Sleep Number Files for Bankruptcy, Agrees to Merger with Sleep Country Canada

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6.12.2026

Quick Facts

Sleep Number filed Chapter 11 bankruptcy with assets of $500 million to $1 billion and liabilities up to $10 billion
Sleep Country Canada will serve as stalking horse bidder in court-supervised sale process
Company expects to secure up to $260 million in debtor-in-possession financing to continue operations

Sleep Number filed for Chapter 11 bankruptcy protection on June 12, 2026, while simultaneously announcing a merger agreement with Sleep Country Canada. The Minneapolis-based mattress retailer listed liabilities between $1 billion and $10 billion against assets of $500 million to $1 billion.

Sleep Country Canada will act as the stalking horse bidder in a court-supervised sale process. The transaction remains subject to higher offers, court approval and other closing conditions.

“While we have made meaningful progress advancing our turnaround efforts and strengthening our operations, our capital structure remains unsustainable,” said Linda Findley, Sleep Number’s CEO. “Following a comprehensive review of our strategic options and a robust sale process, we are confident that moving forward with the Sleep Country Canada agreement and this court-supervised sale process will enable us to address our financial constraints.”

The company expects to secure up to $260 million of debtor-in-possession financing, including $65 million in new financing. Sleep Number ended fiscal 2025 with just $1.69 million of cash and $588.2 million drawn on its revolving credit facility.

Sleep Number’s financial troubles deepened over the past year. Net sales fell 16% to $1.4 billion while gross margin shrank 60 points to 59%. The company recorded a net loss that widened more than sixfold to $132 million and posted a $50 million quarterly loss in May.

The retailer operates more than 570 locations nationwide and plans to continue serving customers, honoring warranties and delivering products throughout the bankruptcy process. Sleep Number also intends to maintain U.S. manufacturing operations following the transaction’s close.

Stewart Schaefer, president and CEO of Sleep Country Canada, said the deal creates growth opportunities. “We have long admired Sleep Number, its game-changing personalized sleep products and the talented team behind them,” Schaefer 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.”

Sleep Number shares, which closed Thursday at 66 cents, dropped 18% to 54 cents in premarket trading. Shareholders typically lose their investments in bankruptcy cases.

CEO Linda Findley joined Sleep Number in April 2025 after leading Blue Apron’s turnaround and sale to Wonder Group. Under her leadership, the company removed $185 million in annualized costs and identified another $50 million in cost reductions.

The bankruptcy comes as the mattress industry consolidates. Tempur Sealy completed its $5 billion Mattress Firm acquisition in February 2025, creating Somnigroup International with $8 billion in revenue and over 2,000 retail locations.