High debt levels, poor sales taking toll in mattress arena
David Perry, Executive editor -- Furniture Today, October 6, 2008
Here's a real-world challenge for you: A reporter for one of the country's great newspapers (hint: two of its reporters found fame in the Watergate scandal) calls and asks about the state of the mattress business these days. What do you say?
A. “No comment.”
B. “Why are you reporters always looking for bad news?”
C. “The industry is cautiously optimistic about a rebound in 2010.”
D. “We are in the middle of a really, really horrible year.”
Before I give you the correct answer to that question, which was posed to me the other day by a reporter for The Washington Post, let's take a few moments to consider where we are as an industry these days. Short answer: It's ugly out there.
The recent Chapter 11 filing by Mattress Discounters of Upper Marlboro, Md., was unwelcome news for an already jittery industry. Simmons gets a major haircut there, it appears. And that ever-active industry grapevine suggests another major mattress retailer could be the next to file. On the wholesale side of the business, there are rumors that a couple of big players are struggling.
The debt levels on both the manufacturing and retail sides of the industry are significant, one bedding leader recently told me. And this poor sales climate gives everyone much less room to maneuver.
Steve Newton, CEO of Mattress Discounters, explained the company's plight this way: “I think it's all driven by the current economy we face. People are not buying mattresses. They're not buying any furniture goods, and they're not buying mattresses in particular.”
That's what Newton told The Washington Post reporter who wrote a story on the bankruptcy filing. That same reporter called me and asked for my perspective on the filing, and on industry conditions in general. And that led me to offer the comment about the “really, really horrible year.” Yes, “D” is the correct answer, or at least it's the answer I gave. Hey, what can you say to a question like that? It's never a good idea to dodge a question. Honesty is always the best policy when answering reporters' questions. Trust me on this.
I was also asked about the Discounters filing by a reporter for Distressed Debt Report, a financial publication. Frankly, I didn't even know there was a Distressed Debt Report, but that call is another sign of the times. I bet the reporters for that publication are pretty busy these days.
Is there any good news out there?
There are some winners, but there are more losers these days, I think. Let's face it: We are in a time of turmoil. True, this is a prolonged slump. But historically our industry has been a strong performer. We just need that history to start kicking in, one of these years.
Contact David Perry at dperry@reedbusiness.com
