Sleep Number, the maker of smart beds and accessories, laid off 500 employees this week, about 10% of its workforce, in an effort to cut costs and streamline operations. The layoffs come after a disappointing third quarter in which the company reported a loss and missed analyst expectations.
Sleep Number also announced that it will close 40 to 50 of its stores in 2024. The company has been struggling to compete in the increasingly competitive bedding market, and the layoffs and store closures are seen as an attempt to right the ship.
The layoffs come amid activist pressure from Stadium Capital Management, one of Sleep Number’s five largest shareholders. Stadium Capital has been critical of Sleep Number’s management team and board of directors, and it has called for a number of changes, including the addition of new board members.
In response to the pressure from Stadium Capital, Sleep Number has agreed to add two new board members: Hilary Schneider and Stephen Macadam. Schneider is a former CEO of Shutterfly Inc., and Macadam is a former president and CEO of public companies EnPro Industries Inc. and BlueLinx Holdings Inc.
Sleep Number has also agreed to form a Capital Allocation and Value Enhancement Committee, of which Schneider and Macadam will be members. The committee will be responsible for reviewing the company’s capital allocation strategy and making recommendations to the board of directors.
The layoffs, store closures, and new board members are all signs that Sleep Number is serious about turning its business around. However, it remains to be seen whether the company’s new strategy will be successful.
Sleep Number’s layoffs and store closures are a sign of the times in the retail and bedding industries. Consumers are spending less on discretionary items, and competition is increasing from online retailers.
Sleep Number’s management team is under pressure to turn the business around, and the new board members are likely to bring a fresh perspective. However, it’s important to note that the company has a history of missing expectations.
Investors will be watching closely to see if Sleep Number’s new strategy can help it regain its footing in the market.