NEW CANAAN, Conn. – Stadium Capital Management, LLC, the largest shareholder of Sleep Number (NASDAQ:SNBR) Corporation (NASDAQ: SNBR), owning approximately 11.7% of the company's shares, has nominated four candidates for election to Sleep Number's Board of Directors at the 2025 Annual Meeting of Shareholders. The company, currently valued at $336 million, has seen its stock rise over 31% in the past year despite challenging market conditions. The nominees were selected for their expertise in capital allocation, product innovation, business turnarounds, and their significant industry experience.
The investment firm expressed concerns about Sleep Number's financial performance and governance, criticizing the current board for its resistance to change and for not addressing issues raised by Stadium Capital. According to Stadium Capital, Sleep Number's shares appreciated by 20% following their call for change, indicating investor support for a new direction. InvestingPro data reveals the company faces significant challenges, with revenue declining 11.3% and operating with a substantial debt burden representing 73% of total capital.
The nominated directors include Patrick A. Hopf, former Interim CEO and Chairman of Sleep Number, with a history of leading the company through multiple turnarounds and significant market value growth. Jeffrey T. Jackson, cited for his CEO experience and record of value creation at PGT (NYSE:PGTI) Innovations, and Jessica M. Prager, noted for her expertise in building culturally relevant brands and leveraging consumer data for growth. Kevin Baker, a Managing Partner at Stadium Capital, is also nominated to bring an ownership perspective to the boardroom.
Stadium Capital emphasizes the need for a refreshed, unbiased board to address Sleep Number's underperformance, conduct an independent CEO search, and ensure the company's growth and profitability. The firm contends that the current long-tenured directors have been detrimental to shareholder interests and advocates for a board that prioritizes owner interests. For detailed analysis of Sleep Number's financial health and growth prospects, investors can access comprehensive research reports and additional insights through InvestingPro, which currently indicates the stock is trading above its Fair Value.
The information in this article is based on a press release statement from Stadium Capital Management, LLC.
In other recent news, Sleep Number has been the focus of substantial developments. The company reported a 10% year-over-year decline in net sales for Q3 2024, totaling $427 million, while maintaining an adjusted EBITDA of $28 million. In addition to financial results, Sleep Number has introduced the ClimateCool smart bed to its product line, aiming for a full-year expense reduction of about $75 million.
Piper Sandler reiterated a Neutral rating on Sleep Number, citing concerns over a decade of underperformance and poor capital allocation. The firm suggested that changes could unlock significant upside for Sleep Number, including a more independent CEO search process and reconstitution of the board.
Stadium Capital Management, Sleep Number's largest shareholder, has proposed significant governance changes. The firm has expressed dissatisfaction with the current leadership and is pushing for new directors on the board, an Executive Chairman, and an independent CEO search process.
These recent developments come amidst a challenging retail environment and leadership transitions, including the upcoming retirement of CEO Shelly Ibach. Sleep Number expects a full-year net sales decline of approximately 10% and projected capital expenditures of $25 million, but anticipates Q4's adjusted EBITDA to exceed $25 million, indicating a potential recovery.
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