Somnigroup International (SGI 0.33%), a global bedding and sleep solutions provider, reported its second quarter 2025 earnings on August 7, 2025. The headline news was a non-GAAP earnings per share (EPS) of $0.53, which came in above analyst expectations of $0.51 (non-GAAP). Compared to the same period a year ago, GAAP revenue jumped 52.5%, propelled by the integration of Mattress Firm and more focus on direct-to-consumer sales. Adjusted EBITDA and margins improved (non-GAAP), Net income and GAAP EPS declined, reflecting acquisition and integration costs. Overall, the quarter showed strong progress on strategic goals, but also highlighted the pressure integration and market headwinds can put on profitability.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.53 | $0.51 | $0.63 | (15.9%) |
| Revenue (GAAP) | $1.88 billion | $1.89 billion | $1.23 billion | 52.8% |
| Net Income (GAAP) | $99 million | $106 million | (6.6%) | |
| Adjusted EBITDA (Non-GAAP) | $291 million | $231 million | 25.6% | |
| EBITDA (GAAP) | $244 million | $224 million | 8.9% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Priorities
Somnigroup International operates in the sleep and bedding industry, offering mattresses, sleep technology, and wellness products. The company sells its products both directly to consumers and through wholesale channels, with a broad presence in North America, the UK, and over 100 other countries.
Recently, Somnigroup has focused on growing its direct-to-consumer (DTC) business, integrating acquired companies, and developing innovative sleep solutions. Success depends on advancing sleep technology, science-backed product development, and using smart technology to enhance customer experience. Data-driven insights and responding to growing demand for wellness round out the company’s strategic pillars.
Quarter Highlights and Key Developments
The latest quarter was marked by significant changes in the business mix, driven largely by the inclusion of the Mattress Firm retail chain. Direct-to-consumer sales reached 66% of total revenue. This reflects progress in the strategic shift from wholesale to owned distribution channels following the Mattress Firm acquisition finalized in February 2025.
Mattress Firm operates over 2,200 stores in the U.S. Sales at Mattress Firm fell by a low single-digit percentage compared with last year, but outperformed the broader specialty bedding retail sector, which has been facing declines. Notably, Somnigroup brands and private labels are expected to account for a low-50s percentage of Mattress Firm’s 2025 sales, up from the mid-40% range in 2024.
In the UK, the Dreams retail chain (more than 200 stores, 18 million online visitors) delivered mid-single-digit sales growth. despite a pressured market. Within the legacy Tempur Sealy brand, global company-owned store count expanded to over 450 locations. Management continues to push omnichannel strategies and new product launches worldwide, including the international release of TEMPUR® products and ongoing rollout of the Sealy Posturepedic collection. This brand refresh is expected to cover 80% of U.S. retail floors by Memorial Day, with management targeting increased floor penetration to gain more market share.
Gross margin guidance for FY2025 was revised downward to “slightly above 44%” due to pricing actions, acquisition impacts, and a $5 million one-time tariff-related headwind. Integration costs also played a role in reducing net income, as the company recorded $17.6 million in combination charges and $13.9 million in business disposal losses. Management executed the sale of 73 Mattress Firm and 103 Sleep Outfitters stores during May.
Product Portfolio and Technology Initiatives
Somnigroup continues to focus on innovation, launching several new products such as TEMPUR-Breeze (high-tech mattresses focusing on temperature regulation), TEMPUR-Ergo Smart Base (adjustable smart bed base), and refreshed versions of Stearns & Foster mattresses. Smart bases now integrate sleep tracking and tailored comfort settings, supporting the company’s position in the wellness technology space.
The commitment to science-backed development is evident in Somnigroup’s emphasis on in-house research and customer data. Mattress Firm has adopted a new merchandising approach, expanding its assortment through partnerships with brands such as Purple Innovation, Leggett & Platt, and Resident Home. This diversified sourcing is designed to react quickly to changing consumer trends, while maximizing the performance of Somnigroup’s own brands and private labels on retail floors.
Marketing continued to pivot toward the theme of “sleep health,” intended to increase category awareness and reinforce product value. Early results indicate the 2025 Sleep Easy campaign tested “meaningfully higher” than previous outreach efforts. The strategic use of data-driven feedback is also reshaping brick-and-mortar operations to more closely align with shifting consumer demand.
Achieved zero waste to landfill status at Canadian, Mexican, U.S, and European manufacturing operations, as well as at 75% of corporate offices and R&D labs. The company is working toward its longer-term carbon neutrality target by 2040.
Financial Outlook and Investor Considerations
Management updated its 2025 guidance, forecasting adjusted EPS of $2.30 to $2.65. and revenue of roughly $7.4 billion at the midpoint for FY2025. The latest outlook assumes a mid-single-digit decline in the global bedding industry in 2025, but calls for improvement in the second half as product launches expand and demand recovers. Adjusted EBITDA is targeted at $1.27 billion for FY2025, while Gross margin expectations now stand slightly above 44% for FY2025, trimmed from a previous 45% due to industry and acquisition impacts. Planned capital expenditures for FY2025 are expected to be $225 million, with additional investments in retail store refreshes.
Somnigroup ended Q2 2025 with net debt to adjusted EBITDA leverage at 3.56 times, above its long-term goal of 2 to 3 times. Management stated that share repurchases will remain minimal for the next year, with a return to activity once leverage normalizes. The company continues to expect at least $100 million in annual run-rate synergies from the Mattress Firm transaction by 2028, raising its 2025 goal to $15 million in cost synergies. No new or increased dividend was declared during the quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
