Steinhoff' bought US business Mattress Firm in 2016. Picture: Getty Images
Steinhoff' bought US business Mattress Firm in 2016. Picture: Getty Images

New York — Mattress Firm, the largest US mattress retailer, is preparing to file for bankruptcy protection as soon as this week, as it seeks to exit costly shop leases and shore up its business, people familiar with the matter said on Tuesday.

The retailer, with 3,000 brick-and-mortar locations, has been squeezed by online upstarts including Casper Sleep. Mattress Firm’s South African parent company, Steinhoff International, faces its own debt problems.

Mattress Firm and Steinhoff did not respond to multiple requests seeking comment.

Once Mattress Firm files for bankruptcy, the process is expected to be completed within a couple of months, and Mattress Firm’s vendors are expected to be repaid in full, said the sources, who asked not to be identified because they were not authorised to speak to the media on the matter.

Mattress Firm would shed some of its stores in the process, the sources said.

Steinhoff acquired Mattress Firm for $3.8bn in 2016. Mattress Firm had acquired HMK Mattress Holdings, the parent company of competitor Sleepy’s, the same year for $780m and then rebranded the shops.

More than 20 retailers have filed bankruptcy since the beginning of 2017. Toys R Us did not survive and was liquidated, while others including children’s retailer Gymboree and Payless ShoeSource reorganised.

Analysts at Piper Jaffray Companies said last northern hemisphere summer that a bankruptcy would allow Mattress Firm to clean up its real-estate portfolio and improve cash flow and profitability.

Mattress Firm lost Tempur Sealy International, the maker of mattress brand Tempur-Pedic, as a supplier in 2017, limiting its offerings.

Tempur Sealy’s shares rose as much as 9% in after-hours trading in New York on Tuesday, as investors bet it would benefit from less competition.

Steinhoff, which has more than 40 brands that include Conforama, Mattress Firm and Poundland, has sold assets including its Polish unit Kika/Leiner and stakes in investment holding firm PSG and industrial firm KAP.