Sleep Number Initiates Chapter 11 Sale, Plans Merger With Sleep Country Canada
Sleep Number has filed for Chapter 11 bankruptcy protection and reached a deal to sell its assets to Sleep Country Canada, Canada's largest mattress company, reports Yahoo Finance. If approved, the arrangement will keep Sleep Number's stores open and allow the new company to honor Sleep Number's warranties, gift cards, store credits and rewards points, as well as the 100-night trial period. Sleep Number's online operations will continue taking orders. The Minneapolis-based company stands to secure about $260 million in financing through the new arrangement.
Sleep Number, a 40-year-old brand, is known for introducing technology that allows couples to adjust the same mattress differently, including softness and temperature. In addition to struggling with a punishing debt structure, Sleep Number faced the impact of tariffs and a shrinking audience. The mattress retailer posted a $50 million loss last month and sales in the first quarter fell 19 percent to $319 million.
Total Retail's Take: Sleep Number has been pursuing a turnaround, recently launching a major new marketing campaign, a brand reset and extensive product innovation. It also began shuttering underperforming locations from its nearly 600-store fleet; however, those efforts weren't enough to avoid a bankruptcy filing. Sleep Number is using a voluntary Chapter 11 sale process to work out a deal with Sleep Country Canada. The Canadian rival is the stalking horse bidder, although Sleep Number may end up fielding better offers, the company said last week. Sleep Number’s day-to-day operations are continuing through the bankruptcy proceedings, according to a company press release.
"While we've made meaningful progress advancing our turnaround efforts and strengthening our operations, our capital structure remains unsustainable," said Linda Findley, president and CEO, in a statement. She added that the court-supervised sale process will position the company to both address financial constraints and potentially even expand the business. Sleep Number says its continuing its turnaround strategy to spur growth and increase financial resilience.
Stewart Schaefer, president and CEO of Sleep Country Canada, said, “Together, we see a tremendous opportunity to build on our complementary strengths and accelerate growth across the United States while introducing Sleep Number's innovative sleep solutions to consumers in Canada and other markets."
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Kristina Stidham is the digital content director at Total Retail and sister brands Women in Retail Leadership Circle and Women Leading Travel & Hospitality at NAPCO Media. She is passionate about digital media and handles video, podcast and virtual event production for all brands. You can often find her at WIRLC, TR, WLT&H or industry events with her camera and podcasting equipment—or at home on Zoom—recording interviews with thought leaders and business executives.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her family and two pet guinea pigs, and travel to new places.
