Investment Thesis
Sleep Number is in severe financial distress with negative stockholders' equity of -$626.3M, indicating liabilities exceed assets. The company faces accelerating revenue decline (-16.1% YoY), sustained operating losses (-$36.9M), and negative free cash flow (-$13.2M) with critically insufficient liquidity (current ratio 0.15x, only $1.5M cash). Structural profitability collapse with deteriorating margins indicates the business model is not sustainable at current scale.
Strengths
- Gross margin of 57.9% demonstrates product economics remain relatively intact
- Established brand presence in specialty mattress retail segment
- Recent insider activity (8 Form 4 filings) suggests ongoing corporate engagement
Risks
- Negative stockholders' equity of -$626.3M creates imminent balance sheet insolvency risk
- Severe liquidity crisis with current ratio of 0.15x and minimal cash reserves of $1.5M
- Persistent negative operating cash flow (-$7.8M) and free cash flow (-$13.2M) indicate cash burn unsustainable
- Revenue contraction of 16.1% YoY suggests loss of market share and demand weakness
- Total liabilities exceed total assets by $659M, indicating debt covenant default risk
Key Metrics to Watch
- Stockholders equity trajectory and debt restructuring developments
- Operating cash flow stabilization and path to positive FCF
- Revenue stabilization and gross margin sustainability under cost pressures
- Liquidity position and refinancing ability given negative equity constraints
Financial Metrics
Revenue
319.0M
Net Income
-50.3M
EPS (Diluted)
$-2.19
Free Cash Flow
-13.2M
Total Assets
641.0M
Cash
1.5M
Profitability Ratios
Gross Margin
57.9%
Operating Margin
-11.6%
Net Margin
-15.8%
ROE
N/A
ROA
-7.8%
FCF Margin
-4.1%
Balance Sheet & Liquidity
Current Ratio
0.15x
Quick Ratio
0.07x
Debt/Equity
N/A
Debt/Assets
197.7%
Interest Coverage
-3.18x
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-13T06:29:09.494291 |
Data as of: 2026-04-04 |
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