Sleep Number 8K Regulation FD Disclosure | SNBR 27 Feb 12

EXHIBIT 99.1

Unleashing Profitable
Growth Formula

February 2012

Statements used in this news release relating to future plans, events, financial results or
performance are forward-looking statements subject to certain risks and uncertainties
including, among others, such factors as current general and industry economic trends;
consumer confidence; the effectiveness of our marketing and sales programs, including
advertising and promotional efforts; consumer acceptance of our products, product quality and
brand image; our ability to continue to improve our product line and product quality; warranty
obligations; availability of attractive and cost-effective consumer credit options; execution of
our retail store distribution strategy; rising commodity costs and other inflationary pressures;
our dependence on significant suppliers, including several sole-source suppliers and the
vulnerability of suppliers to recessionary pressures; industry competition; risks of pending and
potentially unforeseen litigation; increasing government regulations; the adequacy of our
management information systems to meet the evolving needs of our business and evolving
regulatory standards; our ability to attract and retain key employees; and uncertainties arising
from global events, such as terrorist attacks or a pandemic outbreak, or the threat of such
events. Additional information concerning these and other risks and uncertainties is contained
in our filings with the SEC, including our Annual Report on Form 10-K, and other periodic
reports filed with the SEC. The company has no obligation to publicly update or revise any of
the forward-looking statements in this presentation.

FORWARD LOOKING STATEMENTS

Self-funding, strong balance sheet and no debt

Accelerating margins

Compelling sales growth

KEY INVESTMENT PROPOSITION

• Differentiated product -

DualAir™ adjustable mattress and

proprietary bedding collection

• Exclusive distribution

• Advantaged business model -
vertically integrated

• 12 consecutive quarters of profit
improvement 26% comp in 2011

SLEEP NUMBER OVERVIEW

Top-Line
Growth

Sustainable
Profitable
Growth

• Older customer with back pain

• Narrow Direct Response media

• National store growth

• Younger, more affluent customer

• Broad-reach media

• Market development

COMPANY TRANSFORMATION

Sleep Number transformed into a strong company with sustainable, profitable growth

2011

(11%)

11%

23%

2011

2010

2009

Growth formula has led to record levels of sales and margin

1-Yr Comp

(4%)

19%

26%

Operating Margin

8.6%

12.2%

2011

2010

2009

GM%

SM Exp%

61.6%

62.5%

63.3%

47.6%

44.6%

42.7%

4.4%*

EPS

$0.57

$1.07

2010

2009

$0.24*

*Pro Forma EPS

*Pro Forma Operating Margin

PROVEN GROWTH FORMULA

Net Sales Growth

• Asset turnover rate 3x competitors

• Fast growing Return on Invested Capital

Additional financial buffer

Gap to break-even sales $250M (33%)

Break-even sales (ttm)

Actual sales (ttm)

$250M
(33%)

>$125M in cash &
No debt

Net sales distribution of
stores open > 1 year

Main Driver

Quantum increase in store productivity

FY09

FY11

Sleep Number can manage economic headwinds and continue to invest in opportunities

POSITIONED WITH ECONOMIC FLEXIBILITY

• Consistent growth over past three decades,
reset in 08/09 (resilient following recessions)

• Premium ($>1,000) outpacing total industry

• Current recovery driven by non-innerspring

• Industry sales at retail $12B

• Sleep Number has less than 5% share

US wholesale mattress sales steadily growing

Industry moving to non-innerspring

Large industry with Sleep Number in the sweet-spot of premium & non-innerspring growth

INDUSTRY DYNAMICS

Premium segment (>$1,000)

Projected growth

Recession

Year of negative growth

1.3

6.9

6.5

6.8

5.6

Source: Industry report (ISPA) & KeyBanc estimates

($ in billions)

54%

Non-Innerspring

5.9

19%

33%

Share of total

Broadening awareness is #1 growth opportunity

Awareness drives market share

National average

• Leading markets 10-12% share

• Sleep Number awareness lags industry leaders

55%

Leading

Innerspring

Leading

Non-Innerspring

32%

15%

Sleep Number*

Leading markets

10-12%

Awareness

Market share

#1 growth

opportunity

15%

25%-

40%

10-15% share

$1.5B+ net sales

* Awareness as of August 2011

AWARENESS

Increasing media investment & effectiveness

Broader target Customer

• Broader media strategy increases reach

• Increased investment focused on national
advertising leverage and local development

• Redefined target customer

• Includes prime mattress buying years

• Moving from need state to aspirational

Before

After

• 45-65+ yrs. old

• $50K+ income

• Need state-driven

• 30-54 yrs. old

• $75K+ income

• Values health

• Will pay premium

Targeting a broader customer base and investing for greater reach

2009

2012

Increases target
market 4x

Direct

Media

Broad

Reach

Achieving ~3x reach

with 2x investment

$61M

$120M+

AWARENESS

National retailer

National scale in place; now focused on local market development

• 380+ stores in 45 states

• Exclusive distribution

• 5-8% annual store growth with >90% market fill-in

Sleep Number store presence

• Differentiated store design

• Company-controlled retail experience

• Reposition or remodel 15-20% of stores annually

Flexible real estate - mall and non mall

> $2.0M average sales per store planned in 2012

DISTRIBUTION

Aggressive growth strategy for large, underdeveloped markets

Aggressive growth strategy

• Heavy-up local media for break-through share of
media voice

• Rapidly optimize store location, format and design

• Pilot market success - on track to double market
share in 3 years in these markets

• Apply strategy to 13 total markets - represents 1/3
of bedding sales ($4B)

…4 in 2011, 3 in 2012 and 6 in 2013-2014

Aggressive growth pilot

Growing 2-3x faster
Year 1

22%

16%

25%

28%

49%

59%

66%

2011 YOY% net sales-total company

4 aggressive growth pilots

Integrated

strategy

launch

DISTRIBUTION

INNOVATIVE PRODUCTS

The most differentiated products in the industry

$999

$1,399

$1,699

$2,599

$3,199

i10

$4,699

$2,099

Sleep Number Bed Series Pricing (Queen Sets):

$3,199

Performance

Innovation

Memory Foam

Sleep Number Beds:

• DualAir™ Technology- adjusts on each side for

personalized comfort

• Clinically proven to improve quality of sleep

• Premium good/better/best range of beds

• Opening price point of $699 for queen mattress

Bedding Collection: Solutions designed to improve sleep

FlexFit™ Series: For a fully adjustable experience

Classic

Consumer insight-driven product launches

• Introduction to the Sleep Number experience

• Adjusts to individual’s size, shape, sleeping position

• CoolFit™ Foam, Memory Fiber or European White
Goose Down

• Price $189 - $229

AirFit™ Adjustable Pillow

INNOVATIVE PRODUCTS

• Proprietary CoolFit™ foam with gel technology

• CoolFit™ foam cools, contours and is more breathable

• Exclusive Sleep Number DualAir™ technology

• Price $3,199 queen set

m7 Memory Foam Bed

Differentiated store experience

• Highly trained & tenured full time Sleep
Professionals

• Technology shows science behind the bed

• Relationship-based selling process

• 95% of customers report store experience
exceeded expectations

End-to-end customer experience

Customers love their Sleep Number experience

Controlled brand experience to build value

EXPERIENCE

Growing share through existing and new stores while improving operating margins

2011

2015

$743M*

Open new
stores

$1.5B+

•Build awareness

•Remodels/Repositions

•Product Innovation

12%

Operating

Margin

15%+

Operating

Margin

• 5-8% annual store
growth

• Year 1 new stores >
company average

Leverage

existing stores

$400M+

* (Net Sales)

LEVERAGING OUR UNIQUE BUSINESS MODEL

Gross Margin

Sales & Marketing

G&A/Other

Operating Margin

Profit Margins

2011

2015

Drivers

63%

43%

12%

>15%

• Supply chain leverage & efficiencies

• Product innovation & pricing

• Store base leverage

• Media mix & efficiency

• Focus on core business

Compelling margin expansion delivers strong bottom-line and EPS growth

EPS growth 20%+

MARGIN OUTLOOK

Sleep Number self-funds growth with advantaged profit and cash model

Robust cash flow

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

EBITDA ttm ($ in millions)

Use of Cash

• Maintain $125M minimum balance

• Priority #1: Self-fund high growth

…stores, systems, product innovation

• Reinstate modest share buyback in 2012

STRONG CASH FLOW GENERATION

Self-funding, strong balance sheet and no debt

Accelerating margins

Compelling sales growth

KEY INVESTMENT PROPOSITION

APPENDIX

Bill McLaughlin
President & CEO Age 55
Sleep Number since 2000

Other experience: PepsiCo
Frito-Lay

Shelly Ibach
EVP & COO Age 52
Sleep Number since 2007

Other experience: Macy’s

Target Corporation

Kathy Roedel
EVP & Chief Technology & Services

Sleep Number since 2005 • Age 51

Other experience: GE Healthcare

Wendy Schoppert
EVP & CFO Age 45
Sleep Number since 2005

Other experience: US Bank
America West
Northwest

Mark Kimball
SVP & General Counsel Age 53
Sleep Number since 1999

Other experience: Oppenheimer, Wolff & Donnelly

Karen Richard
SVP & Human Capital Age 41
Sleep Number since 1996

Other experience: TCF Financial Corp

Strong, experienced management team with long tenure and diverse industry backgrounds

Non-GAAP Financial Measures Reconciliation
Fiscal Years 2009, 2010 and 2011

Non-GAAP Financial Measures Reconciliation
EBITDA for 2009, 2010 and 2011 (trailing-twelve-
month basis)

Thank You

Sleep Number (SNBR) 8-KRegulation FD Disclosure