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Mattress Firm Likely To Go Bankrupt; 3,000 Stores About To Shut

Mattress Firm, the largest mattress retailer in the United States, may soon file for bankruptcy after it announced the closure of 3,000 stores across the country. The situation that Mattress Firm is facing presently is similar to several other brick and mortar firms that are struggling financially to keep themselves afloat before online retail giants like Amazon, eBay and several others. Its parent company Steinhoff International Holdings, located in South Africa, had bought Mattress Firm in 2016 for a substantial amount of $3.8 billion. It then acquired the parent firm of its rival brand, Sleepy’s, in the same year for $780 million.

Mattress Firm then rebranded the Sleepy stores to complement its own products and since then it has been working to restructure the debt of its subsidiaries with its creditors after the recent accounting scandal. Though its creditors agreed last month to hold on to their debt recall for three years, the firm has not made any final decisions about debt repayment and its plans could change. It has been seen in the past that large retailers with several thousand stores pursue the bankruptcy route to reject leases and get rid of non-profitable stores. This can help them cut costs and restructure to continue their business.

The firm’s representatives have refused to comment on the bankruptcy rumor and even the parent firm Steinhoff did not reply to request for comments. The shares of Mattress Firm’s closest competitor, Tempur Sealy International Inc, have jumped up by 5.2 percent once the news became public. Both Mattress Firm and Steinhoff are now working with consulting firm AlixPartners LLP to work out turnaround strategies that can lay the ground for bankruptcy. According to research analyst of Piper Jaffray Companies, if the firm adopts the bankruptcy line, then it can clean up its real estate portfolio and improve both its cash flow and profitability.

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