Mattress Firm, the largest mattress retailer in the country, declares bankruptcy.

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HOUSTON >> Mattress Firm, Inc., the largest mattress retailer in the country, today called for bankruptcy protection, saying its rapid store expansion in recent years – with locations often very close to one another – had resulted in a "cannibalization" of sales.

The Houston-based company sought Chapter 11 bankruptcy protection in a Delaware federal court, stating it planned to close up to 700 stores across the country as part of its reorganization plan to continue operations.

Of the 200 stores listed in court filings, no Mattress Firm store in Hawaii has been closed.

The company has more than 3,200 stores and more than 9,800 employees in the United States, and in recent years has significantly expanded its retail footprint.

In court documents, Mattress Firm said the company's previous management team had made several miscalculations by altering the brand image of more than 1,300 stores purchased from competitors in the past two years.

"If these acquisitions have allowed (Mattress Firm) to be present in markets where they were previously little or not present, they have also led to a" cannibalization "of sales between stores close to each other," said the society. "As a result, many Mattress Firm stores are in direct competition with other Mattress Firm stores, resulting in disappointing sales."

According to court documents, Mattress Firm has a liability of more than a billion dollars and has more than 50,000 creditors. It owes its main creditor, the mattress maker Simmons Manufacturing Co., located in Atlanta, nearly $ 65 million.

In a statement, President and Chief Executive Officer Steve Stagner said the bankruptcy filing would allow the company to "strengthen our balance sheet".

Stagner said the reorganization plan will allow the company to "deliver greater value to our customers, open new stores in new markets and strategically expand into existing markets where we envision better opportunities to serve our customers ".

The company, established in 1986, realizes a turnover of more than 3 billion dollars. But in court documents, the company said that during the 2018 fiscal year, it should lose about $ 150 million.

In 2016, South Africa-based retailer Steinhoff International Holdings bought Mattress Firm for $ 3.8 billion.

The parent company of Mattress Firm is grappling with its own problems as the share price has dropped significantly after reporting accounting irregularities being investigated.

"The last few years have been difficult for Mattress Firm. It had too many stores, was facing competitive pressures from the industry, and had a parent company that was shaken by an accounting scandal, "said Daniel Lowenthal, New York Attorney at Patterson Belknap Webb & Tyler, a lawyer specializing in bankruptcy. "But now, his goal is to quickly go into bankruptcy and regroup with new funding."

Mattress Firm said it was hoping to complete its restructuring within two months.