In an effort to shrink its store footprint and shore up its balance sheets, Mattress Firm and its subsidiaries have filed for a voluntary Chapter 11 restructuring case. The company is seeking to implement a reorganization plan that includes a process for closing “economically inefficient store locations,” the retailer said in an statement.
“The process we have initiated today will allow us to strengthen our balance sheet and accelerate the optimization of our store portfolio,” President and CEO Steve Stagner said in the statement. “Leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other.”
In addition, Mattress Firm noted that it has received commitments for debtor-in-possession financing at roughly $250 million that is “subject to court approval.” At the same time, the retailer said it had $525 million in commitments for senior secured credit facilities, which would enable it “to emerge from Chapter 11 and support operations thereafter.”
The company, which is based in Texas, has 3,000 brick-and-mortar stores.
Sources close to the matter told Reuters that the process would likely take only a few months. In addition, they said that the filing is expected. Mattress Firm’s vendors will receive full repayment, and, through the process, it would shrink its brick-and-mortar footprint. Mattress Firm and its parent company, Steinhoff International Holdings NV, didn’t respond to Reuters’ requests for comment at the time.
In August, people familiar with the company said that the retailer was mulling a bankruptcy filing, and, as a result, Tempur Sealy International’s stock rose 5.2 percent and closed at $52.64. Steinhoff International Holdings NV acquired the company in 2016 and has reportedly sought to restructure some of its debt. In July, creditors said they would halt debt claims for a three-year period.