Somnigroup (SGI) is expected to expand market share if mattress maker Sleep Number (SNBR) files for bankruptcy and closes underperforming stores, UBS Securities said in a note emailed Friday.
Sleep Number is preparing to initiate a bankruptcy process, The Wall Street Journal reported Wednesday, citing people familiar with the matter.
Its shares plunged nearly 16% that day, and another 67% on Thursday. They were up 47% in Friday afternoon trade.
The company said in March that it engaged Guggenheim Securities to improve its liquidity and balance sheet. Sleep Number has been executing a turnaround strategy aimed at reigniting growth and increasing financial resilience.
Sleep Number's revenue declined 16% year on year in 2025, while its net loss ballooned to $132 million from $20 million in 2024, according to its March statement.
"We think (Somnigroup) could capture meaningful market share over the next few years," UBS analysts wrote, penciling in about 100 to 300 store closures by Sleep Number.
About 200 closures could generate $120 million in sales for Mattress Firm parent Somnigroup, increasing earnings per share by $0.15, according to the brokerage. Those incremental figures rise to $200 million and $0.25, respectively, assuming 300 closures.
More than 95% of Sleep Number stores were situated within five miles of Mattress Firm's locations at the start of the year, UBS analysts said.
Somnigroup's premium brands have a "high degree of overlap" with Sleep Number's $6,000 revenue per mattress, according to the note.
"We don't take this (bankruptcy news) as a negative read for industry demand over Memorial Day," UBS said. "Several retailers (at a recent furniture and bedding conference) indicated healthy bedding sales over the key holiday period. Several also noted that rainy weather over the long weekend in certain parts of the country was a positive traffic driver."
Price: $0.55, Change: $+0.20, Percent Change: +56.98%
