Sleep Number, known for its innovative smart mattresses and proprietary digital sleep platform, faced a pronounced setback in 2025 with a 16% revenue drop and operating loss amid deteriorating retail traffic and industry headwinds. Despite substantial cost reductions totaling $136 million and a newly established ‘Sleep Number Shifts’ turnaround strategy, the company is challenged by severe liquidity constraints and substantial doubt about its ability to continue as a going concern. The amended credit facility provides temporary relief via covenant adjustments and debt maturity extension, but the company’s recovery depends on execution risks surrounding its repositioning efforts and access to capital.