Mattress Firm has faced substantial operational challenges, which are being addressed by the management through its turnaround plan and bankruptcy. This is the best approach to support and hasten the turnaround plan to guarantee a future for Mattress Firm and its workers and unlock value for stockholders (Bomey, 2018). Chapter 11 bankruptcy, enables retailers to get out of costly leases and lower debt to have an excellent chance to survive profitably. Therefore, it is essential to analyze the operational challenges experienced by Mattress Firm.
Mattress Firm has struggled with deteriorating sales after an acquisition went bad together with a scandal that transpired at its parent company. Also, the country's largest mattress vendor has been struggling amidst the swell of bed-in-a-box online stores, numerous physical stores and an accounting confusion at a conglomerate proprietor, Steinhoff International whereby accounting irregularities comprised the overstatement of cash. Therefore, Mattress Firm strategizes to close up to seven hundred of its three thousand two hundred and thirty stores. The stores are situated in specific markets with too many sites in close vicinity (Bomey, 2018). The additional liquidity from the sale will be used to enhance the products, avail higher value to clients, start new stores in new markets, and tactically develop in existing markets with the most significant prospects to serve customers.
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Lately, Mattress Firm amplified in size due to chains of acquisitions like Mattress Giant in 2012, Sleep Train in 2014, and Sleepy’s in 2016, which was a lot and very fast (Bomey, 2018). Consequently, many Mattress Firm stores are positioned exactly across the road from another Mattress Firm store. The feverish rush to open stores that can be operated with small fixed costs, led to all the troubles befalling Mattress Firm (Bomey, 2018). Furthermore, the company admitted to having had various well-meant, but misguided marketing and sales campaigns in 2017 and 2018 (Bomey, 2018).
As such, Mattress Firm filed for Chapter 11 bankruptcy shelter due to ill-informed operational challenges. Hence, it is set to close its seven hundred stores due to an acquisition that did not work out, the swell of bed-in-a-box online stores, numerous physical stores. Moreover, the operational challenges of Mattress Firm are due to an accounting confusion at a conglomerate proprietor, together with misguided marketing and sales campaigns.
Reference
Bomey, N. (2018). Mattress Firm files for Chapter 11 bankruptcy protection, will close up to 700 stores. Retrieved from https://www.usatoday.com/story/money/2018/10/05/mattress-firm-chapter-11-bankruptcy/1532218002/
