Dive Brief:
- Mattress Firm, a retailer that's been through the ringer in the past few years, has boldly stepped into the public markets, filing papers for a whopping $100 million initial public offering (IPO).
- The retail giant raked in an impressive $4.4 billion in net revenues for fiscal year 2021, marking a significant 35% increase from the previous year, and their comparable sales galloped 36.1% year-over-year. However, the company's still nursing a net loss of $165.1 million for that same fiscal year.
- As of September 28, Mattress Firm's total liabilities and long-term debt stood at a hefty $3.5 billion and $1.2 billion, respectively.
Dive Insight:
Mattress Firm initiates public offering process
Mattress Firm's been on one wild rollercoaster ride since the past few years. Following a jaw-dropping $3.8 billion buyout from a private equity firm, a tsunami of store closures, and a bankruptcy filing barely three years ago, this retail juggernaut is now aiming for the public markets with its sights set on the NYSE under the ticker symbol "MFRM."
Established back in 1986, Mattress Firm boasts 2,353 retail stores across the nation and peddles products from famous brands like Tempur-Pedic, Serta, Sealy, Purple, Stearns & Foster, and Beautyrest. According to U.S. retail mattress revenue, Mattress Firmcommands a hefty 20% market share and is the nation's largest omnichannel mattress specialty retailer.
The COVID-19 pandemic blessed retailers peddling home goods with a much-needed boost. Mattress Firm's capitalized on this windfall, recording stronger-than-expected sales and earnings in the first three quarters of fiscal 2021. S&P Global Ratings danced a jig, revising Mattress Firm's outlook from stable to positive, while affirming its B+ issuer credit rating in September. They predicted Mattress Firm would maintain robust credit metrics, even as consumer demand for mattresses wanes in the second half of 2021.
The retailer first caught the eye of private equity firm Steinhoff International Holdings back in 2016, who snapped it up for a whopping $3.8 billion. Two years later, the heat was on as online mattress companies ramped up competition. Mattress Firm took a tumble, filing for bankruptcy protection and shuttering almost 700 stores.
Mattress Firm's latest move towards an IPO isn't unique in today's climate—many bankrupt companies are taking the plunge into the public markets, following in the footsteps of Guitar Center and Hertz. Guitar Center filed for Chapter 11 bankruptcy protection in 2020, exited bankruptcy later, and achieved a public listing via a special purpose acquisition company (SPAC) merger in 2021. Similarly, Hertz, reeling from the impact of the pandemic on travel, filed for bankruptcy in 2020, reemerged by June 2021, and completed an IPO in October 2021.
These instances highlight the potential for retail and travel-related companies to leverage bankruptcy restructuring as a stepping stone towards financial recovery and eventual relisting on the public markets. While Mattress Firm's IPO details aren't yet fully disclosed, external knowledge sheds light on Guitar Center and Hertz's IPOs post-bankruptcy.
- The surge in home goods sales during the pandemic has led to increased profits for retailers like Mattress Firm, who experienced stronger-than-expected sales and earnings in the first three quarters of fiscal 2021.
- In the wake of the pandemic, many companies, including Guitar Center and Hertz, have used bankruptcy restructuring as a stepping stone towards financial recovery and subsequent relisting on the public markets, a path that Mattress Firm may be considering with its IPO.
- AI in the finance industry could potentially predict market trends and help businesses like Mattress Firm navigate the challenges and opportunities that come with a pandemic and the subsequent economic recovery, especially in sectors like retail and home goods.
