Mattress Firm Inc. — the Houston-based company that is the largest specialty mattress retailer in the United States — on Friday filed for Chapter 11 bankruptcy protection.
"The process we have initiated … will allow us to strengthen our balance sheet and accelerate the optimization of our store portfolio," said Steve Stagner, Mattress Firm's executive chairman, president and CEO, in a statement. "Leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other."
The company expects to close more than 200 of those stores within days and the remainder within the next couple of weeks. So far only one Minnesota closure is planned, in Willmar, according to bankruptcy documents.
A full list of locations that are expected to close has yet to be released. The chain has about 30 stores in Minnesota, according to its website.
Under Chapter 11 bankruptcy, companies go through a court-ordered restructuring of their business. The privately held company filed a prepackaged plan of reorganization with the Bankruptcy Court of Delaware that includes plans to close 700 of its more than 3,000 stores.
Competition has been increasing in the mattress industry as some other traditional and online mattress manufacturers embrace traditional store locations in part to mimic the success of Minneapolis-based Sleep Number Corp. The brick-and-mortar salesrooms allow customers to experience the Sleep Number smart beds. Sleep Number has long controlled its distribution channel and sells its beds almost exclusively through more than 550 company-owned stores and through its e-commerce channels.
According to Sleep Number's most recent quarterly earnings report, more than 98 percent of its sales are through company-controlled sales channels (stores, online, phone) and more than 90 percent through its stores.
Tempur Sealy International, which terminated a distribution deal with Mattress Firm in January 2017, sells its mattresses through wholesale and direct channels. It has recently opened a number of corporate-owned Tempur-Pedic stores concentrating on its brand. Tempur Sealy now has about 40 company-owned stores. According to Tempur Sealy's most recent quarterly earnings report, it makes only 10 percent of its sales directly through its stores or e-commerce channels.
