Sleep Country aims to pick up Sears’s lost business

TORONTO Sleep Country Canada Holdings Inc. expects to capture more than a quarter of the mattress business lost by Sears Canada Inc. as the struggling retailer closes stores and restructures under creditor protection.

“We share a lot of similar traits to what people want to see in a retailer with Sears,” chief executive Dave Friesema said Thursday. “We have a 25 to 28 per cent market share in Canada and we would want to get at least that much to get our fair share, but we think we can get more than that.”

Friesema estimated that Sears Canada’s share of the mattress market was between nine and 14 per cent before it filed for creditor protection, and many of the 59 Sears stores slated for closure are in markets where Sleep Country has a presence.

If Sleep Country is able to capture half of Sears’s market share, it could boost earnings per share by 15 per cent to 20 per cent, GMP Securities analyst Martin Landry said in a June note.

Sleep Country’s shares tumbled as much as 11 per cent Thursday, the most since it went public in 2015, after the company reported slowing same-store-sales growth, higher costs and revenue that missed analyst expectations. The shares have doubled since the company’s trading debut.

The mattress industry is facing new competition with the advent of online “bed-in-a-box” retailers like Casper, Leesa and Endy. In response, Sleep Country launched its own e-commerce platform in the second quarter and is selling its own version of the bed-in-a-box, known as Bloom.

Sleep Country wouldn’t disclose its web traffic numbers but online transactions are growing weekly, said Stewart Schaefer, chief business development officer.

Customers have also been coming into Sleep Country’s stores to ask for the Bloom. “This substantiates our feeling on the bed-ina-box phenomenon that one size doesn’t necessarily always fit all and the reality is that people still want to take a nap and test out the mattress before they make a $1,000 decision,” Schaefer said.

Sleep Country is in the midst of a rapid expansion and is on track to open eight to 12 new stores this year and renovate 20 to 30 more. Friesema estimated that about 70 per cent of the new locations will be in existing markets and the remainder will be in new markets.