Sleep country draft roadshow presentation - updated as at dec 31 2015 v8

Management PresentationA Confidential Presentation

Disclaimers

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Forward-looking Information

This presentation, including, in particular, under the headings entitled “Stable, long-term growth”, “Key drivers of SSS growth”, “Roadmap to growth – Increase accessories sales”, “Roadmap to growth – Add stores in existing, satellite and new markets”, “Attractive financial model results in strong cash flow conversion”, “National scale has economic benefits”, “Regional store density adds profitability and barrier to entry”, Select Financial Highlights and Growth Targets” and “Investment Highlights”, contains forward-looking information and forward-looking statements which reflect the current view of management with respect to the Company’s objectives, plans, goals, strategies, outlook, results of operations, financial and operating performance, prospects and opportunities. Wherever used, the words “may”, “will”, “anticipate”, “intend”, “estimate”, “expect”, “plan”, “believe” and similar expressions identify forward-looking information and forward-looking statements. Forward-looking information and forward-looking statements should not be reads as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All of the information in this presentation containing forward-looking information or forward-looking statements is qualified by these cautionary statements.

Forward-looking information and forward-looking statements are based on information available to management at the time they are made, underlying estimates, opinions and assumptions made by management and management’s current good faith belief with respect to future strategies, prospects, events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally. Such risks and uncertainties include, but are not limited to, those described in the Company’s 2015 annual information form (the “AIF”) filed on February 24, 2016. A copy of the AIF can be accessed under the Company’s profile on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com. Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be less significant may also adversely affect the Company.

The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and that should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual strategies, prospects, events, performance and results may vary significantly from those expected. There can be no assurance that the actual strategies, prospects, results, performance, events or activities anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and forward-looking statements and are cautioned not to place undue reliance on such information and statements. The Company does not undertake to update any such forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

Non-IFRS Measures and Retail Industry Metrics

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The Company prepares its financial statements in accordance with International Financial Reporting Standards ("IFRS"). In order to provide additional insight into the business, to provide investors with supplemental measures of its operating performance and to highlight trends in its business that may not otherwise be apparent when relying solely on IFRS financial measures, the Company has also provided in this presentation certain non-IFRS measures, including "Same Store Sales Growth" or "SSSG", "EBITDA", "Operating EBITDA", "Operating EBITDA Margin" and "Conversion", each as defined under the heading entitled "Description of Non-IFRS Measures and Retail Industry Metrics" at the end of this presentation. These measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.

Readers are cautioned that these non-IFRS measures are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similarly titled measures presented by other publicly traded companies. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. For further details concerning how the Company calculates these non-IFRS measures and for reconciliations to the most comparable IFRS measures, please see the Company's most recent management's discussion and analysis of financial condition and results of operation filed with Canadian securities regulatory authorities and available on SEDAR at www.sedar.com.

Sleep Country

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David Friesema Robert Masson

Chief Executive OfficerChief Financial Officer

and CorporateSecretary

Investment Highlights

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The Leading Specialty Mattress Retailer in Canada

Best-in-Class Retailer Driven by Superior Strategy and Execution

Clear Growth Strategy

Attractive Financial Model with Strong Cash Flow Conversion

Compelling Industry Fundamentals

Experienced and Committed Management Team

Compelling Industry Fundamentals

Stable, long-term growth

7

(1) Source: ISPA.

Necessity purchase not a fashion item; even during an economic downturn sales are typically deferred and not lost

Recurring demand driven by 10-12 year replacement cycle

Consumer preferences evolving toward premium quality, larger mattresses given growing health awareness and preference for high-quality sleep

Price increases due to inflation are typically passed through to consumers

U.S. Mattress and Foundation Wholesale Sales (US$ billions) (1)

Recession

$0.8 $0.9 $0.9 $1.0 $1.1 $1.2 $1.3 $1.4 $1.4 $1.6 $1.7 $1.8 $1.9 $2.1 $2.3 $2.3 $2.3 $2.4 $2.6 $2.8 $3.0 $3.2 $3.3 $3.6$4.0

$4.4 $4.6 $4.6 $4.8$5.2

$5.8$6.5

$6.8 $6.9$6.2

$5.7 $5.9$6.3

$6.8 $7.0$7.5

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2012

2013

2014

Similar trends experienced in the Canadian market

Specialty Mattress Retailers

58%

Furniture Retailers

26%

Others9%

Department Stores

7%

2014

Shift in consumer shopping preferences

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(1) Source: Furniture Today.

North American retail mattress industry has undergone a fundamental shift in consumer preference toward specialty mattress retailers like Sleep Country

U.S. Specialty Mattress Retailers Taking Share (1)

Specialty Mattress Retailers

32%

Furniture Retailers

42%

Others13%

Department Stores13%

2000

2000 2013

The Leading Specialty Mattress Retailer in Canada

Largest mattress retailer in Canada

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225 stores and 17 distribution centres across 8 provinces (1)

Has opened 88 stores since the beginning of 2007

Only specialty mattress retailer with a national and regionally diverse footprint

(1) Store count as of February 1, 2016.(2) LTM as of December 31, 2015.

BC

AB

SKMB

ON QC

NL

NBPE

NS

39

27

67 88 850

Sleep Country's National Footprint (# of stores)

LTM (2) (C$ millions)

Sales $456.2

Operating EBITDA $69.1

Leading market share

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(1) Source: Market Survey, September 2014. Purchase data based on six months ended September 2014.Note: Leon’s Furniture Ltd. owns both Leon’s and The Brick banners.

The Brick12%

IKEA 8%

Leon's 4%

Hudson's Bay 4%

Others 33%

Sleep Country Canada

24%

Sears Canada15%

BMTC 13%

IKEA 7%

The Brick5%

Matelas Bonheur

5%

Leon's2%

Hudson's Bay 2%

Others 38%

Sears Canada11%

Dormez-vous?17%

Canadian Mattress Industry Share of Consumer Transactions (1)

Leading specialty mattress retailer with an estimated national market share of 23%

Best-in-Class Retailer Driven by Superior Strategy and Execution

Highly focused strategy with exceptional execution

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“Best-in-Class” Retailer

Strong Brand Recognition

1

Unrivalled In-Store Customer Experience

2

Highly Trained and Dedicated Workforce with a Strong

Culture of Customer Service

4Superior Home DeliveryExperience and Ongoing Customer Relationships

3

Leading brand recognition and traffic

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(1) Source: Market Survey, September 2014. (2) Participants polled were asked: “Thinking about stores that sell mattresses, that you would shop at if you were buying a mattress, please tell me the name of the store that

comes to mind first.”(3) Traffic data based on six months ended September 2014.

Note: Leon’s Furniture Ltd. owns both Leon’s and The Brick banners.

"Top-of-Mind" Unaided Brand Awareness (1) (2)

27%

18%

12%

6%5%

Dormez-vous?

BMTC SearsCanada

MatelasBonheur

The Brick

36%

15%

13%

8%

5%

3%

SleepCountryCanada

SearsCanada

The Brick IKEA Leon's Hudson'sBay

Advertising strategy driving “top-of-mind” unaided brand awareness and leading share of customer visits

41%

34%

30%

16%

14% 13%

SleepCountryCanada

SearsCanada

TheBrick

IKEA Leon's Hudson'sBay

Customer Traffic (% of Shoppers Who Visited Store) (1) (3)

30%

27% 26%

16%

9%

Dormez-vous?

SearsCanada

BMTC The Brick MatelasBonheur

Unrivalled in-store customer experience

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Customers Need Assistance

Sleep Country Offering

Effective sales force

Differentiated, multi-vendor product mix

Customer-oriented policies

Infrequent purchase

Big-ticket item

Highly personalized tastes, preferences, needs and budgets

Constantly evolving, difficult to compare product landscape

Leading shopper to buyer conversion

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Shopper to Buyer Conversion (% of Shoppers that Purchase) (1) and Canadian Mattress Industry Share of Consumer Transactions (2)

(1) Source: Market Survey, September 2014. Conversion data based on six months ended September 2014.(2) Source: Market Survey, September 2014. Purchase data based on six months ended September 2014.

Note: Leon’s Furniture Ltd. owns both Leon’s and The Brick banners.

31%

31%

50%

40%

44%

59%

Hudson'sBay

Leon's

IKEA

The Brick

Sears Canada

Sleep Country Canada

4%

4%

8%

12%

15%

24%

Shopper to Buyer Conversion Share of ConsumerTransactions

40%

33%

50%

31%

70%

41%

50%

57%

Hudson'sBay

Leon's

MatelasBonheur

The Brick

IKEA

Sears Canada

BMTC

Dormez-vous?

2%

2%

5%

5%

7%

11%

13%

17%

Share of ConsumerTransactions

Shopper to Buyer Conversion

Superior home delivery experience and ongoing customer relationships

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Home delivery is critical• Customers are sensitive about home

delivery• Final impression left with customers

Customers Sensitive to Service

Better people, better trained• Uniformed delivery personnel• Shoe covers to protect floors

Efficient delivery logistics• Enterprise-wide IT system supports

delivery logistics• Three-hour delivery time window

Recycle/donation of picked-up mattress sets

Sleep Country Offers Superior Execution

Creates high customer satisfaction and word-of-mouth marketing benefits

Strong Team focused on customer service

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(1) Source: WOW! Retailer Ranking by Sector by Leger Metrics Inc.(2) Mercer Retail Industry Compensation and Benefits Survey, August 2014.

Note: Ontario survey based on 113 Ontario retailers. Over 500 recent customers 15 years of age or older were asked to respond to 16 dimensions. Québec survey based on 148 Québec retailers. Over 400 recent customers 15 years of age or older were asked to respond to 10 to 16 dimensions.

Sleep Country’s Award Wining Corporate Culture

Low turnover rate (2)

• Sleep Country at 16% • Retail industry average of 44%

Clear Growth Strategy

Differentiated strategy has delivered strong results and momentum

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Sleep Country Quarterly Same Store Sales Growth (1)

(1) Source: Company report. See ‘‘Non-IFRS Measures and Retail Industry Metrics”.

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Key drivers of SSS growth

Increase Traffic Increased marketing investment Expand messaging

Increase Conversionof Shoppers to Buyers

Continued focus on hiring the best people Additional training initiatives

Higher AUSP Continued shift to higher quality mattresses Larger sizes are increasing in popularity

Expand Accessory Sales

Expand and improve product lines Additional marketing messaging Enhanced training

Enhanced Store Design

Contemporary design creates bright and welcoming atmosphere Greater emphasis on accessory displays

Roadmap to growth – Increase accessories sales

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Bedframes

Pillows

Mattress pads

Key Accessories Sleep Country Accessories Revenue (1) (C$ millions)

Sheets

Duvets

Headboards and Footboards

Opportunity to capture market share in an estimated $830 million highly fragmented yet addressable market in Canada

(1) Source: Company report.

13.9% CAGR

Roadmap to growth – Continued implementation of enhanced store design

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Results for the thirteen stores renovated to date show an increase in revenues above our national SSSG

Roadmap to growth – Add stores in existing, satellite and new markets

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(1) Source: Based on Statistic Canada’s total 2014 population in each province. Note: Store Count as of March 31, 2015.

(2) Assuming a 2% population growth per year for seven years.(3) Source: Company filings.

Significant white space is available given its low store densityTarget to open 50 – 70 new stores

84

60

All Markets High Density Markets

Population Per Store (thousand) (1) Population Per Store (thousand) (3)

162

140

Today 5-7 Years

Leading U.S. Specialty Mattress Retailer

(2)

Modest net new store cost of approximately $325,000 comprising of capex and working capital investment

Typically, new in-fill and satellite stores are cash flow positive within 6 and 12 months, respectively

In-Fill Store Opportunity – Demonstrated Success

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Sleep Country’s most tenured market

Added eight new stores from 2012 to 2015, growing the regional store footprint from 19 to 27 stores

New In-Fill Stores Continue to Drive Sales Growth in Longstanding Richmond Market

(1) See “Non-IFRS Measures and Retail Industry Metrics”. (2) Inner blue circle indicates 3 km radius; outer blue circle indicates 10km radius

B.C. Case Study

19 Existing Stores8 In-Fill StoresCities

Results

Total sales in region increased by 53%• Existing stores achieved compound same

store sales growth of 5% over the 4 years (1)

• New stores contributed 31%

Scale: 20 km

Expanded View (2)

Legend

Attractive Financial Model with Strong Cash Flow Conversion

Attractive financial model results in strong cash flow conversion

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Attractive Financial Model

National Scale Creates Economic Advantages

1

Regional Scale Optimizes Economics on a Per-Store Basis

2

Working Capital Funds Growth

3

Low Capital Expenditure Requirements

4

National scale has economic benefits

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Vendor relationships

• Buying Power

Advertising efficiency

• National buys

Leveraging centralized corporate overheads

Leading Suppliers to Sleep CountrySleep Country’s Economic Advantages

Regional store density adds profitability and barrier to entry

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RegionalStore

Density

RegionalStore

Density

High barrier to entry for competition

Leverage regional fixed costs

Build leadership position quickly

Add in-fill stores over time

Working capital funds growth

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Sleep Country Working Capital Cycle

Day 33-48: Pay Supplier

Day 0: Customer Purchase Customer Payment

Day 3: Mattress Delivered

to Warehouse

Day 0 Day 33 Day 48Day 1

Day 1: Mattress Ordered

Day 3

30-45 Day Payment Terms from Supplier

Day 4

Day 4: Mattress Delivered

to Customer

“Just-in-time” inventory relationship with mattress suppliers results in cash flow generated from working capital to fund growth

Low capital expenditure model

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Maintenance capital expenditures have averaged 1.0% of revenue from 2008 to 2015

(1) Source: Company report.

Sleep Country Maintenance and Growth Capital Expenditures (% of sales) (1)

Select Financial Highlights and Growth Targets (1)

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(1) See “Non-IFRS Measures and Retail Industry Metrics”.(2) Excludes SG&A expenses added back in the reconciliation of EBITDA to Operating EBITDA.

(C$ million unless otherwise stated) 2012 2013 2014 2015 5-7 Year Targets

Revenue $332.6 $353.9 $396.1 $456.2 $575 to $640

Same Store Sales Growth (4.2%) 1.0% 8.3% 11.3% 3-6%

Net New Stores 10 13 4 12 50-70 Total

Gross Profit $80.9 $88.1 $103.4 $126.8

Gross Margin 24.3% 24.9% 26.1% 27.8%

SG&A(2) $42.5 $48.7 $52.8 $57.7

% of sales 12.8% 13.8% 13.3% 12.6%

Operating EBITDA $38.4 $39.4 $50.6 $69.1 $80 to $90

Operating EBITDA Margin 11.5% 11.1% 12.8% 15.2%

Capitalization

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Capital structure provides financial flexibility to grow the business

As at December 31, 2015(C$ millions)

Revolving Credit Facility $124.0

Finance Leases $0.8

Total Long Term Debt $124.8

Net Debt / LTM Operating EBITDA 1.57x

Cash on Hand $16.6

Net Debt $108.2

Outstanding Lease Liabilities

Net Debt / EBITDAR

$157.0

2.48x

Experienced and Committed Management Team

Proven management team committed to growing the business and shareholder value

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Member Years at Sleep Country

Relevant Experience Biography

Dave Friesema Chief Executive Officer

20+ 20+ Held numerous senior positions at Sleep Country including Head of Sales, General Manager and Chief Operating Officer

Chairman of the Better Sleep Council Canada Helped establish and manage mattress retail organizations in the United States

Robert Masson Chief Financial Officer and

Corporate Secretary

2 20+ Chief Financial Officer of Second Cup from 2009 to 2013 Prior to joining Sleep Country, Robert had extensive management experience with several

other public and private companies including, IBM Canada, Manchuwok, Ernst & Young, Deloitte & Touche and Sappi

Stewart Schaefer President, Dormez-vous? Chief Business Development

Officer

10 20+ Founded Dormez-vous? in 1994; grew the business to five stores before being acquired by Sleep Country in 2006

In 1992, co-founded Heritage Classic Beds, a distributor of metal beds Commodity Broker in Chicago from 1986 to 1992, later returning to Montreal to work at

Dean Witter Reynolds and Refco Futures

Dave Howcroft Senior Vice President, Sales

20+ 20+ Created programs to consistently build, develop and motivate a first-class sales team Instrumental in developing and implementing various sales workshops, training programs

and sales processes

Sieg Will Senior Vice President, Operations

14 20+ Instrumental in development and implementation of standard operating policies and procedures across organization

Held senior positions with Canadian Tire and PepsiCo in the sales, operations and account management areas

Eric Solomon Senior Vice President,

Merchandising and Marketing

20+ 20+ Instrumental in growing the business by increasing "top-of-mind" brand awareness Provides oversight to the marketing department

Stephen Gunn Founder & Executive Co-Chair

20+ 20+ Co-founded Sleep Country in 1994 Co-founded and was President of Kenrick Capital, a private equity firm Management Consultant at McKinsey and Company from 1981 to 1987 Serves on the Board of Directors of Dollarama, Golfsmith International, Cara and

Mastermind Toys

Christine Magee Founder & Executive Co-Chair

20+ 20+ Co-founded Sleep Country in 1994 Senior Manager of Corporate and Commercial Lending with National Bank from 1985 to

1994 Serves on the Board of Directors of Sirius XM Canada, Trillium Health Partners and the

Advisory Board of the Ivey School of Business

Investment Highlights

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Compelling Industry

Fundamentals

North American mattress and foundation industry is characterized by stable, long-term growth and a high degree of resiliency to economic swings

Industry demand driven by essential nature of product and replacement cycle of 10-12 years Shift in consumer preference towards larger size mattresses and premium quality products Consumers have shifted preference towards specialty mattress retailers due to big-ticket nature of mattress purchase and lack of consumer

product knowledge Low vulnerability to online competition and showrooming due to highly tactile purchase decision,

The Leading Specialty Mattress Retailer in Canada

Only specialty mattress retailer in Canada with a national and regionally diverse footprint National footprint of 225 stores and 17 distribution centres across 8 provinces Leading specialty mattress retailer with an estimated national market share of 23%

Best-in-Class Retailer Driven by Superior Strategy

and Execution

Largest share of customer visits across Canada driven by “top-of-mind” unaided brand awareness and 20-year advertising investment Unrivalled in-store customer experience drives high conversion of sales, repeat business and superior sales per associate metrics Superior home delivery experience and ongoing customer relationships drives high customer satisfaction, repeat sales and word-of-mouth

advertising Highly trained and dedicated workforce with a strong culture of customer service Convenient and highly visible locations

Clear Growth Strategy

Opportunity to grow Revenue and Operating EBITDA to $575-$640 million and $80-$90 million, respectively, in 5-7 years Strong same store sales growth(1) potential driven by increased mattress and accessories sales growth and continued implementation of

enhanced store design Opportunity to open 50-70 net new stores in the next 5-7 years in existing, satellite and new markets Operating leverage on sales growth through highly scalable centralized support infrastructure Selectively consider strategic acquisitions that are accretive and enhance market opportunities

Attractive Financial Model with Strong

Cash Flow Conversion

National scale creates economic advantages Regional scale optimizes economics on a per-store basis Negative working capital operating model facilitated by "just in time" inventory relationship with suppliers, funds growth Low capital expenditure requirements due to asset-light business model (~1.0% maintenance capex requirements) Compelling new store economics with in-fill locations typically becoming cash flow positive within 6 months of opening

Experienced and Committed

Management Team

Highly experienced management team with proven track record On average 15+ years of experience with Sleep Country and 20+ years of relevant industry experience Proven track record of success as a public company Co-founders remain committed to the business and its long-term success

(1) See “Non-IFRS Measures and Retail Industry Metrics”.

Description of Non-IFRS Measures and Retail Industry Metrics

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This presentation makes reference to certain non-IFRS measures including:

“AUSP” is defined as the average unit selling price of a mattress or foundation.

“EBITDA” is defined as net earnings (loss) from continuing operations before: (i) net interest expense and other financing charges; (ii) income taxes; (iii) depreciation of property, plant and equipment; and (iv) amortization of other assets.

“Conversion” is defined as the number of customers who entered a store and made a purchase divided by the total number of customers who entered the store (expressed as a percentage).

“Operating EBITDA” is defined as EBITDA adjusted for: (i) reduction in management bonuses; (ii) reduction in management compensation; (iii) certain non-recurring items (shareholder reorganization, professional fees and customer deposit breakages and other provision); and (iv) share based compensation.

“Same Store Sales Growth” or “SSSG” is a retail industry metric used to compare sales derived from the established stores of certain period over the same period in prior year. SSSG helps to explain what portion of sales growth can be attributed to growth in established stores and what portion can be attributed to the opening of the new stores. Sleep Country calculates SSSG as the percentage increase or decrease in sales of stores opened for at least 12 complete months relative to the same period in the prior year.

These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similarly titled measures presented by other publicly traded companies. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. For further details concerning how the Company calculates these non-IFRS measures and for reconciliations to the most comparable IFRS measures, please see the Company's most recent management's discussion and analysis of financial condition and results of operation filed with Canadian securities regulatory authorities and available on SEDAR at www.sedar.com.