Mattress Firm, the largest U.S. mattress company is filing for Chapter 11 bankruptcy protection. Chapter 11 bankruptcy is a way for retailers to get out of unwanted leases.
Across the U.S., Mattress Firm has 3,500 locations which in the past were inexpensive to operate and were more fitting for the industry that saw very little competition, price wise. In today's day and age, the industry like many others, has moved on to online retailers such as Casper who are able to sell mattresses with little to no markup.
In the next few days, Mattress Firm will start to close about 200 locations. Mattress Firm CEO, Steve Stagner, said on Friday the Company will "exit up to 700 stores in certain markets where [it has] too many locations in close proximity to each other."
After a price dispute, Tempur Sealy International pulled its products out of Mattress Firm locations last year. Because of corporate challenges like this, Mattress Firm had less products to sell and the Company’s employees had to sell other brands such as Serta Simmons after years of selling its preferred brand, Tempur Sealy.
Due to Mattress Firm’s bankruptcy news, shares of Tempur Sealy rose 1.5% but the stock is actually down over 18% this year.
This is not the end of Mattress Firm who are expected to finish a restructuring within 1-2 months. The Company has secured some financing to support its operations during bankruptcy, almost USD 250 Million in so-called debtor-in-possession financing and also USD 525 Million in financing to help get out of bankruptcy and continue operations.
Mattress Firm says it will continue payment to employee wages, health and welfare benefits, as well as continuing to honor its customer policies and programs through filed motions. The Company is also asking court authorization to pay suppliers and contractors in full for all services provided before and after its bankruptcy filing.
Over 20 retailers have already filed for bankruptcy since the beginning of 2017 such as Toys R Us who have been forced to liquidate as well.