Tempur Sealy Reunites with Mattress Firm, Signs 3 New Long-term Supply Agreements

June 19, 2019  by Laurie Northington in Business Strategy, Industry   

The reintroduction of products into Mattress Firm stores is expected to commence in the fourth quarter of 2019 and to be completed early in the first quarter of 2020. 

“Tempur Sealy announced it has entered into a supply agreement with Mattress Firm, Inc. to reintroduce Tempur-Pedic, Stearns & Foster and Sealy branded products to approximately 2,500 Mattress Firm stores across the United States,” said Scott Thompson, CEO, chairman, and president of Tempur Sealy. “We are pleased that this agreement reunites some of the industry’s strongest brands with the largest bedding retailer in the U.S. The largest bedding manufacturer in the world should do business with the largest specialty mattress retailer in the world.”

The Big Lots agreement is expected to grow the sales of entry-level Sealy products and to drive unit volume, primarily in the below $1,000 retail price point, a segment that has been a recent focus of the company. Big Lots’ growing partnership with Sealy is evidence of the investments in product quality and manufacturing reliability that Sealy has made in recent years. Sealy’s launch of new products with Big Lots is expected to be complete by year end 2019. 

Tempur Sealy also recently extended its European retail distribution network by reaching a supply agreement with Beter Bed Holding, one of Europe’s leading bedding retailers. The launch of new products with Beter Bed Holding is expected to be complete by the end of 2019, and initially will include over 100 stores.

The additional net sales from these three supply agreements are expected to be in excess of $400 million on an annual run rate basis once product launches are completed. The impact on the company’s previously announced adjusted EBITDA guidance for 2019 is not expected to be material, with an initial estimate of incremental annual adjusted EBITDA benefit in the range of $75 million to $100 million beginning in 2020.

“The expansion of our distribution is a testament to the strength of our brands, coupled with reliable manufacturing and quality service,” said Thompson. “Our premium brands and innovative products have allowed us to service a growing customer base. We expect these newly reported transactions will have a positive impact on expanding our brands’ share of voice in the market and in leveraging our cost structure. Aligning with quality third-party retailers in a win-win structure is consistent with our distribution strategy.”   

Thompson added, “While the most important aspect of our worldwide omni-channel distribution strategy is third-party retail distribution, we continue to pursue our highly successful direct to consumer initiatives, both online and through company-owned retail stores. Furthermore, the company has also embarked on an initiative to capture additional market share in emerging e-commerce and big box retailer channels as a continuation of our focus to be wherever the customer wants to shop.“