Mattress Firm goes bankrupt and will close up to 700 stores

The Houston-based retailer suffers from a resurgence of online "bed-in-a-box" retailers, too many physical stores and an accounting mess at its parent company, Steinhoff International.

Mattress Firm plans to close up to 700 stores out of its 3,230 stores. These stores are located "in some markets where we have too many locations close to each other," said Steve Stagner, CEO of Mattress Firm, in a statement.

About 200 will close within a few days.

"We intend to use the additional cash flow from these actions to enhance our product offering, provide greater value to our customers, open new stores in new markets, and strategically grow our business." in existing markets where we see the best opportunities to serve our customers "I said.

Mattress Firms said in court that she would not proceed with typical sales outings, where customers could sign an agreement.

Instead, he will transfer the mattresses to other stores, warehouses or distribution centers, or may "decide to abandon" the products of the showroom, according to a brief filed in court. .

In chapter 11 of the bankruptcy, retailers usually try to get out of expensive leases and reduce their debt to have a better chance of surviving profitably.

The retailer has grown in recent years through a series of acquisitions – Mattress Giant in 2012, Sleep Train in 2014 and Sleepy's in 2016.

It was too much, too fast.

The company has since closed hundreds of sites, seeking stability in a context of upheaval in the mattress market.

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Over-expansion is at the heart of the industry's problems. There are now more places to buy a mattress in the United States than buying a Big Mac.

Representatives of Mattress Firm and Steinhoff International did not immediately respond to requests for comments other than a press release.

The chain declared bankruptcy in federal Delaware court. The company said it has secured enough support from secured lenders to stay in business, but a federal judge must approve the company's restructuring plan, which is not guaranteed.

The case could have significant collateral damage:

• Homeowners who rely heavily on the expansion of Mattress Firm will end up with empty stores.

• Mattress manufacturers could suffer huge losses. Mattress Firm alone owes more than $ 90 million to Serta Simmons, according to a court record.

• Competitors could face a flood of inexpensive mattresses. If the company can not survive the bankruptcy, huge disruptions could ensue.

TO CLOSE

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On the other hand, online retailers could capitalize in the long run. Bed-in-box vendors like Casper and Leesa have taken a leap forward, offering free trial periods, free shipping and easy orders.

But online mattress manufacturers are facing their own problems, including significant discounts, intense marketing and the threat of Amazon dominating them.