Sleep Number (SNBR) 10-K 24 Feb 23 2022 FY Annual report Financial data

Cover

Cover - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 28, 2023	Jul. 02, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	000-25121
Entity Registrant Name	SLEEP NUMBER CORPORATION
Entity Incorporation, State or Country Code	MN
Entity Tax Identification Number	41-1597886
Entity Address, Address Line One	1001 Third Avenue South
Entity Address, City or Town	Minneapolis
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55404
City Area Code	763
Local Phone Number	551-7000
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	SNBR
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Entity Shell Company	false
Entity Public Float			$ 467,760
Entity Common Stock, Shares Outstanding		22,014,000
Documents Incorporated by Reference	Portions of the registrant’s proxy statement to be furnished to shareholders in connection with its 2023 Annual Meeting of Shareholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K.
Entity Central Index Key	0000827187
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false

Audit Information

Audit Information	12 Months Ended
	Dec. 31, 2022
Audit Information [Abstract]
Auditor Name	DELOITTE & TOUCHE LLP
Auditor Location	Minneapolis, Minnesota
Auditor Firm ID	34

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Current assets:
Cash and cash equivalents	$ 1,792	$ 2,389
Accounts receivable, net of allowances of $1,267 and $924, respectively	26,005	25,718
Inventories	114,034	105,644
Prepaid expenses	16,006	18,953
Other current assets	39,921	54,917
Total current assets	197,758	207,621
Non-current assets:
Property and equipment, net	200,605	195,128
Operating lease right-of-use assets	397,755	371,133
Goodwill and intangible assets, net	68,065	70,468
Deferred income taxes	7,958	0
Other non-current assets	81,795	75,190
Total assets	953,936	919,540
Current liabilities:
Borrowings under revolving credit facility	459,600	382,500
Accounts payable	176,207	162,547
Customer prepayments	73,181	129,499
Accrued sales returns	25,594	22,368
Compensation and benefits	31,291	51,240
Taxes and withholding	23,622	22,087
Operating Lease, Liability Current	79,533	72,360
Other current liabilities	60,785	64,177
Total current liabilities	929,813	906,778
Non-current liabilities:
Deferred income taxes	0	688
Operating lease liabilities	356,879	336,192
Other non-current liabilities	105,421	100,835
Total liabilities	1,392,113	1,344,493
Shareholders’ deficit:
Undesignated preferred stock; 5,000 shares authorized, five thousand shares issued and outstanding	0	0
Common stock, $0.01 par value; 142,500 shares authorized, 22,014 and 22,683 shares issued and outstanding, respectively	220	227
Additional paid-in capital	5,182	3,971
Accumulated deficit	(443,579)	(429,151)
Total shareholders’ deficit	(438,177)	(424,953)
Total liabilities and shareholders’ deficit	$ 953,936	$ 919,540

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Current assets:
Allowances	$ 1,267	$ 924
Shareholders’ deficit:
Undesignated preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Undesignated preferred stock, shares issued (in shares)	5,000,000	5,000,000
Undesignated preferred stock, shares outstanding (in shares)	5,000,000	5,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	142,500,000	142,500,000
Common stock, shares issued (in shares)	22,014,000	22,683,000
Common stock, shares outstanding (in shares)	22,014,000	22,683,000

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Income Statement [Abstract]
Net sales	$ 2,114,297	$ 2,184,949	$ 1,856,555
Cost of sales	912,001	866,102	700,555
Gross profit	1,202,296	1,318,847	1,156,000
Operating expenses:
Sales and marketing	919,629	905,359	771,195
General and administrative	153,266	161,412	158,999
Research and development	61,521	58,540	40,910
Total operating expenses	1,134,416	1,125,311	971,104
Operating income	67,880	193,536	184,896
Interest expense, net	18,985	6,245	8,924
Income before income taxes	48,895	187,291	175,972
Income tax expense	12,285	33,545	36,783
Net income	$ 36,610	$ 153,746	$ 139,189
Basic net income per share:
Net income - basic (in dollars per share)	$ 1.63	$ 6.40	$ 5.03
Weighted-average shares - basic (in shares)	22,396	24,038	27,665
Diluted net income per share:
Net income - diluted (in dollars per share)	$ 1.60	$ 6.16	$ 4.90
Weighted-average shares (in shares)	22,852	24,947	28,428

Consolidated Statements of Shar

Consolidated Statements of Shareholders' Deficit - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Balance (in shares) at Dec. 28, 2019		27,961
Balance at Dec. 28, 2019	$ (159,431)	$ 280	$ 0	$ (159,711)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	139,189			139,189
Exercise of common stock options (in shares)		420
Exercise of common stock options	9,602	$ 4	9,598
Stock-based compensation (in shares)		620
Stock-based compensation	21,813	$ 6	21,807
Repurchases of common stock (in shares)		(3,611)
Repurchases of common stock	(235,151)	$ (36)	(31,405)	(203,710)
Balance (in shares) at Jan. 02, 2021		25,390
Balance at Jan. 02, 2021	(223,978)	$ 254	0	(224,232)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	153,746			153,746
Exercise of common stock options (in shares)		174
Exercise of common stock options	4,441	$ 2	4,439
Stock-based compensation (in shares)		369
Stock-based compensation	23,214	$ 4	23,210
Repurchases of common stock (in shares)		(3,250)
Repurchases of common stock	$ (382,376)	$ (33)	(23,678)	(358,665)
Balance (in shares) at Jan. 01, 2022	22,683	22,683
Balance at Jan. 01, 2022	$ (424,953)	$ 227	3,971	(429,151)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 36,610			36,610
Exercise of common stock options (in shares)	48	48
Exercise of common stock options	$ 1,131		1,131
Stock-based compensation (in shares)		405
Stock-based compensation	13,223	$ 4	13,219
Repurchases of common stock (in shares)		(1,122)
Repurchases of common stock	$ (64,188)	$ (11)	(13,139)	(51,038)
Balance (in shares) at Dec. 31, 2022	22,014	22,014
Balance at Dec. 31, 2022	$ (438,177)	$ 220	$ 5,182	$ (443,579)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Cash flows from operating activities:
Net income	$ 36,610	$ 153,746	$ 139,189
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	67,401	60,394	61,563
Stock-based compensation	13,223	23,214	21,813
Net loss on disposals and impairments of assets	291	37	247
Deferred income taxes	(8,646)	446	(3,566)
Changes in operating assets and liabilities:
Accounts receivable	(287)	6,153	(11,893)
Inventories	(11,560)	(24,282)	5,703
Income taxes	1,356	(3,066)	1,057
Prepaid expenses and other assets	19,379	(13,836)	(13,717)
Accounts payable	(4,743)	54,405	(16,755)
Customer prepayments	(56,318)	57,482	37,769
Accrued compensation and benefits	(19,821)	(24,790)	36,825
Other taxes and withholding	179	1,814	111
Other accruals and liabilities	(926)	8,293	21,315
Net cash provided by operating activities	36,138	300,010	279,661
Cash flows from investing activities:
Purchases of property and equipment	(69,454)	(66,900)	(37,100)
Proceeds from sales of property and equipment	49	257	55
Investment in non-marketable equity securities	(1,202)	0	0
Purchase of intangible assets	0	0	(1,973)
Net cash used in investing activities	(70,607)	(66,643)	(39,018)
Cash flows from financing activities:
Repurchases of common stock	(64,188)	(382,376)	(235,644)
Net increase (decrease) in short-term borrowings	97,647	145,473	(11,639)
Proceeds from issuance of common stock	1,131	4,441	9,602
Debt issuance costs	(718)	(2,759)	(312)
Net cash provided by (used in) financing activities	33,872	(235,221)	(237,993)
Net (decrease) increase in cash and cash equivalents	(597)	(1,854)	2,650
Cash and cash equivalents, at beginning of period	2,389	4,243	1,593
Cash and cash equivalents, at end of period	1,792	2,389	4,243
Non-cash financing transactions:
Change in unsettled repurchases of common stock	0	0	(493)
Supplemental Disclosure of Cash Flow Information
Income taxes paid, net of refunds	19,792	36,305	38,698
Interest paid	16,918	5,438	9,053
Purchases of property and equipment included in accounts payable	$ 11,707	$ 13,968	$ 5,015

Business and Summary of Signifi

Business and Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Business and Summary of Significant Accounting Policies	Business and Summary of Significant Accounting Policies Business & Basis of Presentation Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of Sleep Number beds which allows it to offer consumers high-quality, individualized sleep solutions and services. Sleep Number also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. Sleep Number generates revenue by marketing its innovations directly to new and existing customers, and selling products through its Stores, Online, Phone, Chat (Total Retail) and Other. The consolidated financial statements include the accounts of Sleep Number Corporation and its subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation. Fiscal Year The Company’s fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2022 ended December 31, 2022; fiscal 2021 ended January 1, 2022; and fiscal 2020 ended January 2, 2021. Fiscal 2020 had 53 weeks, 2022 and 2021 each had 52 weeks. Use of Estimates in the Preparation of Financial Statements The preparation of condensed consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. Our critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition. Cash and Cash Equivalents Cash and cash equivalents include highly-liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in the consolidated balance sheets and in net increase (decrease) in short-term borrowings in the financing activities section of the Company’s consolidated statements of cash flows. Book overdrafts totaled $36 million and $15 million at December 31, 2022 and January 1, 2022, respectively. Accounts Receivable Accounts receivable are recorded net of an allowance for expected credit losses and consist primarily of receivables from third-party financiers for customer credit purchases. The allowance is recognized in an amount equal to anticipated future write-offs. The Company estimates future write-offs based on delinquencies, aging trends, industry risk trends, its historical experience and current trends. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. Inventories Inventories include materials, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We review inventory quantities on hand and record reserves for obsolescence based on historical selling prices, current market conditions and forecasted product demand, to reduce inventory to net realizable value. Property and Equipment Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net income in the consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable. Estimated useful lives of the Company’s property and equipment by major asset category are as follows: Leasehold improvements 5 to 15 years Furniture and equipment 3 to 15 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years Goodwill and Intangible Assets, Net Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net identifiable assets. The Company’s intangible assets include developed technologies and trade names/trademarks. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 8-10 years. Asset Impairment Charges Long-lived Assets and Definite-lived Intangible Assets - the Company reviews its long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, the Company first compares the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, the Company calculates an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When the Company recognizes an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If the Company recognizes an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The goodwill impairment test involves a comparison of the fair value of a reporting unit with its carrying value. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and the Company’s market capitalization. The Company has only one reporting unit, which has a negative carrying value. The reporting unit had a goodwill balance of $64 million at December 31, 2022 and January 1, 2022. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. Based on the Company’s 2022 assessments, it determined there was no impairment. Other Investments We have an investment in non-marketable equity securities of $1.2 million at December 31, 2022. This investment was made in a strategic product-development partner and is included in other non-current assets in our consolidated balance sheet. Non-marketable equity securities are equity securities without readily determinable fair value that are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. Warranty Liabilities The Company provides a limited warranty on most of the products it sells. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by the Company and are adjusted for any current trends as appropriate. The majority of the Company’s warranty claims are incurred within the first year. The Company’s warranty liability contains uncertainties because its warranty obligations cover an extended period of time and require management to make estimates for claim rates and the projected cost of materials and freight associated with sending replacement parts to customers. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. The Company classifies as non-current those estimated warranty costs expected to be paid out in greater than one year. The activity in the accrued warranty liabilities account was as follows (in thousands): 2022 2021 2020 Balance at beginning of period $ 10,069 $ 12,152 $ 11,345 Additions charged to costs and expenses for current-year sales 16,694 16,732 13,387 Deductions from reserves (17,157) (18,134) (12,158) Change in liabilities for pre-existing warranties during the current (609) (681) (422) Balance at end of period $ 8,997 $ 10,069 $ 12,152 Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: • Level 1 – observable inputs such as quoted prices in active markets; • Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The Company generally estimates fair value of long-lived assets, including its retail stores, using the income approach, which the Company based on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date. Shareholders’ Deficit Dividends The Company is not restricted from paying cash dividends under the Credit Agreement so long as it is not in default under the Credit Agreement, the Company’s leverage ratio (as defined in the Credit Agreement) after giving effect to such restricted payments (as defined in the Credit Agreement) would not exceed 3.75:1.00 and no default or event of default (as defined in the Credit Agreement) would result therefrom. At December 31, 2022, the Company exceeded the 3.75:1.00 leverage ratio. However, Sleep Number has not historically paid, and has no current plans to pay, cash dividends on the Company’s common stock. Share Repurchases At December 31, 2022, there was $348 million remaining authorization under the $600 million board-approved share repurchase program. There is no expiration date governing the period over which the Company can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to accumulated deficit. Revenue Recognition The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. Revenue recognized excludes sales taxes. Amounts billed to customers for delivery and setup are included in net sales. For most products, the Company receives payment before or promptly after, the products or services are delivered to the customer. The Company accepts sales returns of most products during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that the Company does not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period the Company remeasures the liability to reflect changes in the estimate, with a corresponding adjustment to net sales. Sleep Number beds sold with SleepIQ technology contain multiple performance obligations including the bed, and SleepIQ hardware and software. The Company analyzes its multiple performance obligation(s) to determine whether they are distinct and can be separated or whether they must be accounted for as a single performance obligation. We determined that beds sold with the SleepIQ technology have two performance obligations consisting of: (i) the bed; and (ii) SleepIQ hardware and software. SleepIQ hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. The Company determined the transaction price for multiple performance obligations based on their relative standalone selling prices. The performance obligation related to the bed is satisfied at a point in time. The performance obligation related to SleepIQ technology is satisfied over time based on the ongoing access and usage by the customer of software essential to the functionality of SleepIQ technology. The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the estimated period of benefit to the customer of 4.5 to 5.0 years because its inputs are generally expended evenly throughout the performance period. See Note 9, Revenue Recognition , for additional information on revenue recognition and sales returns. Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within the Company’s industry): Cost of Sales Sales & Marketing • Costs associated with purchasing, manufacturing, shipping, handling and delivering the Company’s products to its retail stores and customers; • Advertising, marketing and media production; • Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage; • Physical inventory losses, scrap and obsolescence; • Payroll and benefits for sales and customer service staff; • Related occupancy and depreciation expenses; • Store occupancy costs; • Costs associated with returns and exchanges; and • Store depreciation expense; • Estimated costs to service customer warranty claims. • Credit card processing fees; and • Promotional financing costs. G&A R&D (1) • Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management; • Internal labor and benefits related to research and development activities; • Outside consulting services related to research and development activities; and • Testing equipment related to research and development activities. • Occupancy costs of corporate facilities; ___________________________ (1) Costs incurred in connection with R&D are charged to expense as incurred. • Depreciation related to corporate assets; • Information hardware, software and maintenance; • Insurance; • Investor relations costs; and • Other overhead costs. Leases The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of future lease payments over the lease term. The Company elected the option to not separate lease and non-lease components for all of its leases. Most of the Company’s leases do not provide an implicit interest rate nor is the rate available to it from its lessors. As an alternative, the Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet as an ROU asset or operating lease liability. The Company recognizes operating lease costs for these short-term leases, primarily small equipment leases, on a straight-line basis over the lease term. At December 31, 2022, the Company’s finance lease ROU assets and associated lease liabilities were not significant. See Note 7, Leases , for further information regarding the Company’s operating leases. Pre-opening Costs Costs associated with the start-up and promotion of new retail store openings are expensed as incurred. Advertising Costs The Company incurs advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs. Advertising expense was $309 million, $323 million and $253 million in 2022, 2021 and 2020, respectively. Advertising costs deferred and included in prepaid expenses in the consolidated balance sheet were not significant at December 31, 2022 and January 1, 2022, respectively. Insurance The Company is self-insured for certain losses related to health and workers’ compensation claims, although the Company obtains third-party insurance coverage to limit exposure to these claims. The Company estimates its self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. The Company’s self-insurance liability was $13 million at both December 31, 2022 and January 1, 2022. At both December 31, 2022 and January 1, 2022, $9 million was included in current liabilities: compensation and benefits in the consolidated balance sheets and $4 million included in other non-current liabilities in the consolidated balance sheets. Software Capitalization For software developed or obtained for internal use, the Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company capitalizes certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. The Company expenses any data conversion or training costs as incurred. Capitalized software costs are included in property and equipment, net in the consolidated balance sheet. The Company capitalizes costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with its policy for software developed or obtained for internal use. The capitalized implementation costs of cloud computing arrangements are expensed over the term of the cloud computing arrangement in the same line item in the statement of operations as the associated hosting fees. Capitalized costs incurred with the implementation of a cloud computing arrangement are included in prepaid expenses and other non-current assets in the Company’s consolidated balance sheet, and in operating cash flows in its consolidated statement of cash flows. Stock-based Compensation The Company compensates officers, directors and key employees with stock-based compensation under stock plans approved by its shareholders and administered under the supervision of the Company’s Board of Directors (Board). At December 31, 2022, a total of 2.1 million shares were available for future grant. These plans include non-qualified stock options and stock awards. The Company records stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. The Company recognizes stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. The Company reduces compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. The Company includes, as part of cash flows from operating activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. In addition, excess tax benefits or deficiencies are recorded as discrete adjustments to income tax expense. Stock Options - stock option awards are granted at exercise prices equal to the closing price of the Company’s stock on the grant date. Generally, options vest proportionally over three years and expire after 10 years. Compensation expense is recognized ratably over the vesting period. The Company determines the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows: Expected Volatility – expected volatility was determined based on implied volatility of the Company’s traded options and historical volatility of the Company’s stock price. Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Expected Term – expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. Stock Awards - the Company issues stock awards to certain employees in conjunction with its stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time-based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of the Company’s common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options. In April 2020, the Company took action to maintain liquidity and cut costs in response to the COVID-19 pandemic, including offering a salary for stock program. Under that program, certain employees elected to forego a percentage of their cash salary for the remainder of the year in exchange for time-based stock awards that represented the value of the cash salary foregone. Subject to continuing employment, these awards vested in December 2020. Certain time-based stock awards have a performance condition (performance-based). The final number of shares earned for performance-based stock awards and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2022, 2021 and 2020 awards. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2022, 2021 and 2020, the performance targets are based on growth in net sales and in operating profit, and the performance periods are fiscal 2022 through 2024, 2021 through 2023 and fiscal 2020 through 2022, respectively. See Note 8, Shareholders’ Deficit , for additional information on stock-based compensation. Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. The Company evaluates all available positive and negative evidence, including its forecast of future taxable income, to assess the need for a valuation allowance on its deferred tax assets. The Company records a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in the Company’s tax returns. The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes. The Company classifies net interest and penalties related to income taxes as a component of income tax expense in its consolidated statements of operations. Net Income Per Share The Company calculates basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the period. It calculates diluted net income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards. Sources of Supply The Company currently obtain materials and components used to produce its beds from outside sources. As a result, the Company is dependent upon suppliers that in some instances, are its sole source of supply, or supply the vast majority of the particular component or material. We continuously evaluate opportunities to dual-source key components and materials. The failure of one or more of the Company’s suppliers to provide it with materials or components on a timely basis could significantly impact the consolidated results of operations and net income per share. While the Company believes that these materials and components, or suitable replacements, could be obtained from other sources in the event of a disruption or loss of supply, it may not be able to find alternative sources of supply or alternative sources of supply on comparable terms and an unexpected loss of supply over a short period of time may not allow the Company to replace these sources in the ordinary course of business.

Fair Value Measurements

Fair Value Measurements	12 Months Ended
	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value MeasurementsAt December 31, 2022 and January 1, 2022, the Company had $17 million and $19 million, respectively, of debt and equity securities that fund its deferred compensation plan and are classified in other non-current assets. The Company also had corresponding deferred compensation plan liabilities of $17 million and $19 million at December 31, 2022 and January 1, 2022, respectively, which are included in other non-current liabilities. The majority of the debt and equity securities are Level 1 as they trade with sufficient frequency and volume to enable it to obtain pricing information on an ongoing basis. Unrealized gains/(losses) on the debt and equity securities offset those associated with the corresponding deferred compensation plan liabilities.

Inventories

Inventories	12 Months Ended
	Dec. 31, 2022
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories consisted of the following (in thousands): December 31, January 1, Raw Materials $ 7,785 $ 11,752 Work in Progress 102 83 Finished goods 106,147 93,809 $ 114,034 $ 105,644 Finished goods inventories consisted of the following (in thousands): December 31, January 1, Finished beds, including certain retail display beds and deliveries in-transit to those customers who have utilized home delivery services $ 36,708 $ 40,686 Finished components that were ready for assembly for the completion of beds 45,722 32,835 Retail accessories 23,717 20,288 $ 106,147 $ 93,809

Property and Equipment

Property and Equipment	12 Months Ended
	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and Equipment Property and equipment consisted of the following (in thousands): December 31, 2022 January 1, Leasehold improvements $ 140,344 $ 130,640 Furniture and equipment 151,202 136,464 Production machinery, computer equipment and software 287,834 257,802 Construction in progress 11,568 14,246 Less: Accumulated depreciation and amortization (390,343) (344,024) $ 200,605 $ 195,128

Goodwill and Intangible Assets,

Goodwill and Intangible Assets, Net	12 Months Ended
	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets, Net	Goodwill and Intangible Assets, Net Goodwill and Indefinite-lived Intangible Assets Goodwill was $64 million at December 31, 2022 and January 1, 2022. Indefinite-lived trade name/trademarks totaled $1.4 million at December 31, 2022 and January 1, 2022. Definite-lived Intangible Assets December 31, 2022 January 1, 2022 Gross Carrying Accumulated Gross Carrying Accumulated Developed technologies $ 18,851 $ 17,641 $ 18,851 $ 15,460 Patents 1,972 559 1,972 337 $ 20,823 $ 18,200 $ 20,823 $ 15,797 Amortization expense for the Company’s developed technologies was $2.0 million in each of 2022, 2021 and 2020. Amortization expense for its patents was $0.2 million, $0.2 million and $0.1 million, in 2022, 2021 and 2020, respectively. Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2023 $ 1,431 2024 222 2025 226 2026 222 2027 222 Thereafter 300 Total future amortization for definite-lived intangible assets $ 2,623

Credit Agreement

Credit Agreement	12 Months Ended
	Dec. 31, 2022
Debt Disclosure [Abstract]
Credit Agreement	Credit Agreement As of December 31, 2022, the Company’s credit facility had a total commitment amount of $825 million. The credit facility is for general corporate purposes, to meet its seasonal working capital requirements and to repurchase its stock. The Credit Agreement includes an accordion feature which allows the Company to increase the amount of the credit facility from $825 million to $1.2 billion, subject to lenders’ approval. The Credit Agreement provides the lenders with a collateral security interest in substantially all of the Company’s assets and those of its subsidiaries and requires it to comply with, among other things, a maximum leverage ratio and a minimum interest coverage ratio (3.0x). We amended the Credit Agreement on October 26, 2022. The amendment, among other things, (a) provides relief from the requirement that the net leverage ratio not exceed 3.75x for certain corporate actions including Permitted Capital Distributions for Performance or Taxes (as defined in the Credit Agreement) and certain acquisition activity; (b) increases the permissible net leverage ratio to 5.0x for the three consecutive quarterly reporting periods ending July 1, 2023; (c) increases the commitment fee rate to 50 basis points and the margin applicable to interest rates for all borrowings by an additional 50 basis points, in each case if the net leverage ratio is greater than or equal to 4.5x; and (d) replaces the option to borrow at an interest rate based on London Interbank Offered Rate (LIBOR) to one based on a Term SOFR Rate. The Term SOFR Rate equals the sum of (x) the Term SOFR Screen Rate (as defined in the Credit Agreement) for the applicable interest period (but in no event less than zero), plus (y) 0.10%, plus (z) the margin based on Sleep Number’s net leverage ratio. For the quarterly reporting period ending September 30, 2023 and subsequent quarterly reporting periods, the maximum leverage ratio will be 4.5x. Under the terms of the Credit Agreement, the Company pays a variable rate of interest and a commitment fee based on its leverage ratio. The Credit Agreement matures in December 2026. The Company was in compliance with all financial covenants as of December 31, 2022. The following tables summarizes the Company’s borrowings under the credit facility ($ in thousands): December 31, 2022 January 1, 2022 Outstanding borrowings $ 459,600 $ 382,500 Outstanding letters of credit $ 5,947 $ 3,997 Additional borrowing capacity $ 359,453 $ 438,503 Weighted-average interest rate 6.7 % 1.6 %

Leases

Leases	12 Months Ended
	Dec. 31, 2022
Leases [Abstract]
Leases	Leases The Company leases its retail, office and manufacturing space under operating leases which, in addition to the minimum lease payments, may require payment of a proportionate share of the real estate taxes and certain building operating expenses. While the Company’s local market development approach generally results in long-term participation in given markets, its retail store leases generally provide for an initial lease term of five three The Company’s operating lease costs include facility, vehicle and equipment lease costs, but exclude variable lease costs. Operating lease costs are recognized on a straight-line basis over the lease term, after consideration of rent escalations and rent holidays. The lease term for purposes of the calculation begins on the earlier of the lease commencement date or the date the Company takes possession of the property. During lease renewal negotiations that extend beyond the original lease term, the Company estimates straight-line rent expense based on current market conditions. Variable lease costs are recorded when it is probable the cost has been incurred and the amount can be reasonably estimated. Future payments for real estate taxes and certain building operating expenses for which the Company is obligated are not included in operating lease costs. At December 31, 2022, the Company’s finance lease right-of-use assets and lease liabilities were not significant. Lease costs were as follows (in thousands): 2022 2021 2020 Operating lease costs (1) $ 109,766 $ 99,474 $ 90,311 Variable lease costs $ 877 $ 2,205 $ 1,147 ____________________ (1) Includes short-term lease costs which are not significant. The maturities of operating lease liabilities as of December 31, 2022, were as follows (1) (in thousands): 2023 $ 103,935 2024 93,430 2025 82,375 2026 70,542 2027 55,494 Thereafter 118,529 Total operating lease payments (2) 524,305 Less: Interest 87,893 Present value of operating lease liabilities $ 436,412 ___________________ (1) Total operating lease payments exclude $80 million of legally binding minimum lease payments for leases signed but not yet commenced. (2) Includes the current portion of $80 million for operating lease liabilities. Other information related to operating leases was as follows: December 31, January 1, Weighted-average remaining lease term (years) 6.2 6.4 Weighted-average discount rate 6.2 % 6.1 % (in thousands) 2022 2021 2020 Cash paid for amounts included in present value of operating lease liabilities $ 99,819 $ 90,198 $ 85,497 Right-of-use assets obtained in exchange for operating lease liabilities $ 82,117 $ 109,000 $ 43,860

Shareholders' Deficit

Shareholders' Deficit	12 Months Ended
	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Shareholders’ Deficit	Shareholders’ Deficit Stock-Based Compensation Expense Total stock-based compensation expense was as follows (in thousands): 2022 2021 2020 Stock awards (1) $ 9,471 $ 20,216 $ 19,435 Stock options 3,752 2,998 2,378 Total stock-based compensation expense (1) 13,223 23,214 21,813 Income tax benefit 3,319 5,722 5,126 Total stock-based compensation expense, net of tax $ 9,904 $ 17,492 $ 16,687 ____________________ (1) Changes in annual stock-based compensation expense includes the cumulative impact of the change in the expected achievements of certain performance targets. Stock Options A summary of the Company’s stock option activity was as follows (in thousands, except per share amounts and years): Stock Weighted- Weighted- Aggregate Outstanding at January 1, 2022 699 $ 42.02 6.3 $ 28,258 Granted 148 58.60 Exercised (48) 23.57 Canceled/Forfeited (12) 58.63 Outstanding at December 31, 2022 787 $ 46.02 6.1 $ 829 Exercisable at December 31, 2022 558 $ 37.09 5.2 $ 829 Vested and expected to vest at December 31, 2022 771 $ 45.66 6.1 $ 829 ____________________ (1) Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant. Other information pertaining to options was as follows (in thousands, except per share amounts): 2022 2021 2020 Weighted-average grant date fair value of stock options granted $ 30.22 $ 71.93 $ 15.10 Total intrinsic value (at exercise) of stock options exercised $ 1,298 $ 16,003 $ 14,357 Cash received from the exercise of stock options for the fiscal year ended December 31, 2022 was $1.1 million. The Company’s tax benefit related to the exercise of stock options for the fiscal year ended December 31, 2022 was $1.3 million. At December 31, 2022, there was $4.8 million of total stock option compensation expense related to non-vested stock options not yet recognized, which is expected to be recognized over a weighted-average period of 1.8 years. The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows: Valuation Assumptions 2022 2021 2020 Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 57 % 58 % 46 % Risk-free interest rate 2.2 % 0.9 % 0.7 % Expected term (years) 5.3 5.2 5.4 Stock Awards Stock award activity was as follows (in thousands, except per share amounts): Time- Weighted-Average Performance- Weighted-Average Outstanding at January 1, 2022 206 $ 69.55 441 $ 63.37 Granted 189 54.60 329 56.16 Vested (110) 61.35 (251) 46.94 Canceled/Forfeited (24) 72.95 (18) 70.10 Outstanding at December 31, 2022 261 $ 61.88 501 $ 66.63 At December 31, 2022, there was $9.7 million of unrecognized compensation expense related to non-vested time-based stock awards, which is expected to be recognized over a weighted-average period of 1.8 years, and $7.4 million of unrecognized compensation expense related to non-vested performance-based stock awards, which is expected to be recognized over a weighted-average period of 1.8 years. Repurchases of Common Stock Repurchases of the Company’s common stock were as follows (in thousands): 2022 2021 2020 Amount repurchased under Board-approved share repurchase program $ 54,868 $ 364,479 $ 228,111 Amount repurchased in connection with the vesting of employee restricted stock grants 9,320 17,897 7,040 Total amount repurchased (based on trade dates) $ 64,188 $ 382,376 $ 235,151 As of December 31, 2022, the remaining authorization under the Board-approved $600 million share repurchase program was $348 million. Net Income per Common Share The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): 2022 2021 2020 Net income $ 36,610 $ 153,746 $ 139,189 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 22,396 24,038 27,665 Dilutive effect of stock-based awards 456 909 763 Diluted weighted-average shares outstanding 22,852 24,947 28,428 Net income per share – basic $ 1.63 $ 6.40 $ 5.03 Net income per share – diluted $ 1.60 $ 6.16 $ 4.90 Additional potential dilutive stock options totaling 0.4 million, 0.1 million and 0.2 million for 2022, 2021 and 2020, respectively, have been excluded from the diluted net income per share calculations because these securities’ exercise prices were anti-dilutive (e.g., greater than the average market price of the Company’s common stock).

Revenue Recognition

Revenue Recognition	12 Months Ended
	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Revenue Recognition	Revenue Recognition Deferred contract assets and deferred contract liabilities are included in the consolidated balance sheets as follows (in thousands): December 31, 2022 January 1, 2022 Deferred contract assets included in: Other current assets $ 28,121 $ 28,048 Other non-current assets 55,564 49,343 $ 83,685 $ 77,391 December 31, 2022 January 1, 2022 Deferred contract liabilities included in: Other current liabilities $ 36,335 $ 36,490 Other non-current liabilities 70,999 63,680 $ 107,334 $ 100,170 During the years ended December 31, 2022, January 1, 2022 and January 2, 2021 the Company recognized revenue of $34 million, $29 million and $34 million, respectively, that was included in the deferred contract liability balance at the beginning of the year. Revenue from goods and services transferred to customers at a point in time accounted for approximately 98% of the Company’s revenues for 2022, 2021 and 2020. Net sales consisted of the following (in thousands): 2022 2021 2020 Retail stores $ 1,823,617 $ 1,904,037 $ 1,582,266 Online, phone, chat and other 290,680 280,912 274,289 Total Company $ 2,114,297 $ 2,184,949 $ 1,856,555 Obligation for Sales Returns The activity in the sales returns liability account for 2022 and 2021 was as follows (in thousands): 2022 2021 Balance at beginning of year $ 22,368 $ 24,765 Additions that reduce net sales 103,477 91,975 Deduction from reserves (100,251) (94,372) Balance at end of period $ 25,594 $ 22,368

Profit Sharing and 401(k) Plan

Profit Sharing and 401(k) Plan	12 Months Ended
	Dec. 31, 2022
Retirement Benefits [Abstract]
Profit Sharing and 401(k) Plan	Profit Sharing and 401(k) PlanUnder the Company’s profit sharing and 401(k) plan, eligible employees may defer up to 50% of their compensation on a pre-tax basis, subject to Internal Revenue Service limitations. Each year, the Company may make a discretionary contribution equal to a percentage of the employee’s contribution. During 2022, 2021 and 2020, the Company’s contributions, net of forfeitures, were $10 million, $7 million and $6 million, respectively.

Income Taxes

Income Taxes	12 Months Ended
	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Income tax expense (benefit) consisted of the following (in thousands): 2022 2021 2020 Current: Federal $ 15,518 $ 17,019 $ 29,762 State 5,174 4,568 6,528 20,692 21,587 36,290 Deferred: Federal (7,264) 10,954 584 State (1,143) 1,004 (91) (8,407) 11,958 493 Income tax expense $ 12,285 $ 33,545 $ 36,783 The following table provides a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate: 2022 2021 2020 Statutory federal income tax 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 6.4 3.0 2.4 R&D tax credits (5.5) (1.4) (1.4) Non-deductible compensation 1.7 1.5 1.0 Stock-based compensation (1.2) (6.3) (2.4) Changes in unrecognized tax benefits (0.4) (0.1) 0.3 Other 3.1 0.2 — Effective income tax rate 25.1 % 17.9 % 20.9 % The Company files income tax returns with the U.S. federal government and various state jurisdictions. In the normal course of business, the Company is subject to examination by federal and state taxing authorities. The Company is no longer subject to federal income tax examinations for years prior to 2019 or state income tax examinations prior to 2018. Deferred Income Taxes The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands): 2022 2021 Deferred tax assets: Stock-based compensation $ 6,896 $ 8,037 Operating lease liabilities 109,144 102,292 Warranty and returns liabilities 7,881 7,459 Net operating loss carryforwards and credits 2,051 1,939 Compensation and benefits 7,678 8,206 Research and development 13,860 — Other 6,110 6,607 Total gross deferred tax assets 153,620 134,540 Valuation allowance (615) (615) Total gross deferred tax assets after valuation allowance 153,005 133,925 Deferred tax liabilities: Property and equipment 38,442 34,655 Operating lease right-of-use assets 99,311 92,778 Deferred revenue 4,394 5,460 Other 2,900 1,720 Total gross deferred tax liabilities 145,047 134,613 Net deferred tax assets (liabilities) $ 7,958 $ (688) At December 31, 2022, the Company had net operating loss carryforwards for federal purposes of $0.5 million, which will expire between 2025 and 2027. The Company evaluates its deferred income taxes quarterly to determine if valuation allowances are required. As part of this evaluation, the Company assess whether valuation allowances should be established for any deferred tax assets that are not considered more likely than not to be realized, using all available evidence, both positive and negative. This assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. The Company has provided a $0.6 million valuation allowance resulting primarily from its inability to utilize certain foreign net operating losses. Unrecognized Tax Benefits Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands): Federal and State Tax 2022 2021 2020 Beginning balance $ 3,869 $ 3,912 $ 3,337 Increases related to current-year tax positions 910 831 860 Increases related to prior-year tax positions 252 4 27 Decreases related to prior-year tax positions (328) (33) — Lapse of statute of limitations (1,058) (845) (312) Ending balance $ 3,645 $ 3,869 $ 3,912 At December 31, 2022 and January 1, 2022, the Company had $3.2 million and $3.7 million, respectively, of unrecognized tax benefits, which if recognized, would affect its effective tax rate. The amount of unrecognized tax benefits is not expected to change materially within the next 12 months.

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Dec. 31, 2022
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. Shareholder Class Action Complaints On December 14, 2021, purported Sleep Number shareholder, Steamfitters Local 449 Pension & Retirement Security Funds (Steamfitters), filed a putative class action complaint in the United States District Court for the District of Minnesota (the District of Minnesota) on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021, inclusive, against Sleep Number, Shelly Ibach and David Callen, the Company’s former Executive Vice President and Chief Financial Officer. Steamfitters alleges material misstatements and omissions in certain of Sleep Number’s public disclosures during the purported class period, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The complaint seeks, among other things, unspecified monetary damages, reasonable costs and expenses and equitable/injunctive or other relief as deemed appropriate by the District of Minnesota. On February 14, 2022, a second purported Sleep Number shareholder, Ricardo Dario Schammas, moved for appointment as lead plaintiff in the action. On March 24, 2022, the District of Minnesota heard argument on Schammas’s motion, and subsequently appointed Steamfitters and Schammas as Co-Lead Plaintiffs (together, Co-Lead Plaintiffs). On July 19, 2022, Co-Lead Plaintiffs filed a consolidated amended complaint, which, like the predecessor complaint, asserts claims against Sleep Number, Shelly Ibach, and David Callen under Sections 10(b) and 20(a) of the Exchange Act. Co- Lead Plaintiffs purport to assert these claims on behalf of all purchasers of Sleep Number common stock between February 18, 2021 and July 20, 2021. Defendants moved to dismiss the consolidated complaint on September 19, 2022, which motion was heard by the Court on January 17, 2023, and remains pending. Shareholder Derivative Complaint On May 12, 2022, Gwendolyn Calla Moore, as the appointed representative of purported Sleep Number shareholder Matthew Gelb, filed a derivative action (the Derivative Action) in the District of Minnesota against Jean-Michel Valette, Shelly Ibach, Barbara Matas, Brenda Lauderback, Daniel Alegre, Deborah Kilpatrick, Julie Howard, Kathleen Nedorostek, Michael Harrison, Stephen Gulis, Jr., David Callen, and Kevin Brown. Moore purports to assert claims on behalf of Sleep Number for breaches of fiduciary duty, waste, and contribution under Sections 10(b) and 21(d) of the Exchange Act. Moore’s allegations generally mirror those asserted in the securities complaint described above. The Moore complaint seeks damages in an unspecified amount, disgorgement, interest, and costs and expenses, including attorneys’ and experts’ fees. On September 13, 2022, the District of Minnesota entered a joint stipulation staying all proceedings in the Derivative Action pending the outcome of any motion to dismiss the Steamfitters consolidated amended complaint. Stockholder Demand On March 25, 2022, Sleep Number received a shareholder litigation demand (the “Demand”), requesting that the Board investigate the allegations in the securities class action complaint and pursue claims on Sleep Number’s behalf based on those allegations. On May 12, 2022, the Board established a special litigation committee to investigate the demand. On October 5 and October 12, 2022, Sleep Number received two additional shareholder litigation demands, which adopted and incorporated the allegations and requests in the Demand. Both of these additional litigation demands were referred to the special litigation committee. The special litigation committee has concluded that it would not be in the best interests of Sleep Number and its shareholders to take any of the actions requested in the demands at this time. 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 31, 2022, the Company has $45 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 31, 2022, the Company had entered into 46 lease commitments primarily for future retail store locations. These lease commitments provide for total lease payments over the next six Leases .

Schedule II - Valuation and Qua

Schedule II - Valuation and Qualifying Accounts	12 Months Ended
	Dec. 31, 2022
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]
Schedule II - Valuation and Qualifying Accounts	Description 2022 2021 2020 Allowances for credit losses Balance at beginning of period $ 924 $ 1,046 $ 898 Additions charged to costs and expenses 2,294 1,750 1,541 Deductions from reserves (1,951) (1,872) (1,393) Balance at end of period $ 1,267 $ 924 $ 1,046

Business and Summary of Signi_2

Business and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Business and Basis of Presentation	Business & Basis of Presentation Sleep Number Corporation and its 100%-owned subsidiaries (Sleep Number or the Company) have a vertically integrated business model and are the exclusive designer, manufacturer, marketer, retailer and servicer of Sleep Number beds which allows it to offer consumers high-quality, individualized sleep solutions and services. Sleep Number also offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. Sleep Number generates revenue by marketing its innovations directly to new and existing customers, and selling products through its Stores, Online, Phone, Chat (Total Retail) and Other. The consolidated financial statements include the accounts of Sleep Number Corporation and its subsidiaries. All significant intra-entity balances and transactions have been eliminated in consolidation.
Fiscal Year	Fiscal Year The Company’s fiscal year ends on the Saturday closest to December 31. Fiscal years and their respective fiscal year ends were as follows: fiscal 2022 ended December 31, 2022; fiscal 2021 ended January 1, 2022; and fiscal 2020 ended January 2, 2021. Fiscal 2020 had 53 weeks, 2022 and 2021 each had 52 weeks.
Use of Estimates in the Preparation of Financial Statements	Use of Estimates in the Preparation of Financial Statements The preparation of condensed consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires the Company to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of sales, expenses and income taxes during the reporting period. Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the consolidated financial statements in future periods and could be material. Our critical accounting policies consist of stock-based compensation, warranty liabilities and revenue recognition.
Cash and Cash Equivalents	Cash and Cash EquivalentsCash and cash equivalents include highly-liquid investments with original maturities of three months or less. The carrying value of these investments approximates fair value due to their short-term maturity. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment, resulting in book overdrafts. Book overdrafts are included in accounts payable in the consolidated balance sheets and in net increase (decrease) in short-term borrowings in the financing activities section of the Company’s consolidated statements of cash flows.
Accounts Receivable	Accounts Receivable Accounts receivable are recorded net of an allowance for expected credit losses and consist primarily of receivables from third-party financiers for customer credit purchases. The allowance is recognized in an amount equal to anticipated future write-offs. The Company estimates future write-offs based on delinquencies, aging trends, industry risk trends, its historical experience and current trends. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.
Inventories	Inventories Inventories include materials, labor and overhead and are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We review inventory quantities on hand and record reserves for obsolescence based on historical selling prices, current market conditions and forecasted product demand, to reduce inventory to net realizable value.
Property and Equipment	Property and Equipment Property and equipment, carried at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in net income in the consolidated statements of operations. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful life are capitalized. Leasehold improvements are depreciated over the shorter of the estimated useful lives of the assets or the contractual term of the lease, with consideration of lease renewal options if renewal appears probable. Estimated useful lives of the Company’s property and equipment by major asset category are as follows: Leasehold improvements 5 to 15 years Furniture and equipment 3 to 15 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years
Goodwill and Intangible Assets, Net	Goodwill and Intangible Assets, Net Goodwill is the difference between the purchase price of a company and the fair market value of the acquired company’s net identifiable assets. The Company’s intangible assets include developed technologies and trade names/trademarks. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from 8-10 years.
Asset Impairment Charges	Asset Impairment Charges Long-lived Assets and Definite-lived Intangible Assets - the Company reviews its long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, the Company first compares the carrying value of the asset to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the asset, the Company calculates an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value. When the Company recognizes an impairment loss, the carrying amount of the asset is reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. We review retail store assets for potential impairment based on historical cash flows, lease termination provisions and expected future retail store operating results. If the Company recognizes an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. Goodwill and Indefinite-lived Intangible Assets - goodwill and indefinite-lived intangible assets are not amortized but are tested for impairment annually or when there are indicators of impairment using a fair value approach. The goodwill impairment test involves a comparison of the fair value of a reporting unit with its carrying value. Fair value is determined using a market-based approach utilizing widely accepted valuation techniques, including quoted market prices and the Company’s market capitalization. The Company has only one reporting unit, which has a negative carrying value. The reporting unit had a goodwill balance of $64 million at December 31, 2022 and January 1, 2022. Indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its fair value. If the
Other Investments	Other InvestmentsWe have an investment in non-marketable equity securities of $1.2 million at December 31, 2022. This investment was made in a strategic product-development partner and is included in other non-current assets in our consolidated balance sheet. Non-marketable equity securities are equity securities without readily determinable fair value that are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.
Warranty Liabilities	Warranty Liabilities The Company provides a limited warranty on most of the products it sells. The estimated warranty costs, which are expensed at the time of sale and included in cost of sales, are based on historical trends and warranty claim rates incurred by the Company and are adjusted for any current trends as appropriate. The majority of the Company’s warranty claims are incurred within the first year. The Company’s warranty liability contains uncertainties because its warranty obligations cover an extended period of time and require management to make estimates for claim rates and the projected cost of materials and freight associated with sending replacement parts to customers. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs.
Fair Value Measurements	Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: • Level 1 – observable inputs such as quoted prices in active markets; • Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and • Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The Company generally estimates fair value of long-lived assets, including its retail stores, using the income approach, which the Company based on estimated future cash flows (discounted and with interest charges). The inputs used to determine fair value relate primarily to future assumptions regarding sales volumes, gross profit rates, retail store operating expenses and applicable probability weightings regarding future alternative uses. These inputs are categorized as Level 3 inputs under the fair value measurements guidance. The inputs used represent management’s assumptions about what information market participants would use in pricing the assets and are based upon the best information available at the balance sheet date.
Shareholders’ Deficit	Shareholders’ Deficit Dividends The Company is not restricted from paying cash dividends under the Credit Agreement so long as it is not in default under the Credit Agreement, the Company’s leverage ratio (as defined in the Credit Agreement) after giving effect to such restricted payments (as defined in the Credit Agreement) would not exceed 3.75:1.00 and no default or event of default (as defined in the Credit Agreement) would result therefrom. At December 31, 2022, the Company exceeded the 3.75:1.00 leverage ratio. However, Sleep Number has not historically paid, and has no current plans to pay, cash dividends on the Company’s common stock. Share Repurchases At December 31, 2022, there was $348 million remaining authorization under the $600 million board-approved share repurchase program. There is no expiration date governing the period over which the Company can repurchase shares. Any repurchased shares are constructively retired and returned to an unissued status. The cost of stock repurchases is first charged to additional paid-in-capital. Once additional paid-in capital is reduced to zero, any additional amounts are charged to accumulated deficit.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when control of the promised goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. Revenue recognized excludes sales taxes. Amounts billed to customers for delivery and setup are included in net sales. For most products, the Company receives payment before or promptly after, the products or services are delivered to the customer. The Company accepts sales returns of most products during a 100-night trial period. Accrued sales returns represent a refund liability for the amount of consideration that the Company does not expect to be entitled to because it will be refunded to customers. The refund liability estimate is based on historical return rates and is adjusted for any current trends as appropriate. Each reporting period the Company remeasures the liability to reflect changes in the estimate, with a corresponding adjustment to net sales. Sleep Number beds sold with SleepIQ technology contain multiple performance obligations including the bed, and SleepIQ hardware and software. The Company analyzes its multiple performance obligation(s) to determine whether they are distinct and can be separated or whether they must be accounted for as a single performance obligation. We determined that beds sold with the SleepIQ technology have two performance obligations consisting of: (i) the bed; and (ii) SleepIQ hardware and software. SleepIQ hardware and software are not separable as the hardware and related software are not sold separately and the software is integral to the hardware’s functionality. The Company determined the transaction price for multiple performance obligations based on their relative standalone selling prices. The performance obligation related to the bed is satisfied at a point in time. The performance obligation related to SleepIQ technology is satisfied over time based on the ongoing access and usage by the customer of software essential to the functionality of SleepIQ technology. The deferred revenue and costs related to SleepIQ technology are recognized on a straight-line basis over the estimated period of benefit to the customer of 4.5 to 5.0 years because its inputs are generally expended evenly throughout the performance period.
Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses	Cost of Sales, Sales and Marketing, General and Administrative (G&A) and Research & Development (R&D) Expenses The following tables summarize the primary costs classified in each major expense category (the classification of which may vary within the Company’s industry): Cost of Sales Sales & Marketing • Costs associated with purchasing, manufacturing, shipping, handling and delivering the Company’s products to its retail stores and customers; • Advertising, marketing and media production; • Marketing and selling materials such as brochures, videos, websites, customer mailings and in-store signage; • Physical inventory losses, scrap and obsolescence; • Payroll and benefits for sales and customer service staff; • Related occupancy and depreciation expenses; • Store occupancy costs; • Costs associated with returns and exchanges; and • Store depreciation expense; • Estimated costs to service customer warranty claims. • Credit card processing fees; and • Promotional financing costs. G&A R&D (1) • Payroll and benefit costs for corporate employees, including information technology, legal, human resources, finance, sales and marketing administration, investor relations and risk management; • Internal labor and benefits related to research and development activities; • Outside consulting services related to research and development activities; and • Testing equipment related to research and development activities. • Occupancy costs of corporate facilities; ___________________________ (1) Costs incurred in connection with R&D are charged to expense as incurred. • Depreciation related to corporate assets; • Information hardware, software and maintenance; • Insurance; • Investor relations costs; and • Other overhead costs.
Leases	Leases The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of future lease payments over the lease term. The Company elected the option to not separate lease and non-lease components for all of its leases. Most of the Company’s leases do not provide an implicit interest rate nor is the rate available to it from its lessors. As an alternative, the Company uses its estimated incremental borrowing rate, which is derived from information available at the lease commencement date, including publicly available data, in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet as an ROU asset or operating lease liability. The Company recognizes operating lease costs for these short-term leases, primarily small equipment leases, on a straight-line basis over the lease term. At December 31, 2022, the Company’s finance lease ROU assets and associated lease liabilities were not significant. See Note 7, Leases , for further information regarding the Company’s operating leases.
Pre-Opening Costs	Pre-opening Costs Costs associated with the start-up and promotion of new retail store openings are expensed as incurred.
Advertising Costs	Advertising CostsThe Company incurs advertising costs associated with print, digital and broadcast advertisements. Advertising costs are charged to expense when the ad first runs.
Insurance	InsuranceThe Company is self-insured for certain losses related to health and workers’ compensation claims, although the Company obtains third-party insurance coverage to limit exposure to these claims. The Company estimates its self-insured liabilities using a number of factors including historical claims experience and analysis of incurred but not reported claims. The Company’s
Software Capitalization	Software Capitalization For software developed or obtained for internal use, the Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company capitalizes certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time depreciation commences. The Company expenses any data conversion or training costs as incurred. Capitalized software costs are included in property and equipment, net in the consolidated balance sheet. The Company capitalizes costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with its policy for software developed or obtained for internal use. The capitalized implementation costs of cloud computing arrangements are expensed over the term of the cloud computing arrangement in the same line item in the statement of operations as the associated hosting fees. Capitalized costs incurred with the implementation of a cloud computing arrangement are included in prepaid expenses and other non-current assets in the Company’s consolidated balance sheet, and in operating cash flows in its consolidated statement of cash flows.
Stock-Based Compensation	Stock-based Compensation The Company compensates officers, directors and key employees with stock-based compensation under stock plans approved by its shareholders and administered under the supervision of the Company’s Board of Directors (Board). At December 31, 2022, a total of 2.1 million shares were available for future grant. These plans include non-qualified stock options and stock awards. The Company records stock-based compensation expense based on the award’s fair value at the grant date and the awards that are expected to vest. The Company recognizes stock-based compensation expense over the period during which an employee is required to provide services in exchange for the award. The Company reduces compensation expense by estimated forfeitures. Forfeitures are estimated using historical experience and projected employee turnover. The Company includes, as part of cash flows from operating activities, the benefit of tax deductions in excess of recognized stock-based compensation expense. In addition, excess tax benefits or deficiencies are recorded as discrete adjustments to income tax expense. Stock Options - stock option awards are granted at exercise prices equal to the closing price of the Company’s stock on the grant date. Generally, options vest proportionally over three years and expire after 10 years. Compensation expense is recognized ratably over the vesting period. The Company determines the fair value of stock options granted and the resulting compensation expense at the date-of-grant using the Black-Scholes-Merton option-pricing model. Descriptions of significant assumptions used to estimate the expected volatility, risk-free interest rate and expected term are as follows: Expected Volatility – expected volatility was determined based on implied volatility of the Company’s traded options and historical volatility of the Company’s stock price. Risk-Free Interest Rate – the risk-free interest rate was based on the implied yield available on U.S. Treasury zero-coupon issues at the date of grant with a term equal to the expected term. Expected Term – expected term represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience and anticipated future exercise patterns, giving consideration to the contractual terms of unexercised stock-based awards. Stock Awards - the Company issues stock awards to certain employees in conjunction with its stock-based compensation plan. The stock awards generally vest over three years based on continued employment (time-based). Compensation expense related to stock awards, except for stock awards with a market condition, is determined on the grant date based on the publicly quoted closing price of the Company’s common stock and is charged to earnings on a straight-line basis over the vesting period. Stock awards with a market condition are valued using a Monte Carlo simulation model. The significant assumptions used to estimate the expected volatility and risk-free interest rate are similar to those described above in Stock Options. In April 2020, the Company took action to maintain liquidity and cut costs in response to the COVID-19 pandemic, including offering a salary for stock program. Under that program, certain employees elected to forego a percentage of their cash salary for the remainder of the year in exchange for time-based stock awards that represented the value of the cash salary foregone. Subject to continuing employment, these awards vested in December 2020. Certain time-based stock awards have a performance condition (performance-based). The final number of shares earned for performance-based stock awards and the related compensation expense is adjusted up or down to the extent the performance target is met. The actual number of shares that will ultimately be awarded range from 0% - 200% of the targeted amount for the 2022, 2021 and 2020 awards. We evaluate the likelihood of meeting the performance targets at each reporting period and adjust compensation expense, on a cumulative basis, based on the expected achievement of each of the performance targets. For performance-based stock awards granted in 2022, 2021 and 2020, the performance targets are based on growth in net sales and in operating profit, and the performance periods are fiscal 2022 through 2024, 2021 through 2023 and fiscal 2020 through 2022, respectively.
Income Taxes	Income Taxes The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established for any portion of deferred tax assets that are not considered more likely than not to be realized. The Company evaluates all available positive and negative evidence, including its forecast of future taxable income, to assess the need for a valuation allowance on its deferred tax assets. The Company records a liability for unrecognized tax benefits from uncertain tax positions taken, or expected to be taken, in the Company’s tax returns. The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and may not accurately forecast actual outcomes. The Company classifies net interest and penalties related to income taxes as a component of income tax expense in its consolidated statements of operations.
Net Income Per Share	Net Income Per Share The Company calculates basic net income per share by dividing net income by the weighted-average number of common shares outstanding during the period. It calculates diluted net income per share based on the weighted-average number of common shares outstanding adjusted by the number of potentially dilutive common shares as determined by the treasury stock method. Potentially dilutive shares consist of stock options and stock awards.
Sources of Supply	Sources of Supply The Company currently obtain materials and components used to produce its beds from outside sources. As a result, the Company is dependent upon suppliers that in some instances, are its sole source of supply, or supply the vast majority of the particular component or material. We continuously evaluate opportunities to dual-source key components and materials. The failure of one or more of the Company’s suppliers to provide it with materials or components on a timely basis could significantly impact the consolidated results of operations and net income per share. While the Company believes that these materials and components, or suitable replacements, could be obtained from other sources in the event of a disruption or loss of supply, it may not be able to find alternative sources of supply or alternative sources of supply on comparable terms and an unexpected loss of supply over a short period of time may not allow the Company to replace these sources in the ordinary course of business.

Business and Summary of Signi_3

Business and Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Estimated Useful Lives of Property and Equipment	Estimated useful lives of the Company’s property and equipment by major asset category are as follows: Leasehold improvements 5 to 15 years Furniture and equipment 3 to 15 years Production machinery 3 to 7 years Computer equipment and software 3 to 12 years
Warranty Liabilities	The activity in the accrued warranty liabilities account was as follows (in thousands): 2022 2021 2020 Balance at beginning of period $ 10,069 $ 12,152 $ 11,345 Additions charged to costs and expenses for current-year sales 16,694 16,732 13,387 Deductions from reserves (17,157) (18,134) (12,158) Change in liabilities for pre-existing warranties during the current (609) (681) (422) Balance at end of period $ 8,997 $ 10,069 $ 12,152

Inventories (Tables)

Inventories (Tables)	12 Months Ended
	Dec. 31, 2022
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories consisted of the following (in thousands): December 31, January 1, Raw Materials $ 7,785 $ 11,752 Work in Progress 102 83 Finished goods 106,147 93,809 $ 114,034 $ 105,644
Schedule of Finished Goods Inventories	Finished goods inventories consisted of the following (in thousands): December 31, January 1, Finished beds, including certain retail display beds and deliveries in-transit to those customers who have utilized home delivery services $ 36,708 $ 40,686 Finished components that were ready for assembly for the completion of beds 45,722 32,835 Retail accessories 23,717 20,288 $ 106,147 $ 93,809

Property and Equipment (Tables)

Property and Equipment (Tables)	12 Months Ended
	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment	Property and equipment consisted of the following (in thousands): December 31, 2022 January 1, Leasehold improvements $ 140,344 $ 130,640 Furniture and equipment 151,202 136,464 Production machinery, computer equipment and software 287,834 257,802 Construction in progress 11,568 14,246 Less: Accumulated depreciation and amortization (390,343) (344,024) $ 200,605 $ 195,128

Goodwill and Intangible Asset_2

Goodwill and Intangible Assets, Net (Tables)	12 Months Ended
	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Definite-Lived Intangible Assets	Definite-lived Intangible Assets December 31, 2022 January 1, 2022 Gross Carrying Accumulated Gross Carrying Accumulated Developed technologies $ 18,851 $ 17,641 $ 18,851 $ 15,460 Patents 1,972 559 1,972 337 $ 20,823 $ 18,200 $ 20,823 $ 15,797
Schedule of Annual Amortization for Definite-Lived Intangible Assets	Annual amortization for definite-lived intangible assets for subsequent years are as follows (in thousands): 2023 $ 1,431 2024 222 2025 226 2026 222 2027 222 Thereafter 300 Total future amortization for definite-lived intangible assets $ 2,623

Credit Agreement (Tables)

Credit Agreement (Tables)	12 Months Ended
	Dec. 31, 2022
Debt Disclosure [Abstract]
Schedule of Borrowings Under Credit Facility	The following tables summarizes the Company’s borrowings under the credit facility ($ in thousands): December 31, 2022 January 1, 2022 Outstanding borrowings $ 459,600 $ 382,500 Outstanding letters of credit $ 5,947 $ 3,997 Additional borrowing capacity $ 359,453 $ 438,503 Weighted-average interest rate 6.7 % 1.6 %

Leases (Tables)

Leases (Tables)	12 Months Ended
	Dec. 31, 2022
Leases [Abstract]
Schedule of Operating Lease Costs	Lease costs were as follows (in thousands): 2022 2021 2020 Operating lease costs (1) $ 109,766 $ 99,474 $ 90,311 Variable lease costs $ 877 $ 2,205 $ 1,147 ____________________ (1) Includes short-term lease costs which are not significant.
Schedule of Maturities of Operating Lease Liabilities	The maturities of operating lease liabilities as of December 31, 2022, were as follows (1) (in thousands): 2023 $ 103,935 2024 93,430 2025 82,375 2026 70,542 2027 55,494 Thereafter 118,529 Total operating lease payments (2) 524,305 Less: Interest 87,893 Present value of operating lease liabilities $ 436,412 ___________________ (1) Total operating lease payments exclude $80 million of legally binding minimum lease payments for leases signed but not yet commenced. (2) Includes the current portion of $80 million for operating lease liabilities.
Schedule of Other Information Related Operating Leases	Other information related to operating leases was as follows: December 31, January 1, Weighted-average remaining lease term (years) 6.2 6.4 Weighted-average discount rate 6.2 % 6.1 % (in thousands) 2022 2021 2020 Cash paid for amounts included in present value of operating lease liabilities $ 99,819 $ 90,198 $ 85,497 Right-of-use assets obtained in exchange for operating lease liabilities $ 82,117 $ 109,000 $ 43,860

Shareholders' Deficit (Tables)

Shareholders' Deficit (Tables)	12 Months Ended
	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Schedule of Stock-Based Compensation Expense	Total stock-based compensation expense was as follows (in thousands): 2022 2021 2020 Stock awards (1) $ 9,471 $ 20,216 $ 19,435 Stock options 3,752 2,998 2,378 Total stock-based compensation expense (1) 13,223 23,214 21,813 Income tax benefit 3,319 5,722 5,126 Total stock-based compensation expense, net of tax $ 9,904 $ 17,492 $ 16,687 ____________________ (1) Changes in annual stock-based compensation expense includes the cumulative impact of the change in the expected achievements of certain performance targets.
Summary of Stock Option Activity	A summary of the Company’s stock option activity was as follows (in thousands, except per share amounts and years): Stock Weighted- Weighted- Aggregate Outstanding at January 1, 2022 699 $ 42.02 6.3 $ 28,258 Granted 148 58.60 Exercised (48) 23.57 Canceled/Forfeited (12) 58.63 Outstanding at December 31, 2022 787 $ 46.02 6.1 $ 829 Exercisable at December 31, 2022 558 $ 37.09 5.2 $ 829 Vested and expected to vest at December 31, 2022 771 $ 45.66 6.1 $ 829 ____________________ (1) Aggregate intrinsic value includes only those options where the current share price is equal to or greater than the share price on the date of grant.
Other Information Pertaining to Options	Other information pertaining to options was as follows (in thousands, except per share amounts): 2022 2021 2020 Weighted-average grant date fair value of stock options granted $ 30.22 $ 71.93 $ 15.10 Total intrinsic value (at exercise) of stock options exercised $ 1,298 $ 16,003 $ 14,357
Assumptions Used to Calculate Fair Value of Options Granted Using Black-Scholes-Merton Option-Pricing Model	The assumptions used to calculate the fair value of options granted using the Black-Scholes-Merton option-pricing model were as follows: Valuation Assumptions 2022 2021 2020 Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 57 % 58 % 46 % Risk-free interest rate 2.2 % 0.9 % 0.7 % Expected term (years) 5.3 5.2 5.4
Stock Award Activity	Stock award activity was as follows (in thousands, except per share amounts): Time- Weighted-Average Performance- Weighted-Average Outstanding at January 1, 2022 206 $ 69.55 441 $ 63.37 Granted 189 54.60 329 56.16 Vested (110) 61.35 (251) 46.94 Canceled/Forfeited (24) 72.95 (18) 70.10 Outstanding at December 31, 2022 261 $ 61.88 501 $ 66.63
Schedule of Repurchase of Common Stock	Repurchases of the Company’s common stock were as follows (in thousands): 2022 2021 2020 Amount repurchased under Board-approved share repurchase program $ 54,868 $ 364,479 $ 228,111 Amount repurchased in connection with the vesting of employee restricted stock grants 9,320 17,897 7,040 Total amount repurchased (based on trade dates) $ 64,188 $ 382,376 $ 235,151
Net Income per Common Share	The components of basic and diluted net income per share were as follows (in thousands, except per share amounts): 2022 2021 2020 Net income $ 36,610 $ 153,746 $ 139,189 Reconciliation of weighted-average shares outstanding: Basic weighted-average shares outstanding 22,396 24,038 27,665 Dilutive effect of stock-based awards 456 909 763 Diluted weighted-average shares outstanding 22,852 24,947 28,428 Net income per share – basic $ 1.63 $ 6.40 $ 5.03 Net income per share – diluted $ 1.60 $ 6.16 $ 4.90

Revenue Recognition (Tables)

Revenue Recognition (Tables)	12 Months Ended
	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Schedule of Deferred Contract Liabilities and Deferred Contract Assets	Deferred contract assets and deferred contract liabilities are included in the consolidated balance sheets as follows (in thousands): December 31, 2022 January 1, 2022 Deferred contract assets included in: Other current assets $ 28,121 $ 28,048 Other non-current assets 55,564 49,343 $ 83,685 $ 77,391 December 31, 2022 January 1, 2022 Deferred contract liabilities included in: Other current liabilities $ 36,335 $ 36,490 Other non-current liabilities 70,999 63,680 $ 107,334 $ 100,170
Disaggregation of Revenue	Net sales consisted of the following (in thousands): 2022 2021 2020 Retail stores $ 1,823,617 $ 1,904,037 $ 1,582,266 Online, phone, chat and other 290,680 280,912 274,289 Total Company $ 2,114,297 $ 2,184,949 $ 1,856,555
Schedule of Sales Return Liability	The activity in the sales returns liability account for 2022 and 2021 was as follows (in thousands): 2022 2021 Balance at beginning of year $ 22,368 $ 24,765 Additions that reduce net sales 103,477 91,975 Deduction from reserves (100,251) (94,372) Balance at end of period $ 25,594 $ 22,368

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Summary of Income Tax Expense (Benefit)	Income tax expense (benefit) consisted of the following (in thousands): 2022 2021 2020 Current: Federal $ 15,518 $ 17,019 $ 29,762 State 5,174 4,568 6,528 20,692 21,587 36,290 Deferred: Federal (7,264) 10,954 584 State (1,143) 1,004 (91) (8,407) 11,958 493 Income tax expense $ 12,285 $ 33,545 $ 36,783
Reconciliation of Income Tax Expense (Benefit) at the Statutory Federal Rate	The following table provides a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate: 2022 2021 2020 Statutory federal income tax 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 6.4 3.0 2.4 R&D tax credits (5.5) (1.4) (1.4) Non-deductible compensation 1.7 1.5 1.0 Stock-based compensation (1.2) (6.3) (2.4) Changes in unrecognized tax benefits (0.4) (0.1) 0.3 Other 3.1 0.2 — Effective income tax rate 25.1 % 17.9 % 20.9 %
Summary of Deferred Income Taxes	The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands): 2022 2021 Deferred tax assets: Stock-based compensation $ 6,896 $ 8,037 Operating lease liabilities 109,144 102,292 Warranty and returns liabilities 7,881 7,459 Net operating loss carryforwards and credits 2,051 1,939 Compensation and benefits 7,678 8,206 Research and development 13,860 — Other 6,110 6,607 Total gross deferred tax assets 153,620 134,540 Valuation allowance (615) (615) Total gross deferred tax assets after valuation allowance 153,005 133,925 Deferred tax liabilities: Property and equipment 38,442 34,655 Operating lease right-of-use assets 99,311 92,778 Deferred revenue 4,394 5,460 Other 2,900 1,720 Total gross deferred tax liabilities 145,047 134,613 Net deferred tax assets (liabilities) $ 7,958 $ (688)
Summary of Reconciliations Unrecognized Tax Benefits	Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands): Federal and State Tax 2022 2021 2020 Beginning balance $ 3,869 $ 3,912 $ 3,337 Increases related to current-year tax positions 910 831 860 Increases related to prior-year tax positions 252 4 27 Decreases related to prior-year tax positions (328) (33) — Lapse of statute of limitations (1,058) (845) (312) Ending balance $ 3,645 $ 3,869 $ 3,912

Business and Summary of Signi_4

Business and Summary of Significant Accounting Policies - Cash and Cash Equivalents - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2022	Jan. 01, 2022
Accounts Payable
Cash and Cash Equivalents [Line Items]
Book overdrafts	$ 36	$ 15

Business and Summary of Signi_5

Business and Summary of Significant Accounting Policies - Property and Equipment, Estimated Useful Lives of Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2022
Leasehold improvements | Minimum
Property and equipment [Line Items]
Estimated useful lives	5 years
Leasehold improvements | Maximum
Property and equipment [Line Items]
Estimated useful lives	15 years
Furniture and equipment | Minimum
Property and equipment [Line Items]
Estimated useful lives	3 years
Furniture and equipment | Maximum
Property and equipment [Line Items]
Estimated useful lives	15 years
Production machinery | Minimum
Property and equipment [Line Items]
Estimated useful lives	3 years
Production machinery | Maximum
Property and equipment [Line Items]
Estimated useful lives	7 years
Computer equipment and software | Minimum
Property and equipment [Line Items]
Estimated useful lives	3 years
Computer equipment and software | Maximum
Property and equipment [Line Items]
Estimated useful lives	12 years

Business and Summary of Signi_6

Business and Summary of Significant Accounting Policies - Goodwill and Intangible Assets, Net - Narrative (Details)	12 Months Ended
	Dec. 31, 2022
Minimum
Definite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life	8 years
Maximum
Definite-Lived Intangible Assets [Line Items]
Finite-lived intangible asset, useful life	10 years

Business and Summary of Signi_7

Business and Summary of Significant Accounting Policies - Goodwill and Indefinite-lived Intangible Assets, Narrative (Details) $ in Millions	12 Months Ended
	Dec. 31, 2022 USD ($) reporting_unit	Jan. 01, 2022 USD ($)
Accounting Policies [Abstract]
Number of reporting units | reporting_unit	1
Goodwill | $	$ 64	$ 64

Business and Summary of Signi_8

Business and Summary of Significant Accounting Policies - Asset Impairment Charges - Narrative (Details)	12 Months Ended
	Dec. 31, 2022 USD ($)
Accounting Policies [Abstract]
Impairment of goodwill and intangible assets	$ 0

Business and Summary of Signi_9

Business and Summary of Significant Accounting Policies - Other Investments, Narrative (Details) $ in Millions	Dec. 31, 2022 USD ($)
Accounting Policies [Abstract]
Non-marketable equity securities	$ 1.2

Business and Summary of Sign_10

Business and Summary of Significant Accounting Policies - Warranty Liabilities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Warranty Liabilities [Roll Forward]
Balance at beginning of period	$ 10,069	$ 12,152	$ 11,345
Additions charged to costs and expenses for current-year sales	16,694	16,732	13,387
Deductions from reserves	(17,157)	(18,134)	(12,158)
Change in liabilities for pre-existing warranties during the current    year, including expirations	(609)	(681)	(422)
Balance at end of period	$ 8,997	$ 10,069	$ 12,152

Business and Summary of Sign_11

Business and Summary of Significant Accounting Policies - Dividends - Narrative (Details)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Leverage ratio	375%

Business and Summary of Sign_12

Business and Summary of Significant Accounting Policies - Share Repurchases - Narrative (Details)	Dec. 31, 2022 USD ($)
Accounting Policies [Abstract]
Remaining authorized stock purchase plan	$ 348,000,000
Approved share repurchase program	$ 600,000,000

Business and Summary of Sign_13

Business and Summary of Significant Accounting Policies - Revenue Recognition - Narrative (Details) - SleepIQ Technology	12 Months Ended
	Dec. 31, 2022
Minimum
Disaggregation of Revenue [Line Items]
Estimated product life	4 years 6 months
Maximum
Disaggregation of Revenue [Line Items]
Estimated product life	5 years

Business and Summary of Sign_14

Business and Summary of Significant Accounting Policies - Advertising Costs - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Accounting Policies [Abstract]
Advertising expense	$ 309	$ 323	$ 253

Business and Summary of Sign_15

Business and Summary of Significant Accounting Policies - Insurance - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2022	Jan. 01, 2022
Accounting Policies [Abstract]
Self-insurance liability	$ 13	$ 13
Self-insurance liability, current	9	9
Self-insurance liability, noncurrent	$ 4	$ 4

Business and Summary of Sign_16

Business and Summary of Significant Accounting Policies - Stock-Based Compensation - Narrative (Details) - shares shares in Millions	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	2.1
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award option vesting period	3 years
Award expiration period	10 years
Time-Based Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award option vesting period	3 years
Performance- Based Stock Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards - shares awarded (as a percent)	0%	0%	0%
Performance- Based Stock Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock awards - shares awarded (as a percent)	200%	200%	200%

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring - Level 1 - USD ($) $ in Millions	Dec. 31, 2022	Jan. 01, 2022
Other non-current assets | Available-for-sale securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities assets funding the deferred compensation plan	$ 17	$ 19
Other non-current liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Deferred compensation plan liability	$ 17	$ 19

Inventories - Schedule of Inven

Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Inventory Disclosure [Abstract]
Raw Materials	$ 7,785	$ 11,752
Work in Progress	102	83
Finished goods	106,147	93,809
Inventories	$ 114,034	$ 105,644

Inventories - Schedule of Finis

Inventories - Schedule of Finished Goods Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Inventory Disclosure [Abstract]
Finished beds, including certain retail display beds and deliveries in-transit to those customers who have utilized home delivery services	$ 36,708	$ 40,686
Finished components that were ready for assembly for the completion of beds	45,722	32,835
Retail accessories	23,717	20,288
Finished goods inventory	$ 106,147	$ 93,809

Property and Equipment (Details

Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Property and equipment [Line Items]
Less: Accumulated depreciation and amortization	$ (390,343)	$ (344,024)
Property and equipment, net	200,605	195,128
Leasehold improvements
Property and equipment [Line Items]
Property and equipment, gross	140,344	130,640
Furniture and equipment
Property and equipment [Line Items]
Property and equipment, gross	151,202	136,464
Production machinery, computer equipment and software
Property and equipment [Line Items]
Property and equipment, gross	287,834	257,802
Construction in progress
Property and equipment [Line Items]
Property and equipment, gross	$ 11,568	$ 14,246

Goodwill and Intangible Asset_3

Goodwill and Intangible Assets, Net - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Goodwill And Intangible Assets [Line Items]
Goodwill	$ 64,000	$ 64,000
Gross Carrying Amount	20,823	20,823
Accumulated Amortization	18,200	15,797
Developed technologies
Goodwill And Intangible Assets [Line Items]
Gross Carrying Amount	18,851	18,851
Accumulated Amortization	17,641	15,460
Amortization expense definite-lived intangible assets	2,000	2,000	$ 2,000
Patents
Goodwill And Intangible Assets [Line Items]
Gross Carrying Amount	1,972	1,972
Accumulated Amortization	559	337
Amortization expense definite-lived intangible assets	200	200	$ 100
Trade Names
Goodwill And Intangible Assets [Line Items]
Indefinite-lived trade name/trademarks	$ 1,400	$ 1,400

Goodwill and Intangible Asset_4

Goodwill and Intangible Assets, Net - Definite-lived Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 20,823	$ 20,823
Accumulated Amortization	18,200	15,797
Developed technologies
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	18,851	18,851
Accumulated Amortization	17,641	15,460
Patents
Definite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,972	1,972
Accumulated Amortization	$ 559	$ 337

Goodwill and Intangible Asset_5

Goodwill and Intangible Assets, Net - Schedule of Annual Amortization for Definite-Lived Intangible Assets (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 1,431
2024	222
2025	226
2026	222
2027	222
Thereafter	300
Total future amortization for definite-lived intangible assets	$ 2,623

Credit Agreement - Additional I

Credit Agreement - Additional Information (Details) $ in Millions	Oct. 26, 2022	Jul. 03, 2023	Dec. 31, 2022 USD ($)	Oct. 25, 2022
Line of Credit Facility [Line Items]
Current borrowing capacity			$ 825
Total availability			$ 1,200
Minimum interest coverage ratio			300%
Revolving Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Debt Instrument, Covenant, Net Leverage Ratio, Maximum Threshold	4.5			3.75
Debt Instrument, Covenant, Net Leverage Ratio, Maximum Threshold For Three Consecutive Quarterly Reporting Periods	5
Line of Credit Facility, Commitment Fee Percentage	0.50%
Debt instrument, basis spread on variable rate	0.50%
Revolving Credit Facility | Line of Credit | Forecast
Line of Credit Facility [Line Items]
Debt Instrument, Covenant, Net Leverage Ratio, Maximum Threshold		4.5
Revolving Credit Facility | Line of Credit | Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.10%

Credit Agreement - Schedule of

Credit Agreement - Schedule of Borrowings Under Credit Facility (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Debt Disclosure [Abstract]
Outstanding borrowings	$ 459,600	$ 382,500
Outstanding letters of credit	5,947	3,997
Additional borrowing capacity	$ 359,453	$ 438,503
Weighted-average interest rate	6.70%	1.60%

Leases - Additional Information

Leases - Additional Information (Details)	Dec. 31, 2022
Retail Store Leases | Minimum
Lessee, Lease, Description [Line Items]
Lease term	5 years
Retail Store Leases | Maximum
Lessee, Lease, Description [Line Items]
Lease term	10 years
Office and Manufacturing Leases | Maximum
Lessee, Lease, Description [Line Items]
Lease term	15 years
Lease Vehicles and Certain Equipment Under Operating Leases | Minimum
Lessee, Lease, Description [Line Items]
Lease term	3 years
Lease Vehicles and Certain Equipment Under Operating Leases | Maximum
Lessee, Lease, Description [Line Items]
Lease term	6 years

Leases - Schedule of Lease Cost

Leases - Schedule of Lease Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Leases [Abstract]
Operating lease costs	$ 109,766	$ 99,474	$ 90,311
Variable lease costs	$ 877	$ 2,205	$ 1,147

Leases - Schedule of Maturities

Leases - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Leases [Abstract]
2023	$ 103,935
2024	93,430
2025	82,375
2026	70,542
2027	55,494
Thereafter	118,529
Total operating lease payments	524,305
Less: Interest	87,893
Present value of operating lease liabilities	436,412
Amount leases executed, not yet commenced, excluded from table	80,000
Operating Lease, Liability Current	$ 79,533	$ 72,360

Leases - Schedule of Other Info

Leases - Schedule of Other Information Related Operating Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Leases [Abstract]
Weighted-average remaining lease term (years)	6 years 2 months 12 days	6 years 4 months 24 days
Weighted-average discount rate	6.20%	6.10%
Cash paid for amounts included in present value of operating lease liabilities	$ 99,819	$ 90,198	$ 85,497
Right-of-use assets obtained in exchange for operating lease liabilities	$ 82,117	$ 109,000	$ 43,860

Shareholders' Deficit - Schedul

Shareholders' Deficit - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 13,223	$ 23,214	$ 21,813
Income tax benefit	3,319	5,722	5,126
Total stock-based compensation expense, net of tax	9,904	17,492	16,687
Stock awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	9,471	20,216	19,435
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 3,752	$ 2,998	$ 2,378

Shareholders' Deficit - Summary

Shareholders' Deficit - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Stock Options
Beginning balance, outstanding (in shares)	699
Granted (in shares)	148
Exercised (in shares)	(48)
Canceled/Forfeited (in shares)	(12)
Ending balance, outstanding (in shares)	787	699
Ending balance, exercisable (in shares)	558
Vested and expected to vest, ending balance (in shares)	771
Weighted- Average Exercise Price per Share
Outstanding, beginning balance (in dollars per share)	$ 42.02
Granted (in dollars per share)	58.60
Exercised (in dollars per share)	23.57
Canceled/Forfeited (in dollars per share)	58.63
Outstanding, ending balance (in dollars per share)	46.02	$ 42.02
Exercisable, ending balance (in dollars per share)	37.09
Vested and expected to vest, ending balance (in dollars per share)	$ 45.66
Weighted- Average Remaining Contractual Term
Weighted-average remaining contractual term - outstanding (years)	6 years 1 month 6 days	6 years 3 months 18 days
Weighted-average remaining contractual term - exercisable (years)	5 years 2 months 12 days
Weighted-average remaining contractual term - vested and expected to vest (years)	6 years 1 month 6 days
Aggregate Intrinsic Value
Aggregate intrinsic value - outstanding	$ 829	$ 28,258
Aggregate intrinsic Value - exercisable	829
Aggregate intrinsic value - vested and expected to vest	$ 829

Shareholders' Deficit - Other I

Shareholders' Deficit - Other Information Pertaining to Options (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-Based Payment Arrangement [Abstract]
Weighted-average grant date fair value of stock options granted (in dollars per share)	$ 30.22	$ 71.93	$ 15.10
Total intrinsic value (at exercise) of stock options exercised	$ 1,298	$ 16,003	$ 14,357

Shareholders' Deficit - Additio

Shareholders' Deficit - Additional Information (Details) - USD ($) shares in Millions	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Approved share repurchase program	$ 600,000,000
Remaining authorized stock purchase plan	$ 348,000,000
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	0.4	0.1	0.2
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from stock options exercised	$ 1,100,000
Tax benefit from exercise of stock options	1,300,000
Stock-based compensation expense related to non-vested awards	$ 4,800,000
Weighted average period to recognize remaining expense over	1 year 9 months 18 days
Time- Based Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense related to non-vested awards	$ 9,700,000
Weighted average period to recognize remaining expense over	1 year 9 months 18 days
Performance- Based Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense related to non-vested awards	$ 7,400,000
Weighted average period to recognize remaining expense over	1 year 9 months 18 days

Shareholders' Deficit - Assumpt

Shareholders' Deficit - Assumptions Used to Calculate Fair Value of Options Granted Using Black-Scholes-Merton Option-Pricing Model (Details) - Stock options	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield (as a percent)	0%	0%	0%
Expected volatility (as a percent)	57%	58%	46%
Risk-free interest rate	2.20%	0.90%	0.70%
Expected term (years)	5 years 3 months 18 days	5 years 2 months 12 days	5 years 4 months 24 days

Shareholders' Deficit - Stock A

Shareholders' Deficit - Stock Award Activity (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Time- Based Stock Awards
Stock awards [Roll Forward]
Outstanding at beginning of period (in shares) | shares	206
Granted (in shares) | shares	189
Vested (in shares) | shares	(110)
Canceled/Forfeited (in shares) | shares	(24)
Outstanding at end of period (in shares) | shares	261
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 69.55
Granted (in dollars per share) | $ / shares	54.60
Vested (in dollars per share) | $ / shares	61.35
Canceled/Forfeited (in dollars per share) | $ / shares	72.95
Outstanding at end of period (in dollars per share) | $ / shares	$ 61.88
Performance- Based Stock Awards
Stock awards [Roll Forward]
Outstanding at beginning of period (in shares) | shares	441
Granted (in shares) | shares	329
Vested (in shares) | shares	(251)
Canceled/Forfeited (in shares) | shares	(18)
Outstanding at end of period (in shares) | shares	501
Weighted-Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 63.37
Granted (in dollars per share) | $ / shares	56.16
Vested (in dollars per share) | $ / shares	46.94
Canceled/Forfeited (in dollars per share) | $ / shares	70.10
Outstanding at end of period (in dollars per share) | $ / shares	$ 66.63

Shareholders' Deficit - Sched_2

Shareholders' Deficit - Schedule of Repurchase of Common Stock (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-Based Payment Arrangement [Abstract]
Amount repurchased under Board-approved share repurchase program	$ 54,868	$ 364,479	$ 228,111
Amount repurchased in connection with the vesting of employee restricted stock grants	9,320	17,897	7,040
Total amount repurchased (based on trade dates)	$ 64,188	$ 382,376	$ 235,151

Shareholders' Deficit - Compone

Shareholders' Deficit - Components of Basic and Diluted Net Income per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Share-Based Payment Arrangement [Abstract]
Net income	$ 36,610	$ 153,746	$ 139,189
Basic weighted-average shares outstanding (in shares)	22,396	24,038	27,665
Dilutive effect of stock-based awards (in shares)	456	909	763
Diluted weighted-average shares outstanding (in shares)	22,852	24,947	28,428
Net income - basic (in dollars per share)	$ 1.63	$ 6.40	$ 5.03
Net income - diluted (in dollars per share)	$ 1.60	$ 6.16	$ 4.90

Revenue Recognition - Schedule

Revenue Recognition - Schedule of Deferred Contract Liabilities and Deferred Contract Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Deferred contract assets included in:
Deferred contract assets	$ 83,685	$ 77,391
Deferred contract liabilities included in:
Deferred contract liabilities	107,334	100,170
Other current assets
Deferred contract assets included in:
Other current assets	28,121	28,048
Other non-current assets
Deferred contract assets included in:
Other non-current assets	55,564	49,343
Other current liabilities
Deferred contract liabilities included in:
Other current liabilities	36,335	36,490
Other non-current liabilities
Deferred contract liabilities included in:
Other non-current liabilities	$ 70,999	$ 63,680

Revenue Recognition - Additiona

Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Disaggregation of Revenue [Line Items]
Revenue recognized, included in beginning deferred contract liability balance	$ 34	$ 29	$ 34
Revenue from Contract with Customer Benchmark | Timing of Transfer of Goods or Services Concentration Risk | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Revenue recognized at a point in time (as a percent)	98%	98%	98%

Revenue Recognition - Disaggreg

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Disaggregation of Revenue [Line Items]
Net sales	$ 2,114,297	$ 2,184,949	$ 1,856,555
Retail stores
Disaggregation of Revenue [Line Items]
Net sales	1,823,617	1,904,037	1,582,266
Online, phone, chat and other
Disaggregation of Revenue [Line Items]
Net sales	$ 290,680	$ 280,912	$ 274,289

Revenue Recognition - Schedul_2

Revenue Recognition - Schedule of Sales Return Liability (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022
Sales Return Liability [Roll Forward]
Balance at beginning of year	$ 22,368	$ 24,765
Additions that reduce net sales	103,477	91,975
Deduction from reserves	(100,251)	(94,372)
Balance at end of period	$ 25,594	$ 22,368

Profit Sharing and 401(k) Plan

Profit Sharing and 401(k) Plan (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Retirement Benefits [Abstract]
Employee compensation deferral (as a percent)	50%
Employer contributions	$ 10	$ 7	$ 6

Income Taxes - Summary of Incom

Income Taxes - Summary of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Current:
Federal	$ 15,518	$ 17,019	$ 29,762
State	5,174	4,568	6,528
Current income tax expense	20,692	21,587	36,290
Deferred:
Federal	(7,264)	10,954	584
State	(1,143)	1,004	(91)
Deferred income tax expense	(8,407)	11,958	493
Income tax expense	$ 12,285	$ 33,545	$ 36,783

Income Taxes - Reconciliation o

Income Taxes - Reconciliation of Income Tax Expense (Benefit) at the Statutory Federal Rate (Details)	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Income Tax Disclosure [Abstract]
Statutory federal income tax	21%	21%	21%
State income taxes, net of federal benefit	6.40%	3%	2.40%
R&D tax credits	(5.50%)	(1.40%)	(1.40%)
Non-deductible compensation	1.70%	1.50%	1%
Stock-based compensation	(1.20%)	(6.30%)	(2.40%)
Changes in unrecognized tax benefits	(0.40%)	(0.10%)	0.30%
Other	3.10%	0.20%	0%
Effective income tax rate	25.10%	17.90%	20.90%

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details) - USD ($)	Dec. 31, 2022	Jan. 01, 2022
Income Taxes [Line Items]
Valuation allowance	$ 615,000	$ 615,000
Unrecognized tax benefits that would impact effective tax rate	3,200,000	$ 3,700,000
Federal
Income Taxes [Line Items]
Operating loss carryforwards	$ 500,000

Income Taxes - Summary of Defer

Income Taxes - Summary of Deferred Income Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Jan. 01, 2022
Deferred tax assets:
Stock-based compensation	$ 6,896	$ 8,037
Operating lease liabilities	109,144	102,292
Warranty and returns liabilities	7,881	7,459
Net operating loss carryforwards and credits	2,051	1,939
Compensation and benefits	7,678	8,206
Research and development	13,860	0
Other	6,110	6,607
Total gross deferred tax assets	153,620	134,540
Valuation allowance	(615)	(615)
Total gross deferred tax assets after valuation allowance	153,005	133,925
Deferred tax liabilities:
Property and equipment	38,442	34,655
Operating lease right-of-use assets	99,311	92,778
Deferred revenue	4,394	5,460
Other	2,900	1,720
Total gross deferred tax liabilities	145,047	134,613
Net deferred tax assets	$ 7,958
Net deferred tax liabilities		$ (688)

Income Taxes - Summary of Recon

Income Taxes - Summary of Reconciliations Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Beginning balance	$ 3,869	$ 3,912	$ 3,337
Increases related to current-year tax positions	910	831	860
Increases related to prior-year tax positions	252	4	27
Decreases related to prior-year tax positions	(328)	(33)	0
Lapse of statute of limitations	(1,058)	(845)	(312)
Ending balance	$ 3,645	$ 3,869	$ 3,912

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	12 Months Ended
	Dec. 31, 2022 USD ($) lease_commitment
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Inventory purchase commitments	$ 45
Purchase Commitment | Future Retail Sites
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Number of future retail store and other lease commitments | lease_commitment	46
Future retail store and other leases, total lease payments	$ 80
Purchase Commitment | Future Retail Sites | Minimum
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Future retail store and other lease commitments term	6 years
Purchase Commitment | Future Retail Sites | Maximum
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Future retail store and other lease commitments term	10 years

Schedule II - Valuation and Q_2

Schedule II - Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Jan. 01, 2022	Jan. 02, 2021
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at beginning of period	$ 924	$ 1,046	$ 898
Additions charged to costs and expenses	2,294	1,750	1,541
Deductions from reserves	(1,951)	(1,872)	(1,393)
Balance at end of period	$ 1,267	$ 924	$ 1,046