Simmons buys 49 sleep shops
By Larry Thomas -- Furniture Today, March 9, 2003
Atlanta — Bedding manufacturer Simmons Co. has boosted its retail presence with the purchase of 49 sleep shops from its parent company, Fenway Partners.
The stores, which operate in the Portland, Ore., and Seattle markets as Sleep Country USA and Mattress Gallery, give Simmons a total of 108 stores. The company's other 59 stores operate as Mattress Gallery in the Los Angeles and San Diego markets.
Simmons Chairman Charlie Eitel long has maintained the company doesn't want to be in the retail business, and he insisted last week that his position hasn't changed. He said Simmons acquired the Portland and Seattle stores in order to make its retail operations more attractive to potential suitors.
"I've been the leading critic of investing in retail stores in our industry ... and I still am," Eitel said. "We still intend to try to sell them. It is not our intention to compete with our existing dealer base."
He said the relatively small size of the Mattress Gallery chain in Southern California has hampered Simmons' ability to sell it. In addition, the retailer continues to struggle operationally, although Eitel noted there have been significant improvements the past two years.
He said the California stores "had a slight cash flow loss" in 2002, while the Portland and Seattle stores "were slightly cash-flow positive."
Eitel said the purchase price of $18.4 million, plus transaction costs, could be adjusted depending on the stores' future performance.
Currently, Mattress Gallery stores in California carry Simmons bedding exclusively, while the Sleep Country and Mattress Gallery stores in Portland and Seattle carry Simmons, Sealy and Spring Air. Eitel said one or two bedding vendors could be added to the California stores.
He said the 108 stores should have sales of $90 million to $100 million in 2003.
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