Houston — Mattress Firm has filed for Chapter 11 bankruptcy protection as part of the Houston-based retailer’s plan to restructure its balance sheet and ultimately close up to 700 stores across the country.
The U.S. Bankruptcy Court in Delaware has appropriated approximately $250 million in debtor-in-possession financing to Mattress Firm to support the company’s operations during the Chapter 11 proceedings.
Mattress Firm has also received commitments for $525 million of senior secured credit facilities to support its post-bankruptcy operations. The company expects to complete the restructuring process within the next 60 days.
Mattress Firm currently has more than 3,000 stores in the U.S., and will remain the largest specialty mattress retailer in the country following the Chapter 11 proceedings. The company will close 200 underperforming stores immediately and then will determine the fate of the remaining 500 stores in the coming weeks.
According to Jeff Green, partner with Hoffman Strategy Group, one positive aspect about the Mattress Firm locations are that they are typically on the pad of a shopping center, which makes them more visible and therefore more valuable. However, the chain is significantly overbuilt, he argues. This is because of the company’s “propensity to locate stores too close to existing stores and the increasing competition from new emerging mattress chains that are entering the space, such as Casper and Tuft & Needle.”
In making the bankruptcy announcement, Mattress Firm CEO Steve Stagner noted that the stores in question are located in markets in which “we have too many locations in close proximity to each other.”
South African retail holding company Steinhoff International acquired Mattress Firm in 2016. In January of this year, rebusinessonline.com reported that the retailer was planning to close 200 stores over the next 18 months. To read the detailed press release issued by Mattress firm regarding today’s bankruptcy filing, click here.
— Taylor Williams