Mattress Firm To Close 200 Stores Over The Next 18 Months
Mattress Firm plans to close roughly 200 underperforming and duplicate stores in the next 18 months.
During a Dec. 19 lenders presentation for Mattress Firm's parent company, Steinhoff International Holdings, Mattress Firm Chairman Steve Stagner outlined the retailer's plan to reach $4B in revenue over the next five years in part by pursuing "store rationalization."
The presentation was held to calm Steinhoff stakeholders after the European-based company announced it would delay its 2016 financial statements amid accounting irregularities. The embattled company has brought on PwC to conduct an independent investigation.
Mattress Firm has been busy conducting its own investigation into the dealings of two former real estate executives and the company's outside broker. The company alleges former employees Bruce Levy and Ryan Vinson, along with former Colliers International Atlanta Retail Executive Alexander Deitch and a handful of developers conspired to defraud the company of tens of millions of dollars by pushing Mattress Firm into more expensive locations as it grew to operate its portfolio of 3,400 locations.
"As a result of putting together 1,500 stores over most recent years through acquisitions, we have recognized that there are approximately 300 underperforming or duplicative stores," Stagner said. "Over last year, we’ve already gotten out of about 90 locations."
Stagner said Steinhoff International's lenders will need to invest $200M in Mattress Firm next year. On Tuesday, the South African conglomerate said it is losing lender support as it grapples with the fallout of the accounting investigation and a gutted stock price. The company has about $11B in debt, per its presentation, about $200M of which is from Steinhoff's U.S. brands, including Mattress Firm.
A $200M investment will help Mattress Firm rebrand its stores, restructure sales operations, close stores, expand its private-label products and invest in its bed-in-a-box offerings. Steinhoff already invested $300M in Mattress Firm this year to rebrand its stores and to form a new partnership with Serta Simmons after terminating its deal with Tempur Sealy.
Before being bought and taken private by Steinhoff last year, Mattress Firm was on an expansion and acquisition spree, acquiring more than 25 other mattress retailers since 2005. With 1,500 new locations since 2010, Mattress Firm now claims it is the first national mattress retailer, generating about $3.3B in revenue with roughly 20% market share.
Steinhoff's share price dove after its meeting with lenders, falling close to 90% and losing the company $14B in market value, according to Bloomberg Markets.
Now the company's investors want to sue for the funds lost in share price. Business Day reported a suit filed Tuesday in Frankfurt, where Steinhoff moved its primary listing from Johannesburg in 2015. It is likely to be the first of several suits by investors.