2028
63,060
2029
43,265
Thereafter
73,361
Total operating lease payments(2)
477,452
Less: Interest
76,299
Present value of operating lease liabilities
$401,153
___________________________
(1)Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in the operating
lease liabilities. Total operating lease payments exclude $17 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:
September 28,
2024
December 30,
2023
Weighted-average remaining lease term (in years)
5.5
5.9
Weighted-average discount rate
6.6%
6.5%
Nine Months Ended
(in thousands)
September 28,
2024
September 30,
2023
Cash paid for amounts included in present value of operating lease liabilities
$81,089
$80,650
Right-of-use assets obtained in exchange for operating lease liabilities
$29,390
$54,172
v3.24.3
Repurchases of Common Stock
 9 Months Ended
Sep. 28, 2024
Repurchases Of Common Stock [Abstract]  
Repurchases of Common Stock Repurchases of Common Stock
For the three months ended September 28, 2024 and September 30, 2023, we repurchased $0.1 million and $0.2
million, respectively, of common stock in connection with the vesting of restricted stock grants. For the nine months
ended September 28, 2024 and September 30, 2023, we repurchased $0.7 million and $3.7 million, respectively, of
common stock in connection with the vesting of restricted stock grants. We made no purchases under the Board-
approved stock purchase plan in either period. As of September 28, 2024, the remaining authorization under the Board-
approved $600 million share repurchase program was $348 million.
v3.24.3
Revenue Recognition
 9 Months Ended
Sep. 28, 2024
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
Deferred contract assets and deferred contract liabilities are included in the condensed consolidated balance sheets as
follows (in thousands):
September 28,
2024
December 30,
2023
Deferred contract assets included in:
Other current assets
$30,329
$28,567
Other non-current assets
50,981
54,795
$81,310
$83,362
September 28,
2024
December 30,
2023
Deferred contract liabilities included in:
Other current liabilities
$38,395
$36,421
Other non-current liabilities
63,594
69,098
$101,989
$105,519
Deferred revenue and costs related to SleepIQ® technology are currently recognized on a straight-line basis over the
product's estimated life of 4.5 to 5.0 years because the Company’s inputs are generally expended evenly throughout the
performance period. During both the three months ended September 28, 2024 and September 30, 2023, the Company
recognized revenue of $10 million, that was included in the deferred contract liability balances at the beginning of the
respective periods. During both the nine months ended September 28, 2024 and September 30, 2023, the Company
recognized revenue of $28 million, that was included in the deferred contract liability balances at the beginning of the
respective periods.
Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of
revenues for both the three and nine months ended September 28, 2024 and September 30, 2023.
Net sales were as follows (in thousands):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Retail stores
$374,593
$409,268
$1,147,931
$1,270,076
Online, phone, chat and other
52,024
63,380
157,548
187,888
Total Company
$426,617
$472,648
$1,305,479
$1,457,964
Obligation for Sales Returns
The activity in the sales returns liability account was as follows (in thousands):
Nine Months Ended
September 28,
2024
September 30,
2023
Balance at beginning of year
$22,402
$25,594
Additions that reduce net sales
69,391
82,718
Deductions from reserves
(72,105)
(85,300)
Balance at end of period
$19,688
$23,012
v3.24.3
Stock-based Compensation Expense
 9 Months Ended
Sep. 28, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-based Compensation Expense Stock-based Compensation Expense
Total stock-based compensation expense was as follows (in thousands):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Stock awards (1)
$774
$(82)
7,212
$8,031
Stock options
658
1,064
2,329
2,841
Total stock-based compensation expense (1)
1,432
982
9,541
10,872
Income tax benefit
285
118
2,004
1,305
Total stock-based compensation expense,
net of tax
$1,147
$864
$7,537
$9,567
___________________________
(1) Changes in stock-based compensation expense include the cumulative impact of the change in the expected achievements of certain performance
targets.
v3.24.3
Profit Sharing and 401(k) Plan
 9 Months Ended
Sep. 28, 2024
Profit Sharing And 401(k) Plan [Abstract]  
Profit Sharing and 401(k) Plan Profit Sharing and 401(k) Plan
Under 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 pay period, the Company makes a contribution equal
to a percentage of the employee’s contribution. During the three months ended September 28, 2024 and
September 30, 2023, the Company’s contributions, net of forfeitures, were $1.9 million and $2.3 million, respectively and
during the nine months ended September 28, 2024 and September 30, 2023, were $5.1 million and $7.5 million,
respectively.
v3.24.3
Net (Loss) Income per Common Share
 9 Months Ended
Sep. 28, 2024
Earnings Per Share [Abstract]  
Net (Loss) Income per Common Share 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):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Net (loss) income
$(3,136)
$(2,318)
$(15,669)
$9,901
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding
22,643
22,479
22,588
22,412
Dilutive effect of stock-based awards
—
—
—
146
Diluted weighted-average shares outstanding
22,643
22,479
22,588
22,558
Net (loss) income per share – basic
$(0.14)
$(0.10)
$(0.69)
$0.44
Net (loss) income per share – diluted
$(0.14)
$(0.10)
$(0.69)
$0.44
For the three months ended September 28, 2024 and September 30, 2023, and for the nine months ended
September 28, 2024, otherwise dilutive stock-based awards have been excluded from the calculation of diluted
weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on our net loss per diluted
share. Additional potential dilutive stock-based awards totaling 1.2 million and 1.1 million for the three months ended
September 28, 2024 and September 30, 2023, respectively, and 1.3 million and 1.2 million for the nine months ended
September 28, 2024 and September 30, 2023, respectively, have been excluded from the diluted net (loss)/income per
share calculations because these stock-based awards were anti-dilutive.
v3.24.3
Restructuring Costs
 9 Months Ended
Sep. 28, 2024
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, and recognized $15.7 million of restructuring costs in that quarter. In addition to the costs
incurred in 2023, the Company incurred an additional $2.0 million and $14.4 million of restructuring costs during the
three and nine months ended September 28, 2024, respectively. Charges incurred related to this initiative 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 condensed consolidated
statement of operations. The Company expects an additional $2 million to $3 million of restructuring costs to be incurred
through the remainder of 2024, primarily due to lease contract termination costs. The following table provides a
summary of the Company’s restructuring costs during the during the three and nine months ended September 28, 2024:
Three Months Ended
Nine Months Ended
September 28,
2024
September 28,
2024
Cash restructuring costs:
Contract termination costs (1)
$300
$4,483
Severance and employee-related benefits
1,663
2,905
Professional fees and other
—
4,494
Total cash restructuring costs
1,963
11,882
Non-cash restructuring costs:
Asset impairments (2)
—
2,500
Total restructuring costs
$1,963
$14,382
____________________
(1) Primarily comprised of lease termination costs.
(2) Primarily comprised of impairments of 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 condensed consolidated balance sheet
(in thousands):
Nine Months Ended
September 28,
2024
Balance at the beginning of year
$8,720
Expenses
11,882
Cash payments
(19,282)
Balance at the end of the period
$1,320
Since the initiation of cost reduction actions in the fourth quarter of 2023, the Company has recognized a cumulative
$30.1 million of restructuring costs, as follows (in thousands):
Cumulative
September 28,
2024
Cash restructuring costs:
Contract termination costs (1)
$11,893
Severance and employee-related benefits
7,871
Professional fees and other
5,604
Total cash restructuring costs
25,368
Non-cash restructuring costs:
Asset impairments (2)
4,742
Total restructuring costs
$30,110
____________________
(1)Primarily comprised of lease termination costs.
(2) Includes impairments of both lease right-of-use assets and property and equipment.
v3.24.3
Commitments and Contingencies
 9 Months Ended
Sep. 28, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Warranty Liabilities
The activity in the accrued warranty liabilities account was as follows (in thousands):
Nine Months Ended
September 28,
2024
September 30,
2023
Balance at beginning of period
$8,503
$8,997
Additions charged to costs and expenses for current-year sales
9,981
12,327
Deductions from reserves
(11,546)
(12,543)
Changes in liability for pre-existing warranties during the current year, including
expirations
511
40
Balance at end of period
$7,449
$8,821
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 condensed 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 condensed 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 condensed
consolidated results of operations, financial position or cash flows. The Company expenses legal costs as incurred.
Purported Class Action Complaint
On September 27, 2024, a purported customer served a putative class action complaint on behalf of themself and a
putative class of California consumers against Sleep Number in the United States District Court for the Eastern District of
California alleging that Sleep Number’s beds are perpetually on sale in violation of California law. The Plaintiff seeks
injunctive relief, damages, and attorneys fees. Sleep Number does not believe the Plaintiff’s claims have merit and
intends to vigorously defend this matter.
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. On February 22, 2024, the plaintiff filed a related lawsuit in the same county
alleging violations of a broad range of California Labor Code wage and hour violations under the state’s Private Attorney
General Act (PAGA), including the same meal and rest break, and wage and hour, violations as appear in the purported
class action.
The Court dismissed the class action complaint with prejudice. The Court sua sponte stayed the PAGA collective action
and the individual plaintiff must prove his claims in arbitration before the stay is lifted. Given the developments in these
proceedings, the matter no longer rises to the level of disclosure in Sleep Number’s periodic reports.
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 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.
Subsequently, the special litigation committee determined that it would not be in the best interests of the Company and
its shareholders to take the actions requested in the demands and, thus, rejected the demands in their entirety.
v3.24.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Jun. 29, 2024
Mar. 30, 2024
Sep. 30, 2023
Jul. 01, 2023
Apr. 01, 2023
Sep. 28, 2024
Sep. 30, 2023
Pay vs Performance Disclosure                
Net (loss) income $ (3,136) $ (5,051) $ (7,482) $ (2,318) $ 754 $ 11,465 $ (15,669) $ 9,901
v3.24.3
Insider Trading Arrangements
 3 Months Ended 9 Months Ended
Sep. 28, 2024
shares
Sep. 28, 2024
shares
Trading Arrangements, by Individual    
Non-Rule 10b5-1 Arrangement Adopted false  
Rule 10b5-1 Arrangement Terminated false  
Non-Rule 10b5-1 Arrangement Terminated false  
Deborah L. Kilpatrick [Member]    
Trading Arrangements, by Individual    
Material Terms of Trading Arrangement   One of the Company’s Board Members, Deborah L. Kilpatrick, adopted a trading arrangement for the sale of securities
of the Company’s common stock (a Rule 10b5-1 Trading Plan) that satisfied the affirmative defense conditions of
Securities Exchange Act Rule 10b5-1(c). Ms. Kilpatrick’s Rule 10b5-1 Trading Plan was adopted on August 2, 2024,
provides for the sale of up to 4,500 shares of common stock pursuant to the terms of the plan, and expires on December
31, 2025 or upon the earlier termination of the plan or sale of all shares subject to the plan.
Name Deborah L. Kilpatrick  
Title Board Members  
Rule 10b5-1 Arrangement Adopted true  
Adoption Date August 2, 2024,  
Expiration Date December 31, 2025  
Arrangement Duration 516 days  
Aggregate Available 4,500 4,500
v3.24.3
Business and Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 28, 2024
Accounting Policies [Abstract]  
Business & Basis of Presentation Business & Basis of Presentation
The Company prepared the condensed consolidated financial statements as of and for the three and nine months ended
September 28, 2024 of Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company),
without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and they reflect, in
the opinion of management, all normal recurring adjustments, including the elimination of all significant intra-entity
balances and transactions, necessary to present fairly its financial position as of September 28, 2024 and December 30,
2023, and the consolidated results of operations and cash flows for the periods presented. The historical and quarterly
consolidated results of operations may not be indicative of the results that may be achieved for the full year or any future
period.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.
generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and
regulations. These condensed consolidated financial statements should be read in conjunction with the most recent
audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 30, 2023 and other recent filings with the SEC.
Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. 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 condensed 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.
Recent Issued Accounting Pronouncements Not Yet Adopted Recent Issued Accounting Pronouncements Not Yet Adopted
Segment Reporting (Topic 280)
In November 2023, the Financial Accounting Standards Board issued guidance within Accounting Standards Update
(ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires
that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this
ASU and all existing disclosures in Topic 280. The Company has determined that its current business and operations
consist of a single business segment and a single reporting unit.
The amendments in this ASU are intended to improve segment disclosure requirements, primarily through enhanced
disclosures about significant segment expenses. The key amendments included in this ASU:
•Require disclosure on an annual and interim basis, of significant segment expenses that are regularly provided to
the chief operating decision maker (CODM) and are included within each reported measure of segment profit
and loss.
•Require disclosure on an annual and interim basis, an amount for other segment items (defined in this ASU) and
a description of its composition.
•Clarify that if the CODM uses more than one measure of the segment’s profit or loss in assessing performance,
one or more of those additional measures may be reported.
•Require disclosure of the title and position of the CODM and an explanation of how the CODM uses the
reported measure(s) of segment profit or loss in assessing performance.
This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024, with early adoption permitted. This guidance is required to be adopted by the Company
beginning with the annual period of 2024. The amendments should be applied retrospectively to all prior periods
presented in the consolidated financial statements. The Company is currently evaluating the impact of this ASU on the
Company’s consolidated financial statements.
Currently, management does not believe that any other recently issued, but not yet effective accounting
pronouncements, if currently adopted, would have a material impact on the Company’s unaudited condensed
consolidated financial statements.
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, the retail store leases generally provide for an initial lease term of five to ten years. The Company’s office and
manufacturing leases provide for an initial lease term of up to fifteen years. In addition, the Company’s 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’s 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.
v3.24.3
Inventories (Tables)
 9 Months Ended
Sep. 28, 2024
Inventory Disclosure [Abstract]  
Schedule of Inventories Inventories consisted of the following (in thousands):
September 28,
2024
December 30,
2023
Raw materials
$6,638
$9,092
Work in progress
133
92
Finished goods
86,268
106,249
$93,039
$115,433
v3.24.3
Goodwill and Intangible Assets, Net (Tables)
 9 Months Ended
Sep. 28, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Annual Amortization of Definite-Lived Tangible Assets Annual amortization for patents for subsequent years are as follows (in thousands):
2024 (excluding the nine months ended September 28, 2024 )
$55
2025
226
2026
222
2027
222
2028
155
2029
99
Thereafter
46
Total future amortization for definite-lived intangible assets
$1,025
v3.24.3
Credit Agreement (Tables)
 9 Months Ended
Sep. 28, 2024
Debt Disclosure [Abstract]  
Schedule of Borrowings Under Credit Facility The following table summarizes the Company’s borrowings under the credit facility ($ in thousands):
September 28,
2024
December 30,
2023
Outstanding borrowings
$516,500
$539,500
Outstanding letters of credit
$7,147
$7,147
Additional borrowing capacity
$156,353
$138,353
Weighted-average interest rate
8.2%
8.5%
v3.24.3
Leases (Tables)
 9 Months Ended
Sep. 28, 2024
Leases [Abstract]  
Schedule of Operating Lease Costs Lease costs were as follows (in thousands):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Operating lease costs(1)
$26,445
$28,517
$80,180
$84,889
Variable lease costs(2)
$42
$48
$1
$230
___________________________
(1)Includes short-term lease costs which are not significant.
(2)Variable lease costs include adjustments to percentage rent.
Schedule of Maturities of Operating Lease Liabilities The maturities of operating lease liabilities as of September 28, 2024, were as follows(1) (in thousands):
2024 (excluding the nine months ended September 28, 2024)
$26,997
2025
103,848
2026
91,716
2027
75,205
2028
63,060
2029
43,265
Thereafter
73,361
Total operating lease payments(2)
477,452
Less: Interest
76,299
Present value of operating lease liabilities
$401,153
___________________________
(1)Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in the operating
lease liabilities. Total operating lease payments exclude $17 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:
September 28,
2024
December 30,
2023
Weighted-average remaining lease term (in years)
5.5
5.9
Weighted-average discount rate
6.6%
6.5%
Nine Months Ended
(in thousands)
September 28,
2024
September 30,
2023
Cash paid for amounts included in present value of operating lease liabilities
$81,089
$80,650
Right-of-use assets obtained in exchange for operating lease liabilities
$29,390
$54,172
v3.24.3
Revenue Recognition (Tables)
 9 Months Ended
Sep. 28, 2024
Revenue from Contract with Customer [Abstract]  
Schedule of Deferred Contract Assets and Deferred Contract Liabilities Deferred contract assets and deferred contract liabilities are included in the condensed consolidated balance sheets as
follows (in thousands):
September 28,
2024
December 30,
2023
Deferred contract assets included in:
Other current assets
$30,329
$28,567
Other non-current assets
50,981
54,795
$81,310
$83,362
September 28,
2024
December 30,
2023
Deferred contract liabilities included in:
Other current liabilities
$38,395
$36,421
Other non-current liabilities
63,594
69,098
$101,989
$105,519
Schedule of Net Sales Net sales were as follows (in thousands):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Retail stores
$374,593
$409,268
$1,147,931
$1,270,076
Online, phone, chat and other
52,024
63,380
157,548
187,888
Total Company
$426,617
$472,648
$1,305,479
$1,457,964
Schedule of Sales Return Liability The activity in the sales returns liability account was as follows (in thousands):
Nine Months Ended
September 28,
2024
September 30,
2023
Balance at beginning of year
$22,402
$25,594
Additions that reduce net sales
69,391
82,718
Deductions from reserves
(72,105)
(85,300)
Balance at end of period
$19,688
$23,012
v3.24.3
Stock-based Compensation Expense (Tables)
 9 Months Ended
Sep. 28, 2024
Share-Based Payment Arrangement [Abstract]  
Schedule of Stock-Based Compensation Expense Total stock-based compensation expense was as follows (in thousands):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Stock awards (1)
$774
$(82)
7,212
$8,031
Stock options
658
1,064
2,329
2,841
Total stock-based compensation expense (1)
1,432
982
9,541
10,872
Income tax benefit
285
118
2,004
1,305
Total stock-based compensation expense,
net of tax
$1,147
$864
$7,537
$9,567
___________________________
(1) Changes in stock-based compensation expense include the cumulative impact of the change in the expected achievements of certain performance
targets.
v3.24.3
Net (Loss) Income per Common Share (Tables)
 9 Months Ended
Sep. 28, 2024
Earnings Per Share [Abstract]  
Schedule of Components of Basic and Diluted Net (Loss) Income per Share The components of basic and diluted net (loss) income per share were as follows (in thousands, except per share
amounts):
Three Months Ended
Nine Months Ended
September 28,
2024
September 30,
2023
September 28,
2024
September 30,
2023
Net (loss) income
$(3,136)
$(2,318)
$(15,669)
$9,901
Reconciliation of weighted-average shares outstanding:
Basic weighted-average shares outstanding
22,643
22,479
22,588
22,412
Dilutive effect of stock-based awards
—
—
—
146
Diluted weighted-average shares outstanding
22,643
22,479
22,588
22,558
Net (loss) income per share – basic
$(0.14)
$(0.10)
$(0.69)
$0.44
Net (loss) income per share – diluted
$(0.14)
$(0.10)
$(0.69)
$0.44
v3.24.3
Restructuring Costs (Tables)
 9 Months Ended
Sep. 28, 2024
Restructuring and Related Activities [Abstract]  
Schedule of Restructuring and Related Costs The following table provides a
summary of the Company’s restructuring costs during the during the three and nine months ended September 28, 2024:
Three Months Ended
Nine Months Ended
September 28,
2024
September 28,
2024
Cash restructuring costs:
Contract termination costs (1)
$300
$4,483
Severance and employee-related benefits
1,663
2,905
Professional fees and other
—
4,494
Total cash restructuring costs
1,963
11,882
Non-cash restructuring costs:
Asset impairments (2)
—
2,500
Total restructuring costs
$1,963
$14,382
____________________
(1) Primarily comprised of lease termination costs.
(2) Primarily comprised of impairments of property and equipment.
Since the initiation of cost reduction actions in the fourth quarter of 2023, the Company has recognized a cumulative
$30.1 million of restructuring costs, as follows (in thousands):
Cumulative
September 28,
2024
Cash restructuring costs:
Contract termination costs (1)
$11,893
Severance and employee-related benefits
7,871
Professional fees and other
5,604
Total cash restructuring costs
25,368
Non-cash restructuring costs:
Asset impairments (2)
4,742
Total restructuring costs
$30,110
____________________
(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 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 condensed consolidated balance sheet
(in thousands):
Nine Months Ended
September 28,
2024
Balance at the beginning of year
$8,720
Expenses
11,882
Cash payments
(19,282)
Balance at the end of the period
$1,320
v3.24.3
Commitments and Contingencies (Tables)
 9 Months Ended
Sep. 28, 2024
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Warranty Liabilities The activity in the accrued warranty liabilities account was as follows (in thousands):
Nine Months Ended
September 28,
2024
September 30,
2023
Balance at beginning of period
$8,503
$8,997
Additions charged to costs and expenses for current-year sales
9,981
12,327
Deductions from reserves
(11,546)
(12,543)
Changes in liability for pre-existing warranties during the current year, including
expirations
511
40
Balance at end of period
$7,449
$8,821
v3.24.3
Business and Summary of Significant Accounting Policies (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Accounting Policies [Abstract]        
Income tax (benefit) expense $ (489) $ (3,253) $ (863) $ 2,637
Discrete tax expense     $ 2,600 $ 1,100
v3.24.3
Fair Value Measurements (Details) - Level 1 - USD ($)
$ in Millions
Sep. 28, 2024
Dec. 30, 2023
Other non-current assets | Recurring    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities assets funding the deferred compensation plan $ 20 $ 19
Other non-current liabilities    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred compensation plan liability $ 20 $ 19
v3.24.3
Inventories (Details) - USD ($)
$ in Thousands
Sep. 28, 2024
Dec. 30, 2023
Inventory Disclosure [Abstract]    
Raw materials $ 6,638 $ 9,092
Work in progress 133 92
Finished goods 86,268 106,249
Inventories $ 93,039 $ 115,433
v3.24.3
Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Dec. 30, 2023
Goodwill And Intangible Assets [Line Items]          
Goodwill $ 64,000   $ 64,000   $ 64,000
Patents          
Goodwill And Intangible Assets [Line Items]          
Finite lived intangible assets, gross 2,000   2,000   2,000
Accumulated amortization 900   900   800
Amortization expense 55 $ 55 200 $ 200  
Trade Names          
Goodwill And Intangible Assets [Line Items]          
Indefinite-lived trade name/trademarks $ 1,400   $ 1,400   $ 1,400
v3.24.3
Goodwill and Intangible Assets, Net - Schedule of Annual Amortization of Definite-Lived Tangible Assets (Details)
$ in Thousands
Sep. 28, 2024
USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]  
2024 (excluding the nine months ended September 28, 2024 ) $ 55
2025 226
2026 222
2027 222
2028 155
2029 99
Thereafter 46
Total future amortization for definite-lived intangible assets $ 1,025
v3.24.3
Credit Agreement - Narrative (Details) - Line of Credit
$ in Millions
Dec. 28, 2024
Sep. 28, 2024
USD ($)
Line of Credit Facility [Line Items]    
Current borrowing capacity   $ 680
Total commitment amount   $ 1,000
Debt Covenant Period One    
Line of Credit Facility [Line Items]    
Net leverage ratio, maximum threshold   5.00
Minimum interest coverage ratio   1.50
Debt Covenant Period Two    
Line of Credit Facility [Line Items]    
Net leverage ratio, maximum threshold   4.80
Debt Covenant Period Two | Forecast    
Line of Credit Facility [Line Items]    
Minimum interest coverage ratio 1.50  
Debt Covenant Period Three    
Line of Credit Facility [Line Items]    
Net leverage ratio, maximum threshold   4.00
Debt Covenant Period Three And Thereafter    
Line of Credit Facility [Line Items]    
Minimum interest coverage ratio   3.00
v3.24.3
Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($)
$ in Thousands
Sep. 28, 2024
Dec. 30, 2023
Debt Disclosure [Abstract]    
Outstanding borrowings $ 516,500 $ 539,500
Outstanding letters of credit 7,147 7,147
Additional borrowing capacity $ 156,353 $ 138,353
Weighted-average interest rate 8.20% 8.50%
v3.24.3
Leases - Narrative (Details)
Sep. 28, 2024
Minimum | Retail Store Leases  
Lessee, Lease, Description [Line Items]  
Lease term 5 years
Minimum | Lease Vehicles and Certain Equipment Under Operating Leases  
Lessee, Lease, Description [Line Items]  
Lease term 3 years
Maximum | Retail Store Leases  
Lessee, Lease, Description [Line Items]  
Lease term 10 years
Maximum | Office and Manufacturing Leases  
Lessee, Lease, Description [Line Items]  
Lease term 15 years
Maximum | Lease Vehicles and Certain Equipment Under Operating Leases  
Lessee, Lease, Description [Line Items]  
Lease term 6 years
v3.24.3
Leases - Schedule of Operating Lease Costs (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Leases [Abstract]        
Operating lease costs $ 26,445 $ 28,517 $ 80,180 $ 84,889
Variable lease cost $ 42 $ 48 $ 1 $ 230
v3.24.3
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($)
$ in Thousands
Sep. 28, 2024
Dec. 30, 2023
Leases [Abstract]    
2024 (excluding the nine months ended September 28, 2024) $ 26,997  
2025 103,848  
2026 91,716  
2027 75,205  
2028 63,060  
2029 43,265  
Thereafter 73,361  
Total operating lease payments 477,452  
Less: Interest 76,299  
Present value of operating lease liabilities 401,153  
Amount leases executed, not yet commenced, excluded from table. 17,000  
Operating lease liabilities, current $ 82,488 $ 81,760
v3.24.3
Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Dec. 30, 2023
Leases [Abstract]      
Weighted-average remaining lease term (in years) 5 years 6 months   5 years 10 months 24 days
Weighted-average discount rate 6.60%   6.50%
Cash paid for amounts included in present value of operating lease liabilities $ 81,089 $ 80,650  
Right-of-use assets obtained in exchange for operating lease liabilities $ 29,390 $ 54,172  
v3.24.3
Repurchases of Common Stock (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Repurchases Of Common Stock [Abstract]        
Stock acquired through tax withholding restricted stock $ 0.1 $ 0.2 $ 0.7 $ 3.7
Authorized share repurchase program 600.0   600.0  
Remaining authorized stock purchase plan $ 348.0   $ 348.0  
v3.24.3
Revenue Recognition - Schedule of Deferred Contract Assets and Deferred Contract Liabilities (Details) - USD ($)
$ in Thousands
Sep. 28, 2024
Dec. 30, 2023
Deferred contract assets included in:    
Deferred contract assets $ 81,310 $ 83,362
Deferred contract liabilities included in:    
Deferred contract liabilities 101,989 105,519
Other current assets    
Deferred contract assets included in:    
Other current assets 30,329 28,567
Other non-current assets    
Deferred contract assets included in:    
Other non-current assets 50,981 54,795
Other current liabilities    
Deferred contract liabilities included in:    
Other current liabilities 38,395 36,421
Other non-current liabilities    
Deferred contract liabilities included in:    
Other non-current liabilities $ 63,594 $ 69,098
v3.24.3
Revenue Recognition - Narrative (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Disaggregation of Revenue [Line Items]        
Revenue recognized, included in beginning deferred contract liability balance $ 10 $ 10 $ 28 $ 28
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 98.00% 98.00% 98.00% 98.00%
SleepIQ Technology | Minimum        
Disaggregation of Revenue [Line Items]        
Estimated product life     4 years 6 months  
SleepIQ Technology | Maximum        
Disaggregation of Revenue [Line Items]        
Estimated product life     5 years  
v3.24.3
Revenue Recognition - Schedule of Net Sales (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Disaggregation of Revenue [Line Items]        
Total Company $ 426,617 $ 472,648 $ 1,305,479 $ 1,457,964
Retail stores        
Disaggregation of Revenue [Line Items]        
Total Company 374,593 409,268 1,147,931 1,270,076
Online, phone, chat and other        
Disaggregation of Revenue [Line Items]        
Total Company $ 52,024 $ 63,380 $ 157,548 $ 187,888
v3.24.3
Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sales Return Liability [Roll Forward]    
Balance at beginning of year $ 22,402 $ 25,594
Additions that reduce net sales 69,391 82,718
Deductions from reserves (72,105) (85,300)
Balance at end of period $ 19,688 $ 23,012
v3.24.3
Stock-based Compensation Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense $ 1,432 $ 982 $ 9,541 $ 10,872
Income tax benefit 285 118 2,004 1,305
Total stock-based compensation expense, net of tax 1,147 864 7,537 9,567
Stock awards        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense 774 (82) 7,212 8,031
Stock options        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total stock-based compensation expense $ 658 $ 1,064 $ 2,329 $ 2,841
v3.24.3
Profit Sharing and 401(k) Plan (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Profit Sharing And 401(k) Plan [Abstract]        
Employee compensation deferral (as a percent)     50.00%  
Employer contributions $ 1.9 $ 2.3 $ 5.1 $ 7.5
v3.24.3
Net (Loss) Income per Common Share - Schedule of Components of Basic and Diluted Net (Loss) Income per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Jun. 29, 2024
Mar. 30, 2024
Sep. 30, 2023
Jul. 01, 2023
Apr. 01, 2023
Sep. 28, 2024
Sep. 30, 2023
Earnings Per Share [Abstract]                
Net (loss) income $ (3,136) $ (5,051) $ (7,482) $ (2,318) $ 754 $ 11,465 $ (15,669) $ 9,901
Reconciliation of weighted-average shares outstanding:                
Basic weighted-average shares outstanding (in shares) 22,643     22,479     22,588 22,412
Dilutive effect of stock-based awards (in shares) 0     0     0 146
Diluted weighted-average shares outstanding (in shares) 22,643     22,479     22,588 22,558
Net (loss) income per share – basic (in dollars per share) $ (0.14)     $ (0.10)     $ (0.69) $ 0.44
Net (loss) income per share – diluted (in dollars per share) $ (0.14)     $ (0.10)     $ (0.69) $ 0.44
v3.24.3
Net (Loss) Income per Common Share - Narrative (Details) - shares
shares in Millions
 3 Months Ended 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Earnings Per Share [Abstract]        
Antidilutive securities excluded from computation of earnings per share (in shares) 1.2 1.1 1.3 1.2
v3.24.3
Restructuring Costs - Narrative (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 28, 2024
Dec. 30, 2023
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Restructuring Cost and Reserve [Line Items]            
Restructuring costs and asset impairment charges $ 1,963 $ 15,700 $ 0 $ 14,382 $ 0 $ 30,110
Minimum            
Restructuring Cost and Reserve [Line Items]            
Remaining expected restructuring 2,000     2,000   2,000
Maximum            
Restructuring Cost and Reserve [Line Items]            
Remaining expected restructuring $ 3,000     $ 3,000   $ 3,000
v3.24.3
Restructuring Costs - Schedule of Restructuring and Related Costs (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 28, 2024
Dec. 30, 2023
Sep. 30, 2023
Sep. 28, 2024
Sep. 30, 2023
Sep. 28, 2024
Restructuring Cost and Reserve [Line Items]            
Total cash restructuring costs $ 1,963     $ 11,882   $ 25,368
Asset impairments 0     2,500   4,742
Total restructuring costs 1,963 $ 15,700 $ 0 14,382 $ 0 30,110
Contract termination costs            
Restructuring Cost and Reserve [Line Items]            
Total cash restructuring costs 300     4,483   11,893
Severance and employee-related benefits            
Restructuring Cost and Reserve [Line Items]            
Total cash restructuring costs 1,663     2,905   7,871
Professional fees and other            
Restructuring Cost and Reserve [Line Items]            
Total cash restructuring costs $ 0     $ 4,494   $ 5,604
v3.24.3
Restructuring Costs - Schedule of Restructuring Reserve by Type of Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 28, 2024
Sep. 28, 2024
Sep. 28, 2024
Restructuring Reserve [Roll Forward]      
Balance at the beginning of year   $ 8,720  
Expenses $ 1,963 11,882 $ 25,368
Cash payments   (19,282)  
Balance at the end of the period $ 1,320 $ 1,320 $ 1,320
v3.24.3
Commitments and Contingencies - Schedule of Warranty Liabilities (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 28, 2024
Sep. 30, 2023
Warranty Liabilities [Roll Forward]    
Balance at beginning of period $ 8,503 $ 8,997
Additions charged to costs and expenses for current-year sales 9,981 12,327
Deductions from reserves (11,546) (12,543)
Changes in liability for pre-existing warranties during the current year, including expirations 511 40
Balance at end of period $ 7,449 $ 8,821
v3.24.3
Commitments and Contingencies - Narrative (Details)
Oct. 12, 2022
litigationDemand
Pending Litigation  
Loss Contingencies [Line Items]  
Number of litigation demands 2