What Happened?
Shares of bedding manufacturer and retailer Sleep Number (NASDAQ:SNBR) fell 13% in the morning session after news of a competing mattress retailer shutting down highlighted the intense competitive pressures facing the industry.
A 26-year-old, family-owned retailer, Mattress Factory, announced it was closing all of its stores. The owners pointed to retirement and growing competition from online sellers and large national brands as the main reasons for the shutdown. This development signaled broader challenges for traditional mattress retailers. While the U.S. mattress market was projected to grow, the environment appeared to favor bigger brands and e-commerce companies, creating a difficult landscape for other players in the sector.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Sleep Number? Access our full analysis report here.
What Is The Market Telling Us
Sleep Number’s shares are extremely volatile and have had 82 moves greater than 5% over the last year. But moves this big are rare even for Sleep Number and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock dropped 39.5% on the news that the company reported disappointing fourth-quarter results, with EBITDA missing significantly and revenue falling short of Wall Street's estimates. Sales declined 12% year on year, due to a reduced store footprint and softer consumer demand. Earnings per share, however, came in above expectations, aided by cost reductions. Yet, Sleep Number withheld financial guidance for 2025, signaling continued uncertainty. This is also linked to the appointment of Linda Findley as the new CEO, as she likely needed some time settling into her role. Overall, this was a weaker quarter.
Sleep Number is down 8% since the beginning of the year, and at $7.91 per share, it is trading 58% below its 52-week high of $18.82 from January 2025. Investors who bought $1,000 worth of Sleep Number’s shares 5 years ago would now be looking at an investment worth $95.71.
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