Mattress Firm tags bankruptcy on rapid expansion

HOUSTON — Mattress Firm Inc., the nation’s largest mattress retailer, filed for bankruptcy protection yesterday, saying its rapid expansion of stores in recent years — with locations often very close to each other — resulted in “cannibalization” of sales.

The Houston-based company filed for Chapter 11 bankruptcy protection in federal court in Delaware, saying it plans to close up to 700 stores around the country as part of its reorganization plan to continue operating.

The company has more than 3,200 stores and more than 9,800 employees in the U.S. and in recent years had aggressively expanded its retail footprint.

In court documents, Mattress Firm said the company’s previous management team had made several miscalculations as it rebranded more than 1,300 stores it had bought from competitors in the last two years.

“While these acquisitions allowed (Mattress Firm) to achieve ... presence in markets where they previously had little to no presence, they also led to ‘cannibalization’ of sales amongst stores in close proximity to each other,” the company said.

According to court documents, Mattress Firm has more than $1 billion in liabilities and has more than 50,000 creditors. It owes its largest creditor, Atlantabased mattress maker Simmons Manufacturing nearly $65 million.

The company, founded in 1986, has sales of more than $3 billion. But in court documents, the company said, in fiscal 2018, it is projected to lose about $150 million. Co.,