Commitments and Contingencies

12 Months Ended

Dec. 28, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

The Company is involved from time to time in various legal proceedings arising in the ordinary course of its business,

including primarily commercial, product liability, employment and intellectual property claims. In accordance with U.S.

generally accepted accounting principles, the Company records a liability in its consolidated financial statements with

respect to any of these matters when it is both probable that a liability has been incurred and the amount of the liability

can be reasonably estimated. If a material loss is reasonably possible but not known or probable, and may be reasonably

estimated, the estimated loss or range of loss is disclosed. With respect to currently pending legal proceedings, the

Company has not established an estimated range of reasonably possible material losses either because it believes that is

has valid defenses to claims asserted against it, the proceeding has not advanced to a stage of discovery that would

enable it to establish an estimate, or the potential loss is not material. The Company currently does not expect the

outcome of pending legal proceedings to have a material effect on its consolidated results of operations, financial

position or cash flows. Litigation, however, is inherently unpredictable, and it is possible that the ultimate outcome of

one or more claims asserted against the Company could adversely impact its consolidated results of operations, financial

position or cash flows. The Company expenses legal costs as incurred.

Purported Class Action Complaint

On January 14, 2025, purported customers served a putative class action complaint on behalf of themselves and a

putative class of California consumers against Sleep Number in the United States District Court for the Central District of

California alleging that Sleep Number’s beds are perpetually on sale in violation of California law. The Plaintiff seeks

injunctive relief, damages and attorneys fees.

Purported Class Action Complaint

On September 27, 2024, a purported customer served a putative class action complaint on behalf of themself and a

putative class of California consumers against Sleep Number in the United States District Court for the Eastern District of

California alleging that Sleep Number’s beds are perpetually on sale in violation of California law. The Plaintiff seeks

injunctive relief, damages and attorneys fees.

Consumer Credit Arrangements

The Company refers customers seeking extended financing to certain third-party financiers (Card Servicers). The Card

Servicers, if credit is granted, establish the interest rates, fees, and all other terms and conditions of the customer’s

account based on their evaluation of the creditworthiness of the customer. As the accounts are owned by the Card

Servicers, at no time are the accounts purchased or acquired from Sleep Number. The Company is not liable to the Card

Servicers for its customers’ credit defaults.

Commitments

As of December 28, 2024, the Company has $23 million of inventory purchase commitments. As part of the normal

course of business, there are a limited number of inventory supply contracts that contain penalty provisions for failure to

purchase contracted quantities. The Company does not currently expect any material payments under these provisions.

At December 28, 2024, the Company had entered into 7 lease commitments primarily for future retail store locations.

These lease commitments provide for total lease payments over the next 11 to 12 years, which if consummated based on

current cost estimates, would approximate $12 million over the initial lease term. The future lease payments for these

lease commitments have been excluded in the total operating lease payments in Note 7, Leases.