NASDAQ: SNBR

needs of each individual; “sense and do” technology uses the sensed data to automatically adjust the smart mattress to

keep the sleeper comfortable throughout the night. Temperature balancing technology supports the ideal climate for each

sleeper and solves a prevalent sleep challenge. Additionally, smart mattresses are an exceptional value, with personalized

sleep insights delivered daily, new features regularly added to all smart mattresses through over-the-air updates and

prices to meet most budgets. Sleep Number’s mattresses provide unmatched features, benefits and comfort that can lead

to improved sleep health and wellness for both sleepers.

The Company’s advantaged business model is supported by its consumer innovation strategy: an individualized, digital

sleep wellness platform, a network of millions of highly engaged Smart Sleepers who are loyal brand advocates, a

vertically integrated operating model and a team member culture of individuality.

The Company’s 3,100 mission-driven team members are focused on driving value creation, including our exclusive direct-

to-consumer selling in 600 stores and online, which meets customers whenever and wherever they choose to provide an

exceptional experience and a lifelong relationship. Additionally, the Company partners with world-leading institutions to

bring the power of over 38 billion hours of longitudinal sleep data to sleep science and research.

Turnaround Strategy

2025 was a transformational year for Sleep Number. Under the leadership of its new CEO, Linda Findley, who joined the

Company in April 2025, the business has undergone change at every level. The Company:

•Created a more streamlined operation designed to enable faster decision‑making by consolidating roles across

key functions and strengthening accountability;

•Reduced operating costs across the business by $136 million as compared to 2024, excluding restructuring and

other non-recurring costs;

•Added financial flexibility by extending the Credit Agreement through the end of 2027; and

•Executed the Twelfth Amendment to the Amended and Restated Credit and Security Agreement, dated as of

February 14, 2018 (as amended, supplemented or otherwise modified from time to time), among U.S. Bank

National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and certain other financial

institutions party thereto (the “Credit Agreement”) to amend financial covenants.

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With a stronger foundation, in November 2025, the Company introduced its turnaround strategy “Sleep Number Shifts,” a

focused, company-wide effort to reposition the brand, expand reach to new customer groups, and reignite growth. The

aim is to drive value for shareholders, customers and team members with efforts rooted in the consumer through all

dimensions of the business. It is centered on three key areas:

•Product: The Company is simplifying its offering with the goal of growing its customer base while building on the

demand from repeat customers

•Marketing: The Company is modernizing its efforts by expanding channels and reach with new creative to better

connect with today’s consumer and drive engagement with a focus on better ROI

•Distribution: The Company is focused on optimizing store footprint as well as exploring opportunities to expand

distribution into new channels, both physical and digital.

“Sleep Number Shifts” is being implemented as the Company continues to execute cost savings and operating

efficiencies, including real estate optimization and right-sizing the fixed cost base. While the Company is focused on

implementing the “Sleep Number Shifts” and executing cost savings and operating efficiencies, it faces liquidity

challenges. See “Risk Factors—Risks Related to Indebtedness and Liquidity.”

Financial Highlights

Ongoing industry demand decline and the impact of lower store traffic contributed to a 16% net sales decline in 2025 for

the Company. Against this recessionary backdrop, the Company continued to focus on improving gross margins and

streamlining its cost structure to optimize Adjusted EBITDA and cash flow generation. For 2025, the Company had a

0.6 percentage point decrease in gross margin rate, including an inventory write-down charge offset by the benefit of

product cost reductions through value engineering and ongoing supplier negotiations and ongoing efficiencies in our home

delivery and logistics operations. The Company also executed an additional $136 million of operating cost reduction

actions for 2025, prior to restructuring and other non-recurring costs, bringing the cumulative operating cost reduction over

the last three years to $308 million. The Company’s net loss for 2025 was $132 million and delivered full-year Adjusted

EBITDA of $78 million, with an Adjusted EBITDA margin of 5.5%, down 1.6 percentage points versus the prior year,

largely a result of the year-over-year net sales decline. Our 2025 fiscal year included an extra week which we estimate

benefited net sales by $25 million.

See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results from Operations - Non-

GAAP Data Reconciliations for additional information on Adjusted EBITDA and other non-GAAP reconciliations.

Integrated Sleep Solutions

Smart Beds and Mattresses

With a relentless focus on the consumer, Sleep Number has continued to advance its award-winning Sleep Number®

smart beds and mattresses. Enhancing its trademark comfort, adjustability and highly accurate detection of sleep and

biosignal data, the smart bed has evolved into a progressive and adaptive sleep wellness technology platform.

The combination of physical and digital innovation enables the Sleep Number smart bed’s proprietary “sense and do”

technology, which digitally responds to each sleeper’s movements, effortlessly adjusting firmness, comfort and support to

relieve pressure points. Through the analysis of sleeper-generated sleep and biosignal data, the smart bed can deliver

both real-time interventions – including automatic comfort adjustments during the night, with no action required by the

sleeper – and personalized sleep insights through its accompanying app. By combining artificial intelligence (AI) and

machine learning (ML) technology, which "learn” from each sleeper over time, the Sleep Number smart bed allows

sleepers to understand metrics related to health and wellbeing during sleep. This data may ultimately enable the

Company’s Smart Sleepers to take preventative and proactive wellness actions. Additionally, the longitudinal data

generated from Sleep Number’s wellness technology platform can be shared with sleepers’ physicians through a monthly

HealthIQ® report, leading to insights that may guide health-provider diagnostics.

Sleep Number’s product innovation roadmap is driven by proprietary data from its millions of Smart Sleepers and sleep

science. This allows the Company to address some of the most pressing sleep health needs and differentiate itself among

mattress brands as one that consumers perceive to improve their health and wellbeing.

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SLEEP NUMBER CORPORATION

As the Company heads into 2026, and as part of its turnaround, Sleep Number announced it is simplifying its offering with

a significant product transition and the goal of growing the new customer base while building on the demand from repeat

customers.

Smart Adjustable Bases

Sleep Number’s smart bed ecosystem includes a full line of exclusive FlexFit® smart adjustable bases that seamlessly

integrate with Sleep Number smart beds for an individualized sleep experience that is proven to deliver more restful sleep

per night. The Company’s industry-leading smart bases offer endless adjustability by raising the head and feet for ultimate

relaxation. Additional features include Partner Snore™ technology, which allows a sleeping partner to temporarily relieve

mild snoring by raising the companion’s head at the touch of a button; Foot Warming, which is designed to help an

individual fall asleep faster; and under-bed lighting, for nighttime visibility.

Sleep Number Bedding and Furniture

The exclusive Sleep Number® bedding collection and upholstered furniture line are designed to improve sleep comfort

and quality, including pillows designed to fit each individual’s sleeping position. The Sleep Number® Lifestyle Collection

furniture enhances the sleep environment and supports the health and wellness benefits of the Sleep Number smart bed

and FlexFit smart adjustable bases. The Lifestyle Collection also provides an integrated sleep experience with

accessories for aging and recovery, providing comfort, aiding in mobility and helping maintain independence at home.

Sleep Number Proprietary Ecosystem

Sleep Number builds lifelong relationships with its customers. The proprietary ecosystem of over 3 million Smart Sleepers

with an average monthly engagement rate of approximately 80 percent is best-in-class for digital products. This high

engagement with the Company’s sleep wellness platform increases customer lifetime value and drives efficient customer

acquisition through advocacy and referrals. The Company measures its repeat and referral customers, which account for

over 50% of sales. The Company’s innovation roadmap supports ongoing engagement initiatives within this ecosystem for

future growth.

An important part of the smart bed ecosystem, the Sleep Number app, puts the “brand in the hand” of the Company’s loyal

Smart Sleepers every day. It enables control of the smart bed and smart adjustable base from one’s mobile device. It also

provides a nightly score – a SleepIQ® score – that indicates how sleepers slept against their personal best metrics and

goals. Paired with personalized insights and details about each sleeper’s heart rate, breath rate, heart rate variability,

circadian rhythm and more, the Sleep Number app is an invaluable tool in helping Smart Sleepers better understand how

to improve their sleep health and wellbeing. A monthly summary report – the HealthIQ® report – comes to the inbox of

each sleeper for a monthly assessment of how they slept; this report can be downloaded to be shared with health

professionals and caregivers.

Sales and Marketing

Brand Communications

Sleep Number continues to invest in its brand and demand drivers for near- and long-term performance. The mattress

industry is a highly commoditized, competitive low-interest category. The Sleep Number brand strategy focuses on brand

amplification to drive awareness and consumer benefits to drive consideration. The Company has several highly visible

strategic partnerships; it engages consumers seamlessly across multiple touchpoints, with an emphasis on digital; and it

creates lifelong customer relationships and brand advocacy by delivering an unparalleled sleep experience. Together,

these actions result in strong brand health, increased brand interest, heightened consumer consideration, customer

engagement and authentic advocacy for Sleep Number’s brand, innovations and services.

The Company leverages a sophisticated media mix to drive its performance marketing and advertising, with emphasis on

digital and aligned with consumer consumption, contributing to improved media return on investment. High-profile video,

including television and online streaming, is its most efficient media, followed by digital and social platforms. Sleep

Number’s in-house digital capabilities, content marketing, online user experience and data-driven tools give it the flexibility

to pivot quickly and optimize media investment, messages and audience by platform in real-time. The Company’s

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promotional strategy focuses on simplicity and relevance, driving consumers to the brand at the time when they are

seeking a sleep solution.

The Company’s brand marketing strategies are designed to deliver Sleep Number value messaging to a broader set of

consumers. In 2025, Sleep Number reset its marketing strategy, building on top of a strong brand relevance to attract

consumers from a larger addressable market. The Company is leveraging the correlation between marketing and

consumer demand to deliver improvements in marketing effectiveness and return on investment at greater scale. In

parallel, Sleep Number is evolving all aspects of marketing and creative work, including deploying a brand refresh focused

on target segments.

The Sleep Number® Rewards loyalty program drives significant brand engagement. Since the launch of the program, the

Company welcomed over 1.9 million members who participated in over 3 million engagements per year on its digital

platform. The Company’s most dedicated Smart Sleepers regularly interact with branded content – including video, web,

email and blog content – which educates them about Sleep Number® products and sleep expertise, adding value to their

investment. They actively write product reviews and post on social media, further activating the marketing flywheel and

advancing the Company’s purpose.

Exclusive Direct-to-Consumer Distribution

Sleep Number’s exclusive, direct-to-consumer distribution model supports lifelong relationships with its customers. Across

its customer touchpoints, defined as Total Retail (Stores, Online, Phone and Chat), it delivers a value-added retail

experience that seamlessly integrates Sleep Number’s digital and physical experiences to meet customer needs. The

Company offers an engaging and dynamic online experience to educate consumers and advance their purchase path,

driving highly-qualified traffic to all of its retail touchpoints. Sleep Number’s mission-driven sleep experts use digital

technology and a best-in-class, relationship-based selling process, which is continually tested and refined to meet the

changing consumer priorities. Processes are designed to match the right sleep solutions and right price point for its

customers – wherever and whenever they want to shop. This “sell-from-anywhere” model supports customers’ shopping

preferences and results in new customer acquisition, sustained repeat and referral, high conversion and strong revenue

per smart bed unit – all of which drive future sales and profitable growth.

As the exclusive distributor of Sleep Number® products, the Company has a nationwide portfolio of retail stores. The

Company targets high-quality, convenient and visible store locations based on several factors, including each market’s

overall sales and profit potential, store geography, demographics and proximity to other brand experiences. Since 2010,

the Company has invested to reposition a large percentage of its mall stores to stronger, optimally-sized, non-mall

locations, adding stores in both existing and new markets. As of January 3, 2026, the Company operated 600 Sleep

Number® stores, with locations in all 50 states.

The Company’s Stores accounted for 88% of net sales in 2025. Average annual net sales per store in 2025, based on

Total Retail, was $1.9 million. In 2025, 32% of Stores open for a full year generated net sales of greater than $2 million,

and 8% of Stores open for a full year generated more than $3 million in net sales. In 2025, Online, Phone, Chat and Other

sales accounted for 12% of net sales.

Operations

Integrated Sourcing and Logistics

All of Sleep Number’s smart beds and mattresses are pre-assembled in its assembly distribution centers prior to delivery.

Sleep Number's network delivers improved visibility, efficiency and waste reduction. Bedding fulfillment is centralized to

leverage improved logistics costs and to serve the entire United States from Ohio. Sleep Number continues to advance its

outbound logistics network by evolving its mix of truckload carriers and dedicated cross docks to reduce product handling,

hand-offs, damage and costs while in transit to customers’ homes. This network design enables scale and provides a

superior and reliable experience for customers.

In addition to a network of global suppliers, Sleep Number operates a dedicated cut and sew facility for cover production

in Irmo, SC and an advanced engineering and prototyping facility in Salt Lake City, UT. Each of these facilities are

combined with an assembly distribution center. There are three additional assembly distribution centers (Minneapolis, MN;

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Cincinnati, OH; and Dallas, TX). The assembly distribution centers fulfill customer orders that are made-to-order daily and

assemble final mattress and order kitting with bases and accessories for shipment.

The Company sources the raw materials and components used in its products from third parties. A significant percentage

of the Company’s products are assembled after it receives orders from customers utilizing manufacturing processes with

minimal levels of raw materials, work-in-process and finished goods inventories. The Company has taken, and continues

to take, various measures to mitigate the potential impact of supply disruptions, including strengthening relationships with

primary suppliers, identifying new alternate suppliers, redesigning products, exploring alternative components and

maintaining safety stocks. Sleep Number is leveraging the flexibility, visibility and resilience of its operating model to

respond nimbly as conditions change.

Home Delivery Service

Sleep Number’s home delivery teams are another direct touchpoint with its customers. Sleep Number smart beds and

mattresses are delivered and installed by Sleep Number delivery technicians or by trained third-party service providers.

This blended model enables the Company to efficiently deliver a strong customer experience.

Customer Service

Sleep Number provides comprehensive post-purchase support that improves Smart Sleepers’ experience and supports its

business. Through ongoing interactions with customers via phone, email, chat and social media, the customer service

team also provides a unique opportunity to benefit from insights that help the Company continuously improve its products

and strengthen its service quality and innovation. This integration enables operational synergies and organizational

efficiencies. Sleep Number has outsourced a portion of its customer service operations for greater efficiency.

Innovation

Sleep Number’s global research and development (R&D) team is comprised of onshore teams in Minneapolis, MN and

San Jose, CA and offshore teams in Europe and Asia. Together, these teams are the driving force of the entire smart bed

ecosystem including all smart beds, adjustable base designs and bedding solutions, and are comprised of experts in

mechanical engineering, comfort, adjustability, temperature, anthropometrics and test systems. The Company’s research

and development expenses were $34 million in 2025 compared to $45 million in 2024.

With over 1,000 patents and patent applications pending worldwide, Sleep Number’s innovation pipeline is robust. The

combination of trademark individualized comfort and adjustability features – with AI, biometric analysis and other digital

tools – creates the sleep wellness platform, which is the foundation of a long-term value proposition. Paired with millions

of connected sleepers with approximately 80% monthly average smart bed user engagement and high customer lifetime

value, the Company believes in the potential for expanded market relevance beyond the traditional mattress space into

wellness technology and data, where there are many untapped consumer opportunities to solve persistent sleep issues.

Sleep Number is redefining the standards for monitoring sleep for research and health, and its smart bed ecosystem

offers a non-invasive, real-world and accurate method to conduct sleep research. The Company’s sleep wellness platform

generates longitudinal sleep and biosignal data through a research-grade, multi-sensor ecosystem including

ballistocardiography and AI/ML algorithms. This platform leverages high-resolution, full-body, continuous sensor

recordings, as well as utilizing signal processing and machine-learning methods. Cloud infrastructure enables scale for

one-to-many security and data sharing capabilities. Cloud intelligence and edge intelligence engines deliver advanced AI

and analytics to generate a physical and digital immersive, adaptive and effortless sleep experience for each sleeper.

Sleep Number’s sleep wellness platform automatically collects and analyzes billions of data points from millions of Smart

Sleepers, conducting one of the largest sample sizes of sleep studies every night. To date, the Company has leveraged

and learned from more than 38 billion hours of sleep data gathered from over 4.8 billion real-world sleep sessions,

generating comprehensive longitudinal and ecologically-valid data to improve sleep quality. More than 558,000 individuals

in its Smart SleeperSM Community — and counting — have opted in to participate in ongoing sleep research and advance

the science of sleep and health. This participation has led to rapid enrollment in Institutional Review Board (IRB)-approved

studies, which combine the power of Sleep Number’s broad sleep database with subjective understanding of sleeper

behaviors to understand real-world outcomes. The smart bed ecosystem is helping to advance the linkage of quality sleep

to health, bringing significant benefits to real-world sleepers.

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Sleep Number is pairing data and innovations with meaningful collaborations with world-leading partners in sleep,

leveraging the potential of the Company’s research and technology to advance sleep science and to develop new

products, services and synergistic interactions.

Partnerships and Collaborations

Strategic partnerships amplify the effectiveness, impact and scale of Sleep Number’s brand and marketing efforts.

National Football League (NFL)

As the Official Sleep and Wellness Partner of the NFL since 2018, the partnership broadens Sleep Number’s brand reach,

deepens its brand relevance and amplifies the benefits of its proprietary innovations. The partnership has led to

unparalleled product adoption: 83% of NFL players have a Sleep Number smart bed*. Through 2028, Sleep Number

expects to continue to actively support players and team personnel with their performance and recovery programs through

sleep assessments, new innovations and more.

Sleep Number’s NFL partnership also includes partnerships with the NFL Players Association (NFLPA) and the

Professional Football Athletic Trainers Society (PFATS), which helps drive greater engagement on and off the field.

Through Sleep Number content, seminars and team sleep education meetings, the trainers and football medical personnel

qualify for continuing education credits.

In 2025, Sleep Number had partnerships with three clubs — Super Bowl LVI Champion Los Angeles Rams, the Dallas

Cowboys, and the Minnesota Vikings — which add to its national media and community-activation efforts. These

partnerships allow for focused communications in some of Sleep Number’s most important markets.

Additionally, the Company leverages the NFL audience to further support American Cancer Society (ACS), being

recognized as “an Official Partner of Crucial Catch” and a presenting sponsor of the Defender, an online tool developed by

ACS and the NFL to provide cancer prevention, screening and support. The Company included ACS in its brand

communications to Smart Sleepers, in its work with the NFL, across its social media and more.

In 2022, Sleep Number formed a partnership with the ACS to study the connection between cancer and sleep quality, with

the goal of developing the first-ever sleep strategies and guidance for cancer patients and survivors. With contributions

from Sleep Number’s proprietary sleep data, ACS will conduct research over six years, which may lead to improved sleep

outcomes for cancer patients and survivors. Additionally, Sleep Number supports cancer patients and caregivers through

donations of sleep solutions to ACS’s Hope Lodges across the country. And, as part of the Crucial Catch partnership,

Sleep Number inspired tens of thousands of NFL fans to learn more about cancer risks and prevention by driving

activation of The Defender.

Health & Research Institutions

Through partnerships with world-leading health and wellness institutions, Sleep Number has advanced sleep science with

its highly accurate, longitudinal sleep data. This data serves as the foundation for groundbreaking research on various

health-related issues.

By enabling a longitudinal view of sleep habits for organizations that otherwise may not have access, Sleep Number

believes partnerships and collaborations with physicians, researchers and institutions can deliver meaningful health

solutions.

Sleep Number has partnered with the Mayo Clinic, ACS, Northwestern University, and the University of Pittsburgh in

several research studies, with the aim of providing insights into how sleep affects health.

*Based on the number of active roster players eligible for the NFL player Sleep Number® bed program who purchased a bed between 7/23/18 and

12/13/24.

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In 2020, Sleep Number announced a collaboration with Mayo Clinic, resulting in multiple research projects including:

•Research to explore the relationship between disrupted sleep and markers of aging (telomeres,

senescence, chronological EKG based on AI);

•Research to explore excessive daytime sleepiness (EDS) and its cardiovascular implications; and

•Research to investigate the prevalence of disordered sleep (sleep apnea, insomnia, and short sleep) in patients with

Somali heritage and the implications for cardiovascular risk.

Intellectual Property

As a result of the Company’s R&D and strategic efforts, Sleep Number has continued to strengthen its patent portfolio,

with a particular focus on smart features that improve sleep quality and thermal solutions to solve temperature disruptions

to sleep. The Company holds various U.S. and foreign patents and patent applications regarding certain elements of the

design and function of Sleep Number products, including air control systems, remote control systems, air chamber

features, mattress construction, foundation systems, sensing systems, automated adjustments, in-bed temperature

control, as well as other technology. Sleep Number has numerous U.S. patents expiring at various dates between January

2027 and May 2044, and numerous U.S. patent applications pending. The Company also has numerous foreign patents

expiring at various dates between September 2026 and June 2047, and foreign patent applications pending.

Notwithstanding these patents and patent applications, the Company cannot ensure that these patent rights will provide

substantial protection or that others will not be able to develop products that are similar to, or competitive with, Sleep

Number products.

Sleep Number has a number of trademarks and service marks registered with the U.S. Patent and Trademark Office,

including Sleep Number®, SleepIQ®, Sleep Number 360®, 360®, the Double Arrow logo, Select Comfort®, AirFit®,

Climate360®, ClimateCool®, Comfortaire®, Dreamaire® , DualTemp®, the DualTemp logo, the DualAir Technology Inside

logo, FlexFit®, FlexTop®, HealthIQ®, IndividualFit®, Know Better Sleep®, Pillow[ology]®, PillowFit®, RespiratoryIQ®,

Responsive Air®, Sleep Is Training®, Sleep Number Inner Circle®, Sleep30®, Smart SleeperSM, This Is Not A Bed®, We

Make Beds Smart®, and WhisperFlo®. The Company has several trademarks that are the subject of pending applications,

including Auto Snore™, BreatheIQ™, BreatheIQ+™, the BreatheIQ logo, the BreatheIQ+ logo, ComfortMode™,

EnviroIQ™, HeartIQ™, Individualized Sleep Experiences™, Tri-Brid™, and WellnessIQ™. Each registered mark is

renewable indefinitely as long as the mark remains in use and/or is not deemed to be invalid or canceled. The Company

also has a number of common law trademarks, including Clima-Temp™, ClimateSeries™, Comfort Service™,

ComfortFit™, CoolFit™, Coolgenex™, Create Your Perfect Comforter™, Create Your Perfect Pillow™, Does Your Bedding

Do that?™, Does Your Pillow Do That?™, DownComfort™, DualAir™, ExactFit™, Firmness Control™, FlexTop™, In

Balance™, Knows You. Senses You. Adjusts to You™, Logic™ Label, LuxWarmth™, NaturalFit™, No Shift™, Partner

Snore™, PlushComfort™, Relaxation™, ResponseFit™, Rest&Read™, Sleep Better Together™, Sleep Number Does

That™, Smart™ Skirt, Smart Button™, SmartFit™, Smart Temp™, Smart Sleeper™, The Best Bed for Couples™,

ThermaLux™, True Temp™, VariaCool™, Winter Soft™, and the Company’s bed model names.

Several of the Company’s trademarks have been registered, or are the subject of pending applications for registration, in

various foreign countries. Sleep Number also has other intellectual property rights related to its products, processes and

technologies, including trade secrets, trade dress and copyrights. The Company protects and enforces its intellectual

property rights, including through litigation, as necessary.

Industry and Competition

The Company competes in the bedding industry that is comprised of mattresses and foundations, pillows and

accessories. The mattress category includes both traditional innerspring models and a wide range of non‑innerspring

options, such as viscoelastic and foam mattresses, hybrids, airbeds, and latex mattresses. The foundation category

includes static and adjustable foundations. The bedding industry is commoditized and highly competitive. Sleep Number

competes against regional and local specialty bedding retailers, bedding manufacturers, home furnishing stores, mass

merchants, national discount stores and online marketers.

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Manufacturers in the bedding industry mostly compete through national and regional retail partners, regional

manufacturing verticals and online direct-to-consumer. Price, quality, brand name recognition, product availability and

product performance are the primary ways manufacturers differentiate themselves. There is a high degree of

concentration among manufacturers who produce innerspring, memory foam and hybrid beds under nationally recognized

brand names, including Tempur-Pedic, Sealy, Stearns & Foster, Serta and Beautyrest. National manufacturers still

dominate the bedding industry. There has recently been market consolidation, with Somnigroup owning the Tempur-Pedic,

Sealy and Stearns & Foster brands, and also owning the Mattress Firm brand and stores. Brands including Saatva,

Purple, Casper and Nectar, which started online have now moved into traditional retail channels for growth.

Seasonality

The Company’s business is modestly impacted by seasonal influences inherent in the U.S. bedding industry and general

retail shopping patterns. The U.S. bedding industry generally experiences lower sales demand in the second quarter of

the calendar year and increased sales demand during selected holiday or promotional periods.

Working Capital

The Company is able to operate with minimal working capital requirements because it sells directly to customers, utilizes

both “make-to-order” and “make-to-stock” production processes and operates retail stores that serve mainly as

showrooms. Sleep Number has historically generated sufficient cash flows to self-fund operations through an accelerated

cash-conversion cycle. The Company’s Credit Agreement provides a revolving credit facility for general corporate

purposes with net aggregate availability of $655 million. The Credit Agreement matures in December 2027.

Qualified customers are offered revolving credit to finance purchases through a private-label consumer credit facility

provided by Synchrony Bank. Approximately 40% of net sales in 2025 were financed by Synchrony Bank. The Company’s

current agreement with Synchrony Bank expires December 31, 2028, subject to earlier termination upon certain events.

The Company pays Synchrony Bank a fee for extended credit promotional financing offers. Under the terms of the

agreement, Synchrony Bank sets the minimum acceptable credit ratings, interest rates, fees and all other terms and

conditions of the customers’ accounts, including collection policies and procedures. As the receivables are owned by

Synchrony Bank, at no time are the receivables purchased or acquired from the Company. Sleep Number is not liable to

Synchrony Bank for its customers’ credit defaults. In connection with all purchases financed under these arrangements,

Synchrony Bank pays the Company an amount equal to the total amount of such purchases, net of promotional related

discounts, upon delivery to the customer.

Governmental Regulation and Compliance

As a vertically integrated manufacturer and retailer, the Company is subject to extensive federal, state and local laws and

regulations affecting all aspects of its business. As a manufacturer, Sleep Number is committed to product quality and

safety, including adherence to all applicable laws and regulations affecting the Company’s products and services.

Compliance with health, safety and environmental laws and regulations, including the federal fire retardant standards

developed by the U.S. Consumer Product Safety Commission, which requires rigorous and costly testing, has increased

the cost and complexity of manufacturing the Company’s products and may adversely impact the speed and cost of

product development efforts. Further, the Company’s manufacturing, distribution, delivery and other business operations

and facilities are subject to additional federal, state or local laws or regulations including supply chain transparency,

conflict minerals sourcing and disclosure, end-of-life disposal, recycling and packaging requirements, transportation and

other laws or regulations relating to environmental protection and health and safety requirements.

As a retailer, the Company is subject to additional laws and regulations that apply to retailers generally and govern the

marketing and sale of the Company’s products and the operation of both Sleep Number retail stores and e-commerce

activities. Many of the statutory and regulatory requirements that impact the Company’s retail and e-commerce operations

are consumer-focused and pertain to activities such as the Company’s promotions, advertising claims, marketing

practices, pricing, consumer credit offerings, truth-in-advertising, consumer privacy, “do not call/mail” requirements, text

messaging requirements, warranty disclosure, delivery timing requirements, accessibility and similar requirements.

The Company’s operations are subject to federal, state and local labor laws including, but not limited to, those relating to

occupational health and safety, employee privacy, wage and hour, overtime pay, pay transparency, harassment and

discrimination, equal opportunity and employee leaves and benefits. The Company is also subject to existing and

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emerging federal and state laws relating to insider trading, data security, privacy, cybersecurity disclosure, clawback policy

disclosures and greenhouse gas measurement and climate impact disclosure.

It is Sleep Number’s policy and practice to comply with all legal and regulatory requirements. The Company’s procedures

and internal controls are designed to promote such compliance.

Human Capital

Guided by its purpose to improve lives by personalizing sleep, Sleep Number fosters a culture where team members are

highly engaged and contribute meaningfully to the company and its communities. With sleep at the center, Sleep Number

supports the wellbeing of its team members across the pillars of physical, emotional, financial, career and community

wellbeing. The company values every individual’s unique talents, perspectives and experiences, and strives to create an

inclusive environment where team members can do their best work, which supports collaboration, innovation, and long-

term success.

At January 3, 2026, Sleep Number employed a total of 3,133 team members, of which 53 were classified as part-time and

3 were employed on a temporary basis. The breakdown of team members by area was as follows: 1,863 in retail sales

and support, 305 in field services, 160 in customer service, 294 in manufacturing and logistics, and 511 in technology,

corporate, management and administrative positions. Team members include racially diverse members of 40% of team

and women of 38%.

Attracting, motivating and retaining the right talent is critical to Sleep Number’s success, which is why it is unyielding in its

commitment to its team members’ wellbeing, connection to one another and sense of belonging. The Company strives to

create and sustain a culture in which all team members feel welcomed and valued and can bring their authentic and whole

selves to work every day and it reinforces this commitment through investment in programs and initiatives including:

•Career Wellbeing: The Company’s Learning and Development programs enhance team member capabilities, driving

personal growth, mentoring opportunities and organizational performance;

•Financial, Emotional and Physical Wellbeing: Sleep Number’s compensation practices and comprehensive benefits

highlight its commitment to improving its team’s economic opportunity and promoting their physical and emotional

stability. The Company annually benchmarks its total rewards programs to ensure market competitiveness and offers

all team members a form of variable compensation tied to performance in addition to their base pay. To support

emotional wellbeing, Sleep Number offers all team members mental health resources in addition to flexible time off

benefits;

•Health and Safety Policies: Sleep Number establishes clear expectations for all team members to ensure a physically

and psychologically safe environment. As part of the Company’s effort to improve safety, it collects and analyzes

workplace injury and accident information across all locations and takes steps to reduce incident rates. The Company

actively evolves its health and safety policies during the year to ensure the safety of its team members and

customers; and

•Community Engagement: Sleep Number fosters a strong sense of belonging, connection and service through Team

Member Resource Groups, Team Member Support Fund and Team Member Volunteer opportunities. Sleep Number

actively supports eight Team Member Resource Groups.

Commitment to Sustainability

Sleep Number is committed to sustainability through initiatives that support the resilience of its business. The Company’s

efforts focus on aligning and integrating environmental stewardship and social progress with its pursuit of long-term

shareholder value creation.

Sleep Number takes seriously its responsibility to its stakeholders, including team members, consumers, community,

suppliers and shareholders. To continue to earn their trust, the Company proactively advances and discloses practices,

priorities and metrics that demonstrate its accountability and commitment to sustainability.

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SLEEP NUMBER CORPORATION

•Sleep Number is strengthening systems and processes that reinforce sound governance, high integrity decision-

making and transparent, consistent reporting practices.

•To attract and retain highly engaged team members, the Company continues to prioritize programs that promote well-

being, provide opportunities for professional development and reward strong performance.

•Through volunteerism, financial and in-kind support, and meaningful contributions to sleep science, research and

sleep innovations, Sleep Number is improving millions of lives – delivering significant value to consumers and their

communities.

•Recognizing the benefit of collaboration in achieving the Company’s goals, Sleep Number is strengthening its

relationships with suppliers and engaging with them to increase its operating model durability and sustainability.

•And the Company is monitoring – and taking responsible actions to control – its greenhouse gas emissions, waste

and other environmental outputs, including through improved network design, transportation optimization and

innovations that extend the useful life of product components.

Additional information is available in the Company’s Corporate Sustainability Report, posted within the Investor Relations

section of the Sleep Number website at http://ir.sleepnumber.com. Select the “ESG” link and then “Sustainability Reports.”

The information contained on the Company’s website or connected to its website is not incorporated by reference into this

Form 10-K and should not be considered part of this report.

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SLEEP NUMBER CORPORATION

Information about the Company’s Executive Officers

LINDA FINDLEY, 52

Board Member, President and Chief Executive Officer (Joined the Company in April 2025)

Linda Findley, Sleep Number® setting 30, serves as the President and Chief Executive Officer for Sleep Number. From

April 2019 to May 2024, Ms. Findley served as the President, Chief Executive Officer and Director of Blue Apron Holdings,

Inc. (formerly Nasdaq: APRN), an ingredient and recipe meal kit company. From May 2016 to December 2018, she was

the Chief Operating Officer at Etsy, Inc. (NYSE: ETSY), a global e-commerce marketplace for unique and creative goods,

where she oversaw product, design, marketing, and customer engagement and acquisition. Prior to Etsy, Ms. Findley held

a variety of senior executive roles at Evernote Corp. from October 2012 to December 2015, including most recently as

Chief Operating Officer, and led global marketing, business development, and customer service for Alibaba.com Ltd. from

June 2009 to October 2012, based out of Hong Kong. Ms. Findley has served on the board of directors of Ralph Lauren

(NYSE: RL) since August 2018 and HeliosX since February 2025.

AMY O’KEEFE, 55

Executive Vice President and Chief Financial Officer (Joined the Company in December 2025)

Amy O’Keefe, Sleep Number® setting 65, serves as Executive Vice President and Chief Financial Officer for Sleep

Number and brings over 30 years of experience leading operational, strategic, and financial transformations across public

and private companies in the consumer products, technology, and wellness sectors. From June 2023 to May 2025, Ms.

O’Keefe served as Chief Financial and Administrative Officer of Avaya LLC, a global communications software company,

where she played a key leadership role in its operational, strategic, and financial transformation, driving significantly

improved free cash flow. Prior to Avaya, O’Keefe spent nearly half of her career at The Black & Decker Corporation

(NYSE: SWK) and subsequently served as Chief Financial Officer for multiple public and private companies, including

Weight Watchers International (Nasdaq: WW), a global wellness company providing subscription-based commercial

weight management programs with both in-person and digital-only offerings, from October 2020 to December 2022, Drive

DeVilbiss Healthcare, Savant Systems, and D&M Holdings. Ms. O’Keefe has served on the board of directors of

TruBridge, Inc. (Nasdaq: TBRG) since October 2024.

MELISSA BARRA, 54

Executive Vice President and Chief Product and Enterprise Strategy Officer (Joined the Company in 2013 and was

promoted to current role in April 2025)

Melissa Barra, Sleep Number® setting 30, serves as Executive Vice President and Chief Product and Enterprise Strategy

Officer. Ms. Barra oversees the Company's product portfolio, from development through distribution and is responsible for

streamlining research and development efforts and ensuring that products, partnerships and distribution continue to

evolve in ways that meet the needs of today's customers. From June 2019 to April 2025, Barra served as Executive Vice

President, Chief Sales and Services Officer, where she led the company’s customer-focused strategy and the

organization’s sales, real estate, field services, customer relationships, and corporate technology teams. Barra joined

Sleep Number in 2013 as Vice President, Consumer Insights and Strategy. Prior to joining Sleep Number in February

2013, Ms. Barra held leadership positions in the U.S. and internationally in process reengineering, finance, strategic

alliances and corporate development for Best Buy, Grupo Futuro S.A., Citibank and GE Capital. Ms. Barra has served on

the board of directors of Pentair PLC (NYSE: PNR) since December 2021.

SAMUEL R. HELLFELD, 47

Executive Vice President and Chief Legal and Risk Officer and Secretary (Joined the Company in 2013 and was

promoted to current role in March 2022)

Samuel R. Hellfeld, Sleep Number® setting 35, serves as Executive Vice President and Chief Legal and Risk Officer and

Secretary and leads legal, internal audit, corporate security and asset protection. From September 2018 to March 2022,

Mr. Hellfeld served as Senior Vice President and Chief Legal and Risk Officer. From October 2015 to September 2018,

Mr. Hellfeld served as Vice President, Associate General Counsel. Mr. Hellfeld joined Sleep Number in March 2013 as

Corporate Counsel. Prior to joining Sleep Number, Mr. Hellfeld was a Partner in the law firm of Fox Rothschild LLP (fka

Oppenheimer Wolff & Donnelly LLP), practicing in the areas of litigation and intellectual property. Prior to 2010, Mr.

Hellfeld was an Associate at several national law firms and also served as Law Clerk in the United States Court of Appeals

for the Ninth Circuit and the United States District Court, Southern District of California.

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SLEEP NUMBER CORPORATION

CHRISTOPHER D. KRUSMARK, 46

Executive Vice President and Chief Retail and People Officer (Joined the Company in 2005 and was promoted to Chief

Retail and People Officer in April 2025)

Christopher D. Krusmark, Sleep Number® setting 55, serves as Executive Vice President and Chief Retail and People

Officer, where he leads the retail selling experience and real estate footprint, ensuring both customers and team members

are supported through connected enterprise processes. From July 2020 to April 2025, Mr. Krusmark served as Sleep

Number as Executive Vice President and Chief Human Resources Officer. From January 2023 through August 2023, Mr.

Krusmark also served as Interim CFO. Prior to being promoted to his Chief Human Resources Officer role in July 2020,

Mr. Krusmark served as Sleep Number’s Vice President of Sales Operations, Field Services and Training where he led

retail and home delivery operations and wholesale business development. From June 2005 to October 2015, Mr.

Krusmark held a variety of leadership roles in finance at Sleep Number supporting sales, real estate, marketing and

product. Prior to joining Sleep Number, Mr. Krusmark worked on the financial audit staff of EY and Arthur Andersen.

AMBER L. MINSON, 56

Executive Vice President and Chief Marketing Officer (Joined the Company in May 2025)

Amber L. Minson, Sleep Number® setting 55, serves as the Executive Vice President and Chief Marketing Officer for

Sleep Number. She leads the company’s integrated marketing strategy, driving sustained demand generation, enhancing

brand visibility and delivering media efficiency. She is an accomplished leader with more than two decades of marketing

and brand strategy experience. Most recently, from July 2024 to April 2025, Ms. Minson served as Chief Marketing Officer

of Casper Sleep Inc., a consumer sleep products company that designs, manufactures, and sells mattresses and related

sleep accessories, under a contract agreement. From January 2023 to May 2024, she served as Chief Revenue Officer,

as well as from October 2022 to January 2023, as Chief Marketing Officer at Blue Apron Holdings, Inc. (formerly Nasdaq:

APRN), an ingredient and recipe meal kit company. where she was responsible for all revenue generating and customer-

facing functions, including growth through strategic pricing and promotional initiatives. From 2020 to 2022, Ms. Minson

served at Chief Marketing Officer for Foreground LLC, a company that helps photographers and photo consumers create

memories that last a lifetime. Ms. Minson also built and scaled high performance marketing organizations for companies

including Intuit, Alibaba, Home Shopping Network (HSN) and Comcast NBCUniversal.

TANYA SKOGERBOE, 50

Senior Vice President and Chief Supply Chain and Transformation Officer (Joined the Company in February 2007 and

was promoted to Chief Supply Chain and Transformation Officer in February 2025)

Ms. Skogerboe, Sleep Number® setting 35, serves as the Senior Vice President and Chief Supply Chain and

Transformation Officer for Sleep Number. In her role, she is responsible for leading all aspects of the company’s supply

chain operations – from manufacturing to fulfillment – to ensure quality, consistency and efficiency at every step of the

customer journey. Ms. Skogerboe also oversees the rigorous transformation efforts of the company to get closer to the

customer and optimize operations. Over her almost 20 year career at Sleep Number, she has held senior leadership

positions in services and strategy, customer experience and commercial channel operations. Prior to joining Sleep

Number, Ms. Skogerboe served as manager of global sales for Northwest Airlines.

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SLEEP NUMBER CORPORATION

Available Information

Sleep Number is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange

Act) and its rules and regulations. The Exchange Act requires the Company to file reports, proxy statements and other

information with the Securities and Exchange Commission (SEC).

Sleep Number’s corporate website is www.sleepnumber.com. Through a link to a third-party content provider, the

corporate website provides free access to its annual reports on Form 10-K, quarterly reports on Form 10-Q, current

reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the

Securities Exchange Act of 1934 as soon as reasonably practicable after the Company electronically files such material

with, or furnishes it to, the SEC. These documents are posted on the corporate website at www.sleepnumber.com: select

the “Investors” link, the “Financials” link, and then the “SEC Filings” link. The information contained on the Company’s

website or connected to its website is not incorporated by reference into this Form 10-K and should not be considered part

of this report.

The Company also makes available, free of charge on its website, the charters of the Audit Committee, Management

Development and Compensation Committee and Corporate Governance and Nominating Committee, as well as its Code

of Business Conduct and Ethics (including any amendment to, or waiver from, a provision of its Code of Business Conduct

and Ethics) adopted by the Company’s Board of Directors (Board). These documents are posted on the Company’s

website: select the “Investors” link, the “Governance” link and then the “Governance Documents” link. The information

contained on the Company’s website or connected to its website is not incorporated by reference into this Form 10-K and

should not be considered part of this report.

Copies of any of the above-referenced information will also be made available, free of charge, upon written request to:

Sleep Number Corporation

Investor Relations Department

1001 Third Avenue South

Minneapolis, MN 55404