From USA Today:
The frenzied competition to get Americans into bed is flipping the mattress industry into upheaval.
As the nation’s largest mattress retailer reels from declining sales and the threat of bankruptcy amid financial scandal at its parent company, mattress companies are waking up with a hangover.
Meanwhile, bed-in-a-box e-commerce companies – now numbering in the dozens after many sprouted in recent years – are planning brick-and-mortar locations. But they’re facing their own set of existential challenges in this highly competitive environment.
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.
Consumers could be the ultimate winner as the furious competition for their business generates deals, price transparency and improved customer service. But the downside is a flurry of store vacancies – and the threat of more.
Facing declining sales, No. 1 U.S. mattress retailer Mattress Firm is closing hundreds of stores and scrambling to bolster its digital business. At the same time, the retailer’s parent company, global conglomerate Steinhoff International, is entangled in an accounting scandal involving billions of dollars in balance-sheet errors that has led its stock to plummet to less than a quarter.
The company is now considering bankruptcy, according to Reuters. A company spokesperson was not immediately available to discuss that report Tuesday.
“I don’t see this ending in a liquidation, but with that said, you could see a filing,” said Kyle Owusu, a senior distressed debt analyst at Reorg Research, who tracks Steinhoff’s crisis. “I wouldn’t even rule out a filing of just the Mattress Firm entity in the U.S. to try to implement a restructuring plan.”