Mattress Warehouse stores sold
By Clint Engel -- Furniture Today, February 1, 2004
WINFIELD, W. Va. — WINFIELD, W. Va. — Two bedding chain operators, including a Mattress Warehouse franchisee, are acquiring the assets of bankrupt Westco Group in bids to expand their businesses into new markets.
Affiliate companies of Innovative Mattress Solutions are taking over Mattress Warehouse locations in the Cleveland, Columbus, and Cincinnati, Ohio and Louisville, Ky., markets as well as Internet domain addresses and federal trademark rights to the Mattress Warehouse name.
IMS companies now operate 24 bedding specialty stores — 17 in West Virginia, Ohio and Kentucky as Mattress Warehouse and seven in the Lexington, Ky.-area as Sleep Outfitters.
A U.S. bankruptcy court approved the deal Jan. 20, and IMS expected it to take effect Feb. 1.
IMS President Kim Knopf said affiliate companies were planning to take five to 12 stores — all in new markets — but didn't know the exact number at press time. She wouldn't disclose the expected purchase price.
Ortho Mattress, a California bedding store chain, also is picking up Westco locations, said Ken Karmin, Ortho Mattress chairman. Because the deal had not yet closed, he declined to disclose the locations or number of stores his company expects to gain, except to say that, like IMS, Ortho is looking at new markets.
According to its Web site, Ortho Mattress operates 37 bedding specialty stores in Southern California. In addition to making and selling its own brand of mattresses, it sells a private-label Summerhill & Bischop line and says it is the largest Serta vendor in Southern California.
Akron, Ohio-based Westco filed for Chapter 11 bankruptcy protection last year. After a failed attempt at reorganization, the court approved the liquidation of 35 remaining stores in Ohio, Kentucky, Indiana, Tennessee, Mississippi, Missouri and Kansas, which has been ongoing since November. All stores were expected to be closed on or before Jan. 31, according to court documents.
In earlier proceedings, the IMS company Sleep Outfitters had agreed to buy Westco's assets for $525,000, according to court documents. W.E. Bedding — which has since changed its name to Ortho Mattress — submitted a notice of intent for an upset bid of $575,000.
In subsequent negotiations, the bidders agreed to split the assets.
Ortho's Karmin said he believes Westco actually will come out better than it would have with the $575,000 bid.
Knopf of IMS said some of the locations her companies are taking already have been closed while others are still liquidating. In both cases the IMS affiliates will quickly reopen them under new management, she said.
"I've used this (Mattress Warehouse) name for 20 years, so in our mind it will be a very easy transition," she said.
IMS said it will stick to the sleep-shop formula, offering a full line of bedding from Sealy, Simmons and Stearns & Foster as well as Tempur-Pedic mattresses and pillows.
"With this acquisition, we can continue to take our successful formula into new markets and expand our operations," Knopf said.
Westco was the parent company of Top 100 player Sleep Fair/Mattress Warehouse, which had 2002 sales of $60.5 million at 60 stores, including some franchise units, according to Furniture/Today market research.
Westco filed for bankruptcy protection last April, reporting assets and liabilities of less than $10 million. Its largest unsecured creditors included Simmons, the Cincinnati licensees of Spring Air and Serta, Fashion Bed Group, Leggett & Platt, Southerland's and Kingsdown.
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