According to Mattress Firm chairman Steve Stagner, the Houston-based brand will close 200 stores over the next 18 months as the company attempts to help the bottom line of its new parent company.
Last year, South African corporation Steinhoff International reportedly bought Mattress Firm for $3.8 billion.
However, Steinhoff recently saw their stocks fall almost 90 percent, as news of an accounting scandal and possible fraud rocked investors.
With Steinhoff’s $7 billion in assets said to be in doubt, its subsidiaries – including Mattress Firm – are on uncertain ground.
Stagler reportedly told investors, despite falling profits, Mattress Firm can turn its sales around and increase revenue to $4 billion over the next five years, partly by shedding some of its 3,400 stores.
Mattress Firm requested an investment of $200 million to complete its downsizing and to sell off Tempur-Sealy mattresses, which the company reportedly retains from a broken partnership with the manufacturer.
According to Stagner, the closures are not new to the chain, which already cut 90 stores from the brand; he says this is due to underperforming duplicate stores opened during the chain’s expansion phase.
Often, the chain reportedly acquired stores owned by competitors and left them open, even if this meant creating new competition against itself, sometimes leaving the old companies name on the new location to create the perception of a choice for customers.
Earlier this year, Mattress Firm’s VP of communications Casey Zuber told Austin’s KUT having multiple stores in the same location became part of the chain’s business model.
“Our real estate strategy is to have stores in highly-trafficked intersections and shopping centers in our key markets, including Austin, to maintain visibility,” Zuber said. “This results occasionally in having Mattress Firm locations in close proximity.”
With stores facing closure, duplicate stores may become a scene from the past.