The Sleep Number Corporation, the largest US mattress retailer, reported a wider fourth-quarter loss and forecast a slowdown in unit sales and quarterly profit, sending its shares plunging in premarket trading.
The retailer said it would be acquired by private equity firm Francisco Partners for $6.90 a share in cash.
The deal, subject to approval by Sleep Number shareholders, is expected to close in the second quarter, following which Sleep Number will be renamed as Henley Sleep.
“With an experienced management team, a strong inventory position and compelling sales opportunities, we look forward to joining Henley in an effort to build a leading leader in mattresses and bedding,” Sleep Number’s chief executive Shelly Ibach said in a statement.
Under the new ownership, Sleep Number will run on a standalone business model.
The company reported a smaller-than-expected fourth-quarter loss, sending its shares up as much as 7.5%. However, the stock was down more than 10% at $6.37 in premarket trading on Friday.
Sleep Number’s quarterly loss more than tripled to $9.3m, or 20 cents per share, from $2.3m, or 4 cents a share, a year earlier. Excluding items, the company lost 23 cents per share, missing analysts’ average estimate of a loss of 13 cents, according to IBES data from Refinitiv.
Net sales rose 20.6% to $307.7m.
Net sales in the mattress and pillows segment, which accounted for more than 90% of Sleep Number’s total sales, rose 16.3% to $296.3m. Excluding the impact of recent acquisitions, the segment’s sales rose 14.7%.