Dive Brief:
- Serta Simmons Bedding has concluded its financial restructuring and exited Chapter 11, the company announced last week. The milestone comes about six months after the bedding manufacturer and retailer filed for bankruptcy in late January.
- Chapter 11 allowed Serta Simmons to reduce its funded debt from about $1.9 billion to about $315 million. The debt reduction cuts the company’s annual cash interest expense by more than $100 million. That will enable “more investments back into the business,” the company said.
- Serta Simmons said it’s building its turnaround strategy on four pillars — product innovation, brand positioning and marketing investments, sales growth and supply chain investments.
Dive Insight:
CEO Shelley Huff said ending the restructuring process is a critical step in the company's turnaround.
“With our financial restructuring behind us, we are taking steps to drive growth by getting back to our innovation roots, reinvesting in our iconic brands, and nailing the fundamentals of our business with a focus on commercial and supply chain excellence,” Huff said in an announcement.
Serta Simmons said it plans to refresh “the vast majority of its product portfolio” this year and will update its product mix more frequently in the future. The company aims to create greater differentiation between its brands, which include Tuft & Needle and Beautyrest, and provide more support to retail partners and sales associates to increase sales. Serta Simmons will use its DTC channels to test new shopping concepts and plans to improve its omnichannel experience. The company will also invest in marketing and supply chain, and upgrade its manufacturing network.
“As we execute our turnaround, we will become an even stronger partner to retailers and will help them better serve their customers with our trusted brands and refreshed product portfolio,” Huff said.
As part of the company’s continued recovery, Serta Simmons also announced a new board of directors. Serta Simmons CEO Huff and Brandi Thomas, who is group vice president and chief audit executive for General Electric, will continue holding board positions. But the company has brought on a slate of other members, including Mark Genender, managing partner of Bristol Growth Capital, who was named chairman. The other members of the revamped board include: former Simmons Bedding CEO Charlie Eitel; FullBeauty Brands CEO Jim Fogarty; and Alan Shaw, former president and CEO of North America for Electrolux. The company plans to announce an additional board member but did not specify when.
Last month, the company named a new chief sales officer as well, in 30-year industry veteran Dominick Azevedo.
The bedding industry experienced significant consolidation of market share in recent decades, according to a June survey from Bank of America Global Research. Market share for the top three bedding manufacturers – Tempur-Sealy, Serta Simmons and Sleep Number – increased to 68% in 2020, up from 57% in 2002. In a threat to Serta Simmons, Tempur-Sealy is taking the most market share, according to Bank of America’s Global Research team, with that company’s share rising to 39% in 2023, up from 29% in 2016.
“For the fourth consecutive year, Tempur is the most recognized brand but is now tied with Serta,” Bank of America’s researchers said. “We believe this illustrates [Tempur’s] high focusing on supporting portfolio brands and product launches through effective and consistent marketing.”
Tempur Sealy in May also announced it was acquiring Mattress Firm for $4 billion.
Serta Simmons could benefit from positive trends in the overall bedding market. Forty-seven percent of respondents to Bank of America’s survey said they were very or extremely likely to purchase a bed in the next two years, the highest number since 2016 and up from 39% last year.
