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From Home Furnishing Business

Mattress Firm to Acquire Sleep Train

Bedding retailer Mattress Firm Holding Corp.(NASDAQ: MFRM)  is in acquisition mode again for the third time this year putting it on track to be the dominate national bedding retailer.

The retailer announced this morning plans to acquire The Sleep Train for $425 million. Mattress Firm will also acquire The Sleep Train's liabilities of about $15 million.

The Sleep Train operates 311 stores located in California, Oregon, Washington, Idaho, Nevada and Hawaii with 2013 net sales of $471 million.

The acquisition will create a bedding retail company with pro forma annual sales approaching $2 billion and more than 2,030 storefronts, as well as giving Mattress Firm an immediate presence on the West Coast. The company plans to continue to operate under both the Mattress Firm and Sleep Train's family of brands and will maintain a West Coast corporate headquarters near Sacramento, Calif.

In April, Mattress Firm bought Mattress King and BedMart adding 75 stores to its stable. Just last month, the retailer announced acquisition plans of 135 Back to Bed stores.

The combined company will have 5,000 employees. Upon closing, Dale Carlsen, CEO of Sleep Train will become president and chief strategy officer of the company and will join the Mattress Firm board of directors as vice chairman. 

Rob Killgore, Sleep Train COO, will become co-chief operating officer of the company with current Mattress Firm COO Ken Murphy.

"This unique and transformational opportunity will meaningfully enhance Mattress Firm's position within the specialty retail bedding industry," said Steve Stagner, Mattress Firm's president and CEO. "The acquisition of Sleep Train will establish Mattress Firm as the first border to border, coast to coast multi-brand mattress specialty retailer in the United States."

The acquisition closing, subject to regulatory approval, is expected by the end of the fourth fiscal quarter of 2014.

"Since 1985, Sleep Train has provided our customers with a good night's sleep and been a strong partner in our communities," Carlsen said. "Mattress Firm, through Steve's leadership, has shown their commitment to their customers and their communities as well. I look forward to bringing our two teams together for the benefit of our customers, our employees and the communities we serve."

In addition to the acquisition news, Mattress Firm issued its second quarter earnings reporting net sales of $410 million for the quarter ended July 29, a 35 percent increase from net sales of $302.5 million in the same quarter last year.

Net income for the quarter was $14.3 million compared to $14.1 million in the same period last year

Net sales for the first half of the year was $743.5 million, a 28.5 percent increase from net sales of $578.5 million in the first half of last year. Net income for the first half was $22 million, compared to net income of $26.1 million during the first half of last year.

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