Mattress Firm Holding is soft on comfort. The bedding retailer operates or franchises more than 3,600 stores, primarily under the Mattress Firm name, in some 49 states. It sells conventional (Simmons) and specialty (Tempur Sealy) mattresses, which together account for most of its sales, in addition to other brands. The company also sells bed frames and bedding accessories. From its humble beginnings in 1986 when three friends pooled their resources to purchase a downtrodden spot in a Houston strip center, the chain has grown into the top US bedding retailer. In 2016 South African retail group Steinhoff acquired the company in a deal valued at $3.8 billion.
Change in Company Type
Following its acquisition by Steinhoff, Mattress Firm became a wholly owned subsidiary of Steinhoff and ceased operating as a public company.
Houston-based Mattress Firm boasts more than 3,600 stores in 49 states. Its largest markets include Florida, home to about 280 stores, Illinois and North Carolina, both with more than 100 locations. The company operates 70 distribution centers, the largest of which are located in Texas, Florida, and Georgia.
Nearly half of the mattress chain's revenue comes from sales of conventional mattresses, while specialty mattresses contribute about 45% of annual sales. Delivery service represents 2%.
Sales and Marketing
The company reported advertising and media production expenses of $105.3 million in fiscal 2014 (ended January), up from $87.2 million and $60.2 million in fiscal years 2013 and 2012, respectively.
Mattress Firm reported $1.2 billion in sales in fiscal 2014 (ended January), an increase of 21% versus the prior year. Net income rose 33% over the same period, to $52.9 million. The addition of new stores at the fast-growing chain and a 1% increase in same-store sales fueled the rise. Sales of conventional mattresses rose 36% year over year, while furniture and accessories sales increased by 30%. The double-digit increase in sales contributed to the gain in profits, as did the absence of an impairment charge booked in fiscal 2013. Other expenses, including operating and sales and marketing costs, rose in fiscal 2014.
Fueled by acquisitions, including West Coast mattress retailer The Sleep Train in fall 2014, the company is forecasting pro forma annual sales of some $2 billion.
Since its 2011 IPO, Mattress Firm has made multiple acquisitions to solidify its position as the nation's top mattress seller. Fast-growing Mattress Firm is doing its bit to further the consolidation of the mattress business through an active acquisition schedule, both of independent chains and its own franchisees. The retailer has extended its reach into new markets, including Hawaii, and consolidated its hold on existing ones, by snapping up other bedding companies. Indeed, in fiscal 2015 (ends January) alone, the company added about 800 locations.
Mergers and Acquisitions
In October 2014, the company acquired The Sleep Train, a West Coast specialty bedding retail chain with some 310 stores in California, Oregon, Washington, Idaho, Nevada, and Hawaii. The purchase strengthened Mattress Firm's position on the West Coast and its status as a national multi-brand bedding retailer. Other acquisitions in fiscal 2014, including Yotes, a franchisee of the company with 34 mattress retail stores in Colorado and Kansas, were made for an aggregate price of $80.5 million.