Late last year, news broke that Tempur Sealy International was looking to shed about 200 Sleep Outfitters and Mattress Firm stores as part of its proposed plan to buy Mattress Firm.
Last week, chatter that Fredrick, Md.-based Mattress Warehouse was confirmed that it has plans to pick up 107 Sleep Outfitters stores, 73 Mattress Firm stores and seven distribution centers. The deal, for which terms have not yet been disclosed, is contingent on the closing of Tempur Sealy’s proposed $4 billion acquisition of Mattress Firm.
That historic deal is currently in the middle of a court case brought by the Federal Trade Commission as the agency has filed to block the deal. The FTC voted 5-0 in July that the acquisition should not be allowed alleging deal documents showed that the company planned to limit other mattress manufacturers access to Mattress Firm’s more than 2,300 stores.
As we reported last week, depositions with other mattress brands are being held, and hearings in the case are scheduled to begin Nov. 12 in the U.S. District Court for the Southern District of Texas in Houston.
The divestiture plan was developed through conversations with the FTC about the proposed Mattress Firm acquisition.
Like a domino maze, all of the pieces need to fall into place, and a number of steps still require navigation before Mattress Warehouse would take ownership of the Sleep Outfitters stores, the Mattress Firm stores and the distribution centers. Tempur Sealy and Mattress Firm must win the court case and close that deal. Then, the divestiture sale.
As for timing, Tempur Sealy said it still believes the litigation will be successful and the Mattress Firm deal will close late this year or early 2025. Mattress Warehouse’s acquisition of the 176 stores and the distribution centers will follow, likely one quarter after close of the Mattress Firm deal.
If the judge rules in Tempur Sealy and Mattress Firm’s favor and the deal and divestiture happens, Tempur Sealy said it expects to operate more than 2,800 stores worldwide with half of its North American sales coming from Mattress Firm operations. Today, Tempur Sealy has more than 750 corporate-owned and joint-venture-operated retail stores worldwide and an estimated 160 stores in the U.S.
For Mattress Warehouse, the acquisition of the Sleep Outfitters and Mattress Firm locations gives it a boost on its target of reaching 500 stores by 2028. If you’ve been paying attention, the specialty bedding retailer is opening stores quickly and expanding into new markets and new states.
According to the Sleep Outfitters website, the retailer operates stores in Alabama, Indiana, Kansas, Kentucky, Missouri, Ohio, Tennessee and West Virginia. Comparing that list with the states Mattress Warehouse shares on its website for store locations, the only overlap is West Virginia. While the store locations were not specified in the divestiture announcement, and Mattress Firm locations included in the deal were not outlined, picking up stores in seven states not already peppered with Mattress Warehouse stores has the potential to expedite the retailer’s expansion march.
Scooping up 176 stores in one fell swoop sets the stage much quicker than opening between 20 and 30 stores a year.
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