Mattress chain seeks protection as financial struggles deepen
- AFM Mattress Co. filed for Chapter 11 bankruptcy in Delaware affecting specific stores.
- The company faces numerous financial pressures, including increased expenses and reduced consumer spending.
- The restructuring process aims to improve operations and reduce unprofitable leases.
In Delaware, AFM Mattress Co. filed for Chapter 11 bankruptcy to reorganize under financial pressure impacting its 52 stores situated in Illinois and Indiana. The chain, known as American Mattress, is a significant player in the mattress retail market yet has faced mounting challenges in the past 18 months. Factors contributing to this decline include a slowdown in consumer spending amid election-year uncertainty and costly changes mandated by two principal mattress vendors for product line resets. Additionally, nearly $3 million was spent on showroom remerchandising, further straining the budget. Despite having profitable locations, underperforming stores heavily impacted the company's overall finances. With reported assets and liabilities between $1 million and $10 million and a roster of 100 to 199 creditors, American Mattress’s financial situation became too precarious, prompting leaders to seek bankruptcy protection strategically. The bid for Chapter 11 aims to shed unprofitable leases and reorganize functional operations while securing continued payment for standard operational costs such as payroll and utilities. Among the creditors are five major bedding manufacturers — Adventure Mattress, Serta/Simmons, Tempur-Pedic, Bedding Industries of America, and Customatic Sleep Technologies, collectively owed around $2.06 million. The company confirmed during its initial hearing that there were no announced layoffs or store closures due to this filing, which may provide some stability during their restructuring process. By approaching bankruptcy with a plan, American Mattress seeks not only to overcome its current financial turmoil but also to position itself for future viability in a stringent retail environment. As the retail landscape evolves, businesses like American Mattress must adapt to changing consumer behaviors and external pressures. The upcoming months will be critical for the company as it navigates its Chapter 11 proceedings, aiming to emerge renewed and ready to compete effectively in the mattress industry.