Mattress Firm files for Chapter 11 bankruptcy, will close up to 700 stores

[left-of-center2012]

Mattress Firm, which has been grappling with declining sales amid an over expansion and a scandal at its parent company, filed for Chapter 11 bankruptcy protection Friday. The Houston-based retailer has been ailing amid a surge of bed-in-a-box online retailers, too many physical stores and an accounting mess at its parent company, Steinhoff International.

Mattress Firm plans to close as many as 700 of its 3,230 stores. Those stores are located "in certain markets where we have too many locations in close proximity to each other," Mattress Firm CEO Steve Stagner said in a statement. About 200 will close within days. The company has nearly 10,000 employees.

Mattress Firms said in a court filing that it will not conduct typical going-out-of-business sales, where customers might score a deal. Instead, it will transfer mattresses to other stores, warehouses or distribution centers, or could "decide to abandon" showroom products, according to a court filing. In Chapter 11 bankruptcy, retailers typically try to get out of expensive leases and slash debt to have a better chance of surviving profitably.

The retailer ballooned in size in recent years through a series of acquisitions – Mattress Giant in 2012, Sleep Train in 2014 and Sleepy’s in 2016. Mattress Firm expects to lose $150 million in its 2018 fiscal year ... Overexpansion is at the heart of the industry’s troubles. There are now more places to buy a mattress in the U.S. than places to buy a Big Mac.

https://www.usatoday.com/story/money/2018/10/05/mattress-firm-chapter-11-bankruptcy/1532218002/

[drray23]

1. There are now more places to buy a mattress in the U.S. than places to buy a Big Mac.

This makes me think of auto dealerships. In most cities, you will have a highway where there are many dealerships all lined up. I always wondered how so many could survive. In the little town of 30,000 where I work, there are literally dozens of car sales places. How do they all get enough business to survive ?

[dogman]

3. Some reasons where I live.

They need a large parking area and lower tax rates. Rural areas often offer both. The auto distribution network allows the manufacturer to centralize storage and inventory is then distributed to more restricted dealers. There are incentives for volume also. Usually the town is heavily incentivizing the dealers with tax rebates. Build it and they will come.

[ScratchCat]

2. I don't think I have ever seen

Another business with such a poor business plan. They moved into our market and opened three stores at one time(over two years). So did their competitor, Mattress 1. There are never cars at any of these places. Everyone I know says the same thing - "Why would anyone think this town needed five new mattress stores?" People buy mattresses less frequently than they buy cars. Its not like there weren't stores already that sell mattresses. They spent millions for sites. Anyone with a brain saw this coming.

[TreasonousBastard]

4. There were three or four Sleepy's within walking distance in my town. When I moved, I bought...

a set at one, and when I found a better deal it took me a while to remember which one to go back to to cancel the order.

Mattress Firm bought Sleepy's, but kept all the stores open. OK, I get that it's tough to get out of a lease around here, but it's still nuts to have all those stores.

Wal-Mart, Costco, BJ's, Big Lots, Bob's... all of them and more are constantly bothering me with super mattress deals for whenever I get around to buying another one. And then there's those TV spots...

I bought a new car, but a new mattress isn't in the works for a while.

[NickB79]

5. A lot of foam-based mattresses last DECADES now

My Tempur-Pedic is warrantied for 25 years!

12 years so far, and still feels fine to me.

Before this, I was going through a new, cheap spring mattress every 4 years or so.

Hell, you can now get foam mattresses delivered to your house from online websites.