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Mattress Firm Inc. – Leading Mattress Store Chain in the US
Mattress Firm Inc. is a leading American mattress store chain and retailing giant founded on July 4, 1986. The company is headquartered at Houston, Texas. On August 7, 2016, Steinhoff International, a South African retailer announced to buy Mattress Firm Properties. Since 2012, company has been operating in around 1600 locations in 35 states of the US under various names. In 2015, Mattress Firm has announced to buy out Sleepy’s, its competitor, for $780 million. Mattress Firm Investment property would have around 3500 stores with this purchase.
As per the calculations in Newconstructs, the economic earnings of Mattress Firm are declined from $14 million in financial year 2012 to $11 million within just 12 months. These losses have been incurred despite the growth of revenue from $704 million in financial year 2012 to $2.5 billion in financial year 2015. But it has still seen revenue growth to $2.8 billion over the past 12 months, according to Forbes.
Since 2013, MFRM has made around 15 acquisitions for around $1.4 billion. Recently, over $795 million has been paid by the form for acquiring HMK Mattress Holdings in the month of February 2016. When such acquisitions are accretive, these acquisitions are very dilutive to the balance sheet and cash flows of MFRM. From 2013 to 2016, the debt of Mattress Firm grew 42% compounded to $2.1 billion annually. Over the past year, debt has raised to around $2.9 billion, which is more than existing market capital.
The major signs of raw deal of these acquisitions for investors are consistent deterioration of return of MFRM on invested capital (ROIC). Since earning around 10% of ROIC in the year 2012, ROIC of Mattress Firm Real estate is more than halved to 4% over the past year. Similarly $1.6 billion of cash is invested from 2013 to 2016 and FCF is minus $603 million over the past year.
Founded by Steve Fendrich, Harry Roberts, and Paul Stork on July 4, 1986, Mattress Firm is a leading mattress and bedding manufacturer and retailer in the US. Currently, the company operates around 3500 stores and Mattress Firm corporate franchise across 49 states of the US. It has largest geographical footprint in the country among other multi-brand mattress giants. It is the leading specialty bedding retailer in the country with the pro forma sales of over $3.5 billion in 2015, according to official Mattress Firm website. In September 2016, Steinhoff International acquired the company for $3.8 billion. Now it is a Steinhoff subsidiary.
With its brands, including Sleepy’s, Mattress Firm, and Sleep Train, the company is offering widest range of both specialty and traditional bedding accessories and mattresses and other products from topmost manufacturers, including Simmons, Serta, Sealy, Tempur-Pedic, King Coil, Stearns & Foster and Hampton & Rhodes.
The Sleep Train Inc is a retail bedding manufacturer operates in California. Based in Rocklin, California, Sleep Train was founded in June 1985 by Dale Carlsen. Sleep Train sold its 24 stores in June 2000, especially in Portland and Seattle, or around 30% of its business to a New York based private investment firm, Fenway Partners, which owned Sleep Country USA, a competing chain founded in the year 1991. Sleep Train had 44 stores and Sleep Country USA had 28.
Sleep Train Inc. has announced its plans to own 54 of stores of Mattress Discounters in California in 2002 during the bankruptcy of that company which would more than double the size of Sleep Train. In 2003, Sleep Country USA is acquired by Fenway Partners in 2003 to Simmons Company based in Atlanta and Sleep Train Inc. acquired a mattress chain in August 2006 from Simmons.
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