Mattress sellers are having a nightmare
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The mattress industry is slumping, but federal regulators say that's not enough to justify the biggest manufacturer buying the biggest retailer.
Why it matters: The FTC last week voted unanimously to attempt to prevent Tempur Sealy from acquiring Mattress Firm for $4 billion — a "vertical" deal that has been in limbo since it was announced in May 2023.
- Tempur Sealy was set to boast a global footprint of some 3,000 stores, 30 e-commerce platforms, 71 manufacturing facilities and four R&D facilities.
The big picture: Following a period of over-expansion and surging online competition, Mattress Firm has been shrinking for years — but it's still the industry's No. 1 seller.
- The company, which is owned by Steinhoff International, filed for Chapter 11 bankruptcy protection in 2018.
- The retailer has since closed about 900 stores, leaving it with about 2,300 at the end of 2023.
Between the lines: Deal supporters say Tempur Sealy and Mattress Firm are facing difficult market conditions that make their marriage necessary.
- The mattress industry enjoyed a brief boom early in the pandemic, when revenue spiked as consumers used economic stimulus checks to purchase home goods in droves.
- But sales have cratered since consumers shifted spending toward services.
- Meanwhile, bed-in-a-box online sellers like Casper have undermined traditional mattress retailers.
By the numbers: U.S. sales of mattresses and foundations — including domestic and imported products — totaled 39.7 million in 2023, down 22% from 2021, according to International Sleep Products Association.
- Mattress Firm's sales fell 5.6% in its 2023 fiscal year, compared with a year earlier.
- Tempur Sealy — whose brands include Tempur-Pedic, Sealy and Stearns & Foster — posted a 1.4% sales decline in 2023.
What they're saying: "Tempur Sealy has been working constructively with the FTC to secure regulatory approval for this transaction and is disappointed that the FTC has initiated litigation," Tempur Sealy said in a statement.
The other side: The deal would give Tempur Sealy "the ability and incentive to suppress competition and raise prices for mattresses for millions of consumers once it acquires Mattress Firm," the FTC alleged.
- Other mattress makers have been concerned that a combination of Tempur Sealy and Mattress Firm would make it harder for them to compete, Axios Pro's Richard Collings reported.
Reality check: Despite being the largest seller, Mattress Firm's U.S. market share in sales of beds and mattresses is only 2.9%, according to market research firm IBISWorld.
- Sleep Number is the next biggest at 1.5%.
- A slew of other players share a piece of the mattress market, including big-box stores such as Walmart, online sellers like Amazon, and department stores like Macy's.
What's next: Tempur Sealy is expected to discuss its next steps in a "business update" conference call at 8am Monday.
