Largest mattress retailer in U.S. Sleep Number files for bankruptcy; shares plunge

Shares of Sleep Number Corporation, the largest mattress retailer in the U.S., plunged more than 40% on Friday after the company filed for bankruptcy and plans to sell its business to a Canadian rival as part of the process. While the U.S. bed and mattress industry expanded in 2025, some major players have described current conditions as a historic downturn for the sector, TheStreet reports.

Shares of micro cap Sleep Number fell more than 40% on the Nasdaq on Friday to $0.40 apiece.

The decline came after the retailer announced it had agreed to combine with Canadian rival Sleep Country Canada and had initiated a voluntary Chapter 11 sale process to facilitate the transaction. Chapter 11 is designed to help businesses avoid liquidation through reorganization rather than closure.

A court-supervised sale process will allow Sleep Number to address its financial constraints and expand its business, CEO Linda Findley was quoted as saying in the company's announcement.

As part of the bankruptcy process, Sleep Number expects to secure up to $260 million of debtor-in-possession financing, which, together with cash generated from ongoing operations, is expected to support the business throughout the court-supervised process.

The company also said the transaction remains subject to court approval and could be superseded by a higher or better offer received during the restructuring process.

Sleep Number has been trying for some time to complete a turnaround and return to growth. In 2025, it appointed Findley as CEO, revamped its product lineup, cut costs, and hired Guggenheim Securities to explore strategic alternatives, including options to improve liquidity.

Despite those efforts, the company's net sales fell 16% year over year to $1.4 billion in 2025, while the net loss widened 6.6-fold to $132 million. In court filings, the company reported $642 million in assets and $1.28 billion in liabilities.

Sleep Number essentially ran out of time to see its turnaround through, GlobalData Managing Director Neil Saunders told Retail Dive, an industry news site. He argued that the mattress market has become fiercely competitive, with rivals such as Mattress Firm offering broader product assortments across multiple price points.

TheStreet, meanwhile, noted that Sleep Number is not the only retailer in the sector facing difficulties: Ortho Mattress previously filed for Chapter 11 bankruptcy protection, as well.