Sleep Number Files for Bankruptcy, Agrees to $415 Million Sale to Sleep Country Canada

Sleep Number filed for Chapter 11 bankruptcy in New York on Friday and lined up a $415 million buyout from Sleep Country Canada Inc., a deal that would hand the Minneapolis mattress maker to a Canadian retailer and leave its roughly 2,920 employees waiting to learn which of those jobs survive.

The company walked into court owing $672 million. It made its name on adjustable "smart beds" sold in mall storefronts, but in the filing it pinned the collapse on two forces every household recognizes: tariffs and inflation. Sleep Number told the court that President Donald Trump's "unpredictable" tariff policy scrambled the global supply chain for its beds, pushed up operating costs, and hit the bottom line hard.

The numbers underneath are blunt. For the first quarter of 2026 the company reported $319 million in net sales and a net loss of $50 million, according to CNBC's review of the filing. A mattress is a once-a-decade purchase for most people, exactly the kind of spending that gets postponed when grocery and rent bills are climbing — and Sleep Number sits at the premium end, where postponement bites first.

Sleep Country Canada is the stalking-horse bidder, the opening offer that sets a floor and blocks lowball bids in the auction to come. Its bid is worth at least $415 million in cash and assumed liabilities. If a higher offer lands, Sleep Number will hold an auction on July 13; it is aiming for court approval by July 15 and a targeted close on July 31. Existing lenders are funding the case itself, putting up $65 million in new money to keep the lights on through bankruptcy — part of up to $260 million in debtor-in-possession financing the company expects to secure.

The company framed the combination as a growth story rather than a wind-down. In its announcement Sleep Number said the merger would let the combined business "provide consumers across the United States and Canada a broader assortment of innovative sleep products and services," and that it expects to keep operating day to day — serving customers, honoring warranties, and delivering mattresses — while the sale proceeds.

For shoppers, the practical reading is reassuring in the short term and uncertain past it: stores stay open, warranties stand, online orders ship. For the workforce, the calculus is harder. A buyer that acquires assets in bankruptcy is under no obligation to keep every store or every payroll line, and Sleep Number said it will "evaluate" its store fleet as part of the process. That phrase is where the 2,920 jobs live.

The timing carries an awkward footnote. Only months ago Sleep Number signed Kansas City Chiefs tight end Travis Kelce as a strategic partner and investor, a three-year endorsement built around new TV spots and the brand's redesigned bed lineup. A marquee sponsorship and a bankruptcy petition inside the same year is the kind of split-screen that tends to follow a company whose product is sound but whose cost base ran ahead of what buyers would pay.

Sleep Number is hardly alone in the bedding aisle. The industry has spent two years absorbing higher import costs and softer demand, and the tariff line in this filing echoes a complaint heard across import-heavy retail. The same price pressure that pushed inflation to 4.2% in May is the pressure that empties showroom floors of big-ticket buyers.

What changes hands, if the deal clears, is more than a brand. Sleep Country gets a U.S. footprint it could not build organically at this speed; Sleep Number's lenders get repaid ahead of shareholders, who are typically last in line and often wiped out in a Chapter 11 asset sale. Between the July 13 auction and the targeted July 31 close sits the only real suspense left — whether a rival bidder values those storefronts and that customer list at more than $415 million, and whether the people who staff them are part of the price.