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Mattress Firm Considers IPO at Volatile Time for Category









Mattress Firm’s confidential initial public offering (IPO) filing with the U.S. Securities and Exchange Commission earlier this week comes as competitors are facing increasing headwinds despite increased consumer focus on health and wellness.

The company has not yet determined the number of shares or the price range for an offering; “any such offering,” Mattress Firm said in a statement, “would take place after the SEC completes its review process, and be subject to market and other conditions.”

Unlike several other mattress companies that have gone public in the last several years, such as Purple Innovation and Casper Sleep, Mattress Firm doesn’t have its own products to hawk, instead carrying brands such as Tempur-Pedic, Sealy and Nectar.

Mattress Firm was acquired by Steinhoff International Holdings, a South African retail company, in 2016 for $3.8 billion; two years later, the mattress retailer filed for Chapter 11 bankruptcy protection and closed 700 stores across the U.S. Mattress Firm still has 2,300 retail stores nationwide, giving it the largest retail footprint in the category.

To be sure, this may be a tough time to be selling mattresses with supply chain issues, labor shortages and a lack of raw materials marring inventory levels and consumers leaving their nesting instincts behind for the time being as they return to socialization. Mattress Firm, which doesn’t control the means of production, has little control over many of these factors.

Still, COVID-19 remains a lingering concern and is increasing people’s focus on wellness, which Casper CEO Philip Krim said will likely bolster the mattress industry.

“Even with the delta variant, we think that there’s going to be a very good demand backdrop for the industry,” he told investors and analysts on a conference call last month.

Read more: Casper, Purple Struggle With Capacity To Meet Growing Demand

The Competitive Landscape

When Casper made its public debut in early February 2020, it had a bit of a rough go at it. The company initially estimated a $17 to $19 price range for its stock before officially pricing its IPO at $12 because of lack of demand. That price led to a company valuation of $475 million, well below the $1.1 billion it was valued at in private in 2019.

Granted, the pre-pandemic world of 20 months ago is vastly different than the landscape most retailers and consumers are looking at today. But Casper’s stock has still never surpassed the price it debuted at, sitting around $5 currently.

Purple Innovation, which has had its share of troubles this year after a manufacturing accident killed a woman, has also seen its stock price drop by 32% year to date, compared to the S&P 500’s 17% rise.

Both companies say the demand for mattresses is still there, but some analysts have asked executives how much more the mattress category can grow. Consumers generally don’t need a new mattress every year, meaning that a sales slump could be looming across the industry.

Reliance on Physical Spaces

With over 2,000 locations, Mattress Firm is also heavily invested in physical retail at a time when consumers are increasingly looking to shop digitally. The share of brick-and-mortar native shoppers has fallen by at least 10% since the pandemic began, while the share of online shoppers has grown by at least 17%, according to PYMNTS data.

Mattresses may be one product that consumers want to try in-store before they buy, which could give Mattress Firm a boost, but most direct-to-consumer (D2C) competitors also offer a no-strings-attached trial period that could serve that need, too.

Mattress Firm will also have to show how it’s changed since filing for bankruptcy just three years ago and how it fits into an increasingly D2C mattress space.





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