SNBR

Sleep Number ($SNBR) Insiders Buy Over $1 Million in Shares During 9-Month Slide: Are Executives Signaling a Turnaround?

05/09/2025 13:00

Key executives at Sleep Number Corp ($SNBR), the American bed and sleep products manufacturer, have made significant share purchases following the company's recent stock price plunge, drawing investor attention. According to SEC filings submitted on May 7th and 8th, President Linda Kozlowski acquired a total of 104,520 shares worth approximately $750,000 over two days, while Executive Vice President Francis Lee purchased 7,200 shares for over $50,000. These substantial insider purchases carry particular significance as they come in the wake of a sharp stock decline following March earnings results. Sleep Number, headquartered in Minneapolis, Minnesota, specializes in smart beds and sleep solutions distributed through 637 stores and online channels in a direct-to-consumer model. The company currently has a market capitalization of approximately $160 million, placing it in the small-cap category. $SNBR's stock has exhibited extreme volatility in recent months. Following the Q4 earnings announcement and news of a new CEO appointment on March 5th, the share price plummeted about 42% in a single day, dropping from $12.89 to $7.49. The downward trend continued until early April when it reached a low of $4.71, before beginning a modest recovery in late April to trade around $7 currently. Nevertheless, the current share price remains approximately 52% below its level from six months ago. Notably, the recent executive purchases continue a pattern of insider buying that has persisted for several months. In March 2025, officer Gary Fazio acquired 12,000 shares (worth about $90,000), while in February, officer Patrick Hopf purchased 25,000 shares (approximately $360,000). Going further back, major shareholder Stadium Capital Management conducted an intensive buying campaign in November 2024, acquiring over 350,000 shares worth about $4.4 million over two weeks. In August 2024, director Stephen Macadam purchased 43,000 shares for $530,000. This consistent pattern of insider purchases suggests confidence in the company's long-term value and growth potential despite its current financial challenges. Indeed, Sleep Number has been facing difficult times. In Q1 2025, the company reported revenue of $393.26 million, representing a 16.4% year-over-year decline, and a net loss of $8.65 million, resulting in earnings per share of -$0.38, a significant deterioration from the $0.03 EPS in the same period last year. To address these challenges, the company is implementing cost-reduction initiatives aimed at achieving annual savings of $80-100 million. Sleep Number is also enhancing marketing efficiency, restructuring its organization to improve decision-making processes, and focusing on customer-centric R&D while leveraging its extensive sleep data for product innovation. The home furnishing market has generally been struggling amid high inflation and rising interest rates. Sleep Number is working to maintain competitiveness against rivals like Tempur Sealy and Purple Innovation through differentiated smart bed technology and sleep data analytics. A positive sign is the favorable consumer response to their recently launched Climate Series beds. Currently, analyst ratings for $SNBR predominantly hover around 'Hold,' with no strong buy recommendations. Wall Street's 12-month price target stands at $7 per share, roughly in line with the current trading price. The company's high leverage ratio (4.46 times EBITDAR) remains a concern. The recent share purchases by executives may reflect an internal view that the current stock price is undervalued, or confidence that ongoing restructuring and cost-saving efforts will lead to improved performance. President Linda Kozlowski's substantial investment is particularly noteworthy. However, investors should approach cautiously, considering Sleep Number's high debt levels and persistent revenue decline. While insider buying doesn't always precede stock price increases, it could serve as a positive signal in a depressed market environment.

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