As part of its third-quarter earnings report, Minneapolis-based mattress manufacturer Sleep Number revealed that it will shutter 40 to 50 stores next year. The locations that will be closed are not currently public information.
Headquartered in downtown Minneapolis, the company recently announced its earnings results for the third quarter, and net sales declined 13% versus the prior year to $473 million, creating a loss per diluted share of $0.10 compared with diluted earnings per share of $0.22 last year.
As part of the company’s overall strategy to reduce costs, Sleep Number laid off 500 employees or 10% of its workforce earlier this month.
About this time last year, Sleep Savvy magazine reported that the retailer was redesigning stores to provide a premium brand experience. The first new store rolled out in the summer of 2022 in Edina, Minnesota, followed by redesigns at stores in West Bloomfield, Michigan, and Aurora, Illinois. At that time, plans included a refresh of more than a dozen stores by the end of 2022, with the pace of openings set to increase this year.
But company officials cited in the report that “demand decelerated abruptly in August and September, leading to a low double-digit demand decline for the quarter versus the prior year.”
In addition, “cost restructuring actions are broad-based and include a reduction in headcount across all areas of the organization, including in corporate and R&D functions,” the earnings report stated.
Further reductions will come in the form of “slowing the rate of new store openings and remodels” and cost optimization through its manufacturing and home delivery network.
“We expect these actions and broad-based restructuring initiatives to result in a more durable operating model with improved profitability and cash flows in a range of economic environments,” said Shelly Ibach, chair, president and CEO, of Sleep Number. “We remain confident in our strategic direction and ability to deliver superior value creation over time.”
Sleep Number has 16 locations in Minnesota and more than 600 locations in the United States.