Dive Brief:

• Mattress Firm has entered into a credit agreement up to $225 million, to be available for "working capital needs and other general corporate purposes." The ABL Facility has an initial aggregate principal availability amount of $75 million, but the company intends to upsize that via an incremental availability feature to a total aggregate principal amount of up to $225 million, according to a company press release.
• Last week, Mattress Firm executives told lenders that the company, as of last year a unit of financially struggling South African conglomerate Steinhoff, would close 200 stores as part of an ongoing restructuring effort, the Houston Business Journal reports.
• Before being acquired by Steinhoff last year, Mattress Firm in 2014 had itself bought rival The Sleep Train, which operated 310 stores, for $425 million, a move that increased its costs over sales. 

Dive Insight:

Steinhoff's plans for Mattress Firm's stores or brands weren't clear from the get-go, and its entry into the U.S. via the mattress space has been fraught with recent disruption. Manufacturers in recent decades established a method of keeping consumers on their toes by selling various models and versions of mattresses to different retailers at a variety of prices and instituting a series of sales and markdowns that made it difficult for consumers to price compare.

Online startups like Casper, Leesa, Yogabed and Tuft & Needle cut through all that by eschewing special sales or markdown events in favor of keeping their "mattress-fits-most" offers in basic bed sizes at one price each and offering long try-out times and free returns. The turmoil at Mattress Firm comes at an especially tense time for the market, as some of those upstarts look to stoke growth through retail partnerships that include brick-and-mortar expansion.

For example, Target displays and sells bedding from startup Casper Mattress on its site and in stores, and reportedly almost bought the company outright for $1 billion. Williams-Sonoma brands West Elm and Pottery Barn have partnered up with Leesa Sleep. 

Mattress Firm's struggles and store closures could provide some relief to department stores, which still traditionally sell a lot of mattresses despite giving up market share to big box discount players like Mattress Firm as well as to the new e-commerce startups. Traditionally, purchasing a mattress has been a sensory experience — customers go to showrooms, listen to salespeople and lie on options to feel their comfort level — to the tune of $14.2 billion in sales.