Is That Good News For Mattress Retailers?
After weeks of speculation, Mattress Firm finally announced today that it has filed for bankruptcy. The retailer and its subsidiaries filed voluntary Chapter 11 restructuring cases in the U.S. Bankruptcy Court in Delaware. As part of this decision, the retailer will implement a “prepackaged plan of reorganization” that aims to ultimately “strengthen its balance sheet and optimize its store footprint.” This restructuring process, which Mattress Firm expects to complete within the next 45 to 60 days, includes closing 700 “economically inefficient store locations” and securing millions of dollars in financing to support its ongoing operations.
Of course, this news doesn’t come as much of a surprise to the mattress and bedding industry. Mattress Firm has been embroiled in financial issues in recent years, including an investigation into the alleged accounting fraud of its parent company Steinhoff International and a lawsuit against former employees over its “aggressive store expansion” strategy. Whispers of Mattress Firm filing for bankruptcy have been on the table for quite some time.
Of the 700 retail locations that are to be closed, Mattress Firm expects to shutter an initial group of 200 stores within the next few days. The retailer will make final decisions about the rest of the closures in the coming weeks—and some industry players are already speculating that the total number of closures may increase.
Even after all of these store closings, Mattress Firm will still have 2,800 retail locations throughout the country. These remaining stores, along with its online sales platform, will continue to serve customers despite the bankruptcy filing—and Mattress Firm expects all deliveries will be fulfilled as schedule. Additionally, the company “intends that warranties, guarantees and other customer programs will be honored as usual.”
While the store closures will surely be unwelcome news for many retail sales associates, a leaner retail footprint will hopefully help Mattress Firm get its finances back on track. “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,” explained Steve Stagner, Executive Chairman, President and CEO of Mattress Firm. “We intend to use the additional liquidity from these actions to improve our product offering, provide greater value to our customers, open new stores in new markets, and strategically expand in existing markets where we see the greatest opportunities to serve our customers.”
Ultimately, Mattress Firm’s bankruptcy could also have a very positive impact on the mattress retail industry at large. The significant number of store closures opens up more opportunities for new, smaller and independent retailers to fill in new gaps in the marketplace. It also puts the brakes on the monopoly-esque stronghold the retailer has been less-than-successfully building towards in recent years. A more competitive retail landscape often spurs more innovative thinking and creative strategies—both of which could help reenergize the brick-and-mortar mattress marketplace.
Get all the details about Mattress Firm filing for bankruptcy here.