Mattress Firm, the largest U.S. mattress retailer with more than 3,000 locations nationwide, is considering a bankruptcy filing, according to a report from Reuters. The retailer has not made any final decisions and its plans could change, sources said.
One recent analyst report from Piper Jaffray suggested that Mattress Firm would file for bankruptcy by November at the latest.
Mattress Firm lost Tempur Sealy International, the maker of popular mattress brand Tempur-Pedic, as a supplier last year, limiting its offerings. Additionally, e-Commerce competitors such as Casper, Leesa and Tuft & Needle have disrupted the sector with simple price points.
Mattress Firm's South African parent, Steinhoff International Holdings, has been working on a deal to restructure the debt of some subsidiaries with its creditors, following an accounting scandal that led to its CEO’s resignation in December 2017 and cost the company $12 billion. Three months later, Mattress Firm CEO and President Ken Murphy stepped down, leaving Executive Chairman Steve Stanger to assume chief executive responsibilities.
In December 2017, Mattress Firm confirmed it would close 200 stores and entered a new credit agreement that could secure the company as much as $225 million.Creditors agreed last month to hold off on their debt claims for three years.
Mattress Firm initially sought to boost its annual revenue to $4 billion and expand private label products to capture 40% of sales by 2023, but these projections could change in the event of a bankruptcy filing. The retailer saw comparable store sales decrease 10% in Q1 2018, with total revenues down 16%.
Discount Retailer Will Close 74 Stores
While Mattress Firm’s bankruptcy situation remains unconfirmed, another U.S. retailer officially unveiled its reorganization plans. National Stores Inc., a discount retailer that operates primarily under the Fallas banner, filed for Chapter 11 bankruptcy.
The discount retailer will close 74 of its 344 stores, with liquidation sales beginning on Aug. 9. The company is working with vendors, lenders and other creditors to reorganize, with existing lenders committing $108 million in debtor-in-possession (DIP) financing to keep remaining stores open.
The stores sell men’s, women’s and children’s apparel, shoes and accessories, as well as housewares, and primarily serve low-income communities.
Despite operating in a relatively healthy discount sector, National Stores has faced financial and operational barriers, such as damage to stores from Hurricanes Harvey and Maria, a reported data breach back in December and various unsuccessful acquisitions.National Stores’ filing listed both its assets and liabilities as between $100 million and $500 million.
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