Minneapolis-based Sleep Number files for bankruptcy

Minneapolis-based Sleep Number announced Friday that it has filed for bankruptcy and plans to merge with a Canadian mattress retailer.

Sleep Number announced in May that it recorded a $50 million net loss in the first quarter of the year, driven by decreased sales. On Friday, the company said that its efforts to change course — including its largest product redesign in a decade — have not been enough.

“While we have made meaningful progress advancing our turnaround efforts and strengthening our operations, our capital structure remains unsustainable,” Linda Findley, Sleep Number’s president and CEO, said in a statement. “Following a comprehensive review of our strategic options and a robust sale process, we are confident that moving forward with the Sleep Country Canada agreement and this court-supervised sale process will enable us to address our financial constraints.”

Sleep Number employs about 3,000 people and has more than 570 stores across the U.S.

For now, Sleep Number’s stores and website remain open for business, and the company is honoring its gift cards and warranties. The company said it expects that to continue through the bankruptcy and merger process.

The proposed merger “is subject to higher and better offers, Court approval and other closing conditions,” the company said.

For its part, Sleep Country Canada sees the merger as both a chance to grow its product offerings at home, and reach new markets in the U.S.

“We see a tremendous opportunity to build on our complementary strengths and accelerate growth across the United States while introducing Sleep Number’s innovative sleep solutions to consumers in Canada and other markets,” Stewart Schaefer, Sleep Country Canada’s president and CEO, said in a statement. “We are excited about what we can accomplish together.”