USA TODAY International Edition
Mattress merger: Serta Simmons and Tuft & Needle
Companies join forces in face of digital growth
Mattress maker Serta Simmons Bedding is merging with online bed-in-abox seller Tuft & Needle as the industry grapples with digital disruption and turmoil at the nation's largest mattress retailer.
Facing concerns that Mattress Firm will file for bankruptcy protection, which could reduce the number of stores where mattresses are sold, Serta Simmons is tying its fate more closely to direct-to-consumer online sales.
Serta Simmons plans to maintain the Tuft & Needle brand and its existing products, including its namesake mattresses and the Beautyrest lineup.
Founded in 2002 by software engineers JT Marino and Daehee Park, Phoenix-based Tuft & Needle is one of the leading sellers of mattresses online.
Like its many online rivals, such as Casper and Leesa, Tuft & Needle delivers mattresses to customers with free shipping and free trial periods. The company's namesake mattresses range from $350 for a twin to $750 for a king.
In addition to online sales, the deal will allow Serta Simmons to distribute Tuft & Needle products to select stores.
"It will be a great combination that will really create the company that consumers are looking for," Serta Simmons CEO Michael Traub said in an interview. "We will serve customers wherever they choose to shop."
Tuft & Needle had $170 million in revenue last year and was profitable, Park said. Terms of the deal were not disclosed.
The deal "immediately unlocks Tuft & Needle to scale much faster," Marino said in an interview. "We are now going to greatly pull ahead of the pack" of digital competitors.
For Serta Simmons, the Tuft & Needle deal could ease the pain coming from the feverish competition in the mattress marketplace, which has taken the form of costly discounts and intense marketing wars.
Following the emergence of dozens of mattress startups in recent years, about 10 percent of mattresses are purchased online today. But industry leaders believe that figure could more than double within a few years. Serta Simmons last year launched its own bed-in-a-box called Tomorrow Sleep.
The tie-up comes amid concerns about the impact of Mattress Firm's financial troubles on Serta Simmons, which had pegged growth hopes to its 2017 deal to sell products there after winning the contract away from rival Tempur Sealy International.
Mattress Firm is teetering on the edge of insolvency as a series of expansions left the company with too many stores and amid a financial scandal at its parent company, Steinhoff International. The retailer, which had 3,304 stores nationwide as of March 31, is closing hundreds of locations and could close more.