Canadian Mattress Retailer Acquires Sleep Number for Over $700M, Reshaping North American Home Textile Supply Chain

A deal worth over $700 million is reshaping the competitive landscape of the North American mattress industry. Canadian retail giant Sleep Country has announced its acquisition of U.S. mattress maker and retailer Sleep Number, which filed for bankruptcy just last month. The transaction goes beyond retail channel consolidation—it signals a fundamental restructuring of the entire home textile supply chain, from fabric procurement to finished product assembly.

Industry Background

Sleep Number, known for its adjustable air-bed technology and premium positioning, had struggled with declining revenue amid inflation, a sluggish housing market, and reduced consumer spending. It entered bankruptcy proceedings in March 2025. Sleep Country seized the opportunity, agreeing to purchase the company for approximately $710 million (including debt), with the deal expected to close by Q3 2025.

The core logic of this acquisition lies in vertical integration of retail and manufacturing. Sleep Country operates over 290 stores in Canada, while Sleep Number runs about 600 retail locations and multiple manufacturing plants in the U.S. Post-merger, the combined entity will control the entire value chain—from fabric cutting, sewing, and filling to final sales—giving it significantly greater bargaining power over upstream suppliers.

Industry Impact

For upstream textile suppliers, the most immediate change is procurement centralization. Sleep Number previously consumed approximately 120 million yards of knitted fabric and 40 million yards of nonwoven material annually for mattress covers, quilting layers, and fire barriers. After the acquisition, Sleep Country is likely to shift some fabric procurement from smaller, fragmented suppliers to centralized bulk purchasing to reduce unit costs. Mills and dyeing plants dependent on Sleep Number orders must restructure their customer portfolios before the deal closes.

Filling material suppliers—memory foam, latex, and spring systems—will face similar pressures. The new group will favor large-scale, standardized product lines. Small foam manufacturers offering highly customized filling solutions may be marginalized if they cannot meet high-volume, low-margin requirements.

Logistics and warehousing will also see adjustments. Both companies previously operated separate distribution networks. Post-merger, overlapping warehouses are expected to close, and the efficiency of fabric-to-finished-goods turnover will be optimized. This means redistribution of order volumes for third-party logistics providers—some regional warehouses may lose business, while logistics hubs near merged factories will benefit.

At a macro level, this deal reflects a new trend in the North American home textile industry: retail brands reverse-integrating manufacturing. Over the past decade, the mattress sector has been disrupted by DTC brands. Now, traditional retailers are rebuilding cost advantages by acquiring manufacturing assets. Sleep Country's move may trigger imitators—will other large home furnishing retailers like Mattress Firm or Ashley Furniture follow with similar vertical acquisitions?

Practical Recommendations

For Fabric Suppliers - Immediately assess the proportion of current Sleep Number orders. If it exceeds 15% of total revenue, develop at least two new alternative clients before the deal closes. - Proactively contact Sleep Country's existing fabric procurement team to understand their quality standards and payment terms, aiming to become one of their dual-source suppliers. - Monitor potential new mattress models post-merger and develop complementary functional fabrics (antibacterial, flame-retardant, or temperature-regulating) early to seize new product introduction windows.

For Foreign Trade Enterprises - Short-term U.S. mattress import demand may fluctuate, as Sleep Number's factories will prioritize internal orders. Suspend active quotations to Sleep Number's U.S. facilities until after the deal closes. - Shift marketing focus to the Canadian market. Sleep Country's store network in Canada may expand rapidly due to the acquisition, increasing demand for imported mattress fabrics, components, and semi-finished goods. - Track the U.S. bankruptcy court's asset liquidation lists. Some closed Sleep Number factory equipment may be sold at auction, offering low-cost acquisition opportunities for companies planning overseas factory setups.