Steinhoff International, a South African international retail holding company, said its United Sates unit, Mattress Firm has filed for voluntary Chapter 11 bankruptcy and plans to shut down 700 stores.
The Chapter 11 petition lists more than $1 billion in both debt and assets, and includes units of well known brand names such as 1800mattress.com and Sleepy’s. A statement released by the Mattress Firm states that it expects to keep operating as usual while it completes a restructuring plan that includes paring back its chain of more than 3000 stores across 49 states.
Mattress Firm has asked the court to approve $250 million of financing in order to keep paying the bills during the re-organisation. Mattress Firm CEO, Steve Stagnar said “leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other”.
The bankruptcy, which includes a pre-packaged restructuring agreement, meaning it already has the approval of key stakeholders, still needs the court’s approval. The company notes that deliveries to customers won’t be affected and it will continue to honour warranties, promotional programmes, returns and exchanges.
Mattress Firm’s turnaround strategy includes e-commerce improvement and opening stores in Los Angeles and Detroit. The company’s presentation to lenders revealed that Mattress Firm’s revenue as of September declined to 1.9 billion Euros from 2.2 billion Euros in September 2017.