Mattress Firm, the biggest retailer of beds in the US, on Friday filed for Chapter 11 bankruptcy protection in a move to restructure the troubled business. Under the protection filed at Delaware Bankruptcy Court, the company said it aims to complete its restructuring measures within two months, which includes the initial closure of about 200 stores.
Mattress Firm, which is owned by South African firm Steinhoff International Holdings, has also sought approval for rejection of around 700 leases.
In addition, the company has committed to senior secured credit of $525 million for the restructuring purposes.
In October last year, the company had sued two former employees for allegedly conspiring to push the company to open more stores.
“The process we have initiated today will allow us to strengthen our balance sheet and accelerate the optimization of our store portfolio. Leading up to the holiday shopping season, we will exit up to 700 stores in certain markets where we have too many locations in close proximity to each other,” CEO Steve Stagner said in a statement.
The company’s profits have been weighed down by too many store locations as well as tight competition from startups like Caspar. In October last year, the company had sued two former employees for allegedly conspiring to push the company to open more stores. There are over 3,500 Mattress Firm stores across the US.
Shares of Tempur Sealy International (TPX), which pulled out its products last year from Mattress Firm stores due to clashes over product pricing, fell almost 2% following the news.