Mattress Firm's Steve Stagner Resigns As CEO
Mattress Firm CEO Steve Stagner, whose tenure has been characterized by rampant store growth and aggressive acquisition of competitors, allegations that former executives committed real estate fraud and a high-profile bankruptcy that culled hundreds of stores, resigned Tuesday.
"We are celebrating Steve Stagner's incredible 23-year contribution to building Mattress Firm into the No. 1 specialty mattress retailer. Steve's leadership has been critical through this period where we needed to return the business to positive momentum," the Mattress Firm board of directors said in a release April 9. "The Board is pleased with the speed of sales recapture, profitability and liquidity improvement to date. Mattress Firm is in a strong go-forward position as we look to the next chapter."
Stagner became CEO in 2010, ushering the world's largest mattress dealer into a public offering a year later and then into a high-profile sale to now-embattled Steinhoff International in 2016.
Steinhoff nearly collapsed in 2016 after it revealed that it was embroiled in a complex accounting scandal. An initial 10-page report issued by PwC that is examining the Steinhoff accounting irregularities has found that a small cadre of former executives — not including Stagner nor anyone from Mattress Firm — was responsible for structuring phony deals and inflating asset values to the tune of $7.4B.
Mattress Firm filed Chapter 11 bankruptcy protection in October, blaming a bloated real estate portfolio for not being able to meet its payments. At the time of its bankruptcy, Mattress Firm operated more than 3,000 locations, sometimes as many as four locations around a single intersection or within a mile of each other.
In November, Mattress Firm emerged from bankruptcy more than 600 stores lighter and having renegotiated rents with landlords on many of its remaining stores.
“It has been my honor and privilege to have served the passionate and hardworking team at Mattress Firm for more than two decades. I believe now is the right time to leave Mattress Firm and make way for fresh leadership because I am confident in the Board's expertise and strong business foundation," Stagner said in a release. "I am looking forward to spending more time with my family after a busy year and will continue to root for Mattress Firm as they evolve and grow."
Mattress Firm announced that it would begin a search for a new CEO while the board works with senior management until a new one is named.
How Stagner's resignation will affect Mattress Firm's ongoing fraud lawsuit saga remains to be seen. Neither Mattress Firm nor its attorneys responded to Bisnow as of press time.
“It's certainly my hope that they are refocusing their attention away from lawsuits that are absolutely going nowhere and back to selling mattresses,” Schulten Ward Turner & Weiss partner Kevin Ward said to Bisnow.
Ward is representing Alexander Deitch, a former executive with Colliers International Atlanta who, along with two other former Mattress Firm executives — Bruce Levy and Ryan Vinson — was accused by the company of operating a bribery and kickback scheme with a host of developers to steer Mattress Firm to high-priced real estate, some of which they secretly owned or had controlling stakes in. Mattress Firm claimed landlords bribed the trio with exotic trips and luxury gifts in some cases.
But Deitch claimed in a countersuit in 2018 that Mattress Firm was as much culpable for the unchecked store growth, having approved aggressive deals in an effort to kill its competition and fostered a culture where vendor gifts and trips were commonplace among company executives.
Colliers International — which was also sued by Mattress Firm over Deitch's alleged conduct — asked Texas courts to depose Julie Stagner, the former spouse of the CEO, over whether real estate deals she was involved in also involved Stagner.
The case has been grinding away in a Texas appeals court this year. But at the start of 2019, Mattress Firm reached a settlement with one of the developers initially named in the fraud lawsuit — Nashville-based Oldacre McDonald and its principal Mark McDonald — and dropped charges against both.
“I literally just heard the news [of Stagner stepping down]. I don't know what to make of it yet,” Ward said. “It will be very difficult for me to predict what Mattress Firm will do. But it certainly changes the dynamics behind the lawsuit.”