Sleep Country Canada Buys Sleep Number Out of Bankruptcy for $702M

Quick Facts

Sleep Country Canada agreed to acquire substantially all of Sleep Number’s assets for $702 million, including $529.5 million in cash, after a court-supervised auction.
Sleep Number filed for Chapter 11 in June 2026 carrying $672.5 million in debt, citing tariffs, pandemic over-expansion, and a shift away from in-store retail.
The combined company will operate more than 800 store locations, making it the second-largest sleep retailer in the world behind Somnigroup International.

Sleep Country Canada, the largest mattress retailer in Canada, will acquire Sleep Number for approximately $702 million following a competitive bankruptcy auction. The U.S. Bankruptcy Court in the Southern District of New York approved the sale on July 21, 2026. The deal is expected to close by July 31.

Sleep Country’s winning bid included $529.5 million in cash plus the assumption of selected obligations, including certain employee severance expenses and contractual liabilities. The company entered the auction as a stalking horse bidder with an original offer of roughly $415 million, then raised that figure by approximately $286.8 million through the auction process.

Runner-up bidders included Brooklyn Bedding, an Arizona-based mattress manufacturer, and a group backed by Sleep Number’s former CEO Shelly Ibach, who led the company until May 2025. Ibach struck a deal with creditors days before the auction to keep her competing bid alive but did not prevail.

Why Sleep Number Failed

Minneapolis-based Sleep Number filed for Chapter 11 in June 2026 carrying $672.5 million in debt. The company posted $319 million in net sales and a net loss of $50 million in the first quarter of 2026 alone.

Sleep Number CFO Amy O’Keefe pointed to a familiar post-pandemic pattern. The company experienced a significant demand spike during COVID-19 and then over-expanded its store footprint, manufacturing capacity, and debt levels. When the mattress boom faded, revenue collapsed along with it.

Court filings cited tariff disruptions under the Trump administration as a compounding factor, with the company stating that the unpredictable shifting of trade rules disrupted its international supply chain, increased costs, and hurt profits. A constrained real estate market, which drives mattress replacement cycles when people move, added further pressure. The company also cited a market shift to e-commerce and a steady decline in foot traffic and in-store sales as structural headwinds.

Sleep Number had crossed $2 billion in annual sales at the peak of the pandemic mattress boom. It could not sustain that level.

What Sleep Country Gets

Sleep Number operates more than 570 U.S. stores and holds more than 1,000 patents and patents pending across 40 years of product development. The company has accumulated over 38 billion hours of longitudinal sleep data from approximately five billion sleep sessions.

Sleep Country currently operates more than 300 stores across Canada under the Sleep Country Canada, Dormez-vous, Endy, Silk and Snow, Hush, Casper Canada, and Simba banners. Adding Sleep Number’s U.S. footprint pushes the combined store count past 800.

The only larger player in the category is Kentucky-based Somnigroup International, which operates more than 2,800 stores across Tempur Sealy International and Mattress Firm in more than 100 countries.

Stewart Schaefer, President and CEO of Sleep Country Canada, called the deal a game-changing acquisition. He said the company’s priorities include maintaining the same quality and service customers expect while building relationships across teams as both organizations come together.

Sleep Number President and CEO Linda Findley said the sale accomplishes what the company set out to do. She acknowledged the company’s capital structure had become unsustainable and said combining with Sleep Country positions the business for a stronger future.

Sleep Number employed nearly 3,000 full-time workers at the time of its bankruptcy filing, in addition to part-time employees and contract workers. Its Chapter 11 case was funded by existing lenders who provided $65 million in new money to support operations through the sale process.