Mattress Firm Eyes Bankruptcy, Store Closures

As Mattress Firm, Inc. looks to shutter money-losing locations and find its way out of leases, people familiar with the company say that the retailer is mulling a bankruptcy filing. On the news, Tempur Sealy International Inc.’s stock rose 5.2 percent and closed at $52.64, Reuters reported.

Steinhoff International Holdings NV, which is the parent of Mattress Firm and acquired the company in 2016, has reportedly sought to restructure some of its subsidiaries’ debt. In July, creditors said they would halt debt claims for a three-year period. Even so, sources told Reuters that the mattress company’s plans are still in flux and that final decisions have not been made. Steinhoff and Mattress Firm are also reportedly working with AlixPartners, LLP, which works with companies with turnaround strategies.

The news comes as the company behind major mattress brands like Tempur-Pedic, Sealy and Stearns and Foster posted a full-year decline in revenue in February 2017, marking the first annual decline for Tempur Sealy International since 2012.

A 2017 report from Bloomberg noted that even as conditions were prime for mattress buying — the economy was good, and consumers were obsessed with wellness — traditional players in the space were having to work harder to keep pace against new entrants and changing shopping behaviors. When looking for mattresses, consumers no longer felt obligated to shop in-store.

This was, in part, due to a wave of new manufacturing startups selling mattresses online, including Casper, Helix Sleep, Saatva, Tuft & Needle, Leesa and Purple. These disruptors had been able to cut out the middleman and instead offer customers both lower prices and free shipping, typically with a no-risk free trial as well.

In July of 2017, Tempur Sealy’s Chief Financial Officer Barry Hytinen told analysts that the bed-in-a-box market was too niche, and noted that the startups tended to spend too much on customer acquisition when he was asked if the company would ever look to buy out one of those firms.