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Mattress Firm has several stores in the Oklahoma City area. Photo Date: March 2, 2018 (JJBers / Flickr / CC BY 2.0 / MGN)
HOUSTON (AP) – Mattress Firm, Inc., the largest mattress retailer in the country, asked on Friday for protection against bankruptcy, saying its rapid expansion of stores in recent years – with locations often very close to one another. others – had resulted in "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.
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 that the company's previous management team had made several miscalculations by changing the brand name of more than 1,300 stores purchased from competitors in the last two years.
"Although these acquisitions have enabled 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. others, "said the company. "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, CEO and Chairman 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 its customers, open new stores in new markets and strategically expand into existing markets where we see the best 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 its share price has dropped significantly after reporting accounting irregularities being investigated.
"The last few years have been difficult for Mattress Firm, which had too many stores, was facing competitive pressures from the industry, and had a parent company that was shaken by an accounting scandal," said New York attorney Daniel Lowenthal. Patterson Belknap Webb & Tyler who specializes in bankruptcy law. "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.
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