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Two mattress company CEOs are suddenly jobless in another shakeup for an industry mired in upheaval, raising questions about the future of a sales partnership between their companies.
Mattress Firm CEO and Executive Chairman Steve Stagner resigned abruptly this week about six months after the company plunged into bankruptcy and closed about 640 stores following an expansion binge.
One analyst said Stagner’s exit was likely necessary to open the door for Mattress Firm to patch up a previously acrimonious relationship with one-time supplier Tempur Sealy International.
Mattress Firm, the nation’s largest mattress retailer, did not name a permanent replacement or an interim leader, saying that its board would “work closely with the senior management team to execute a strategy for operational growth” while it searches for a new CEO.
Stagner was on his second stint as CEO of Mattress Firm, having first served in that post from 2010 through 2016 and then taking over again in March 2018.
“Through his leadership, Mattress Firm successfully emerged from bankruptcy in the fall of 2018, and is now positioned to pursue a disciplined and healthy retail strategy,” Mattress Firm spokesperson Sunni Goodman said in an email. “Knowing Mattress Firm is in a good place, Steve felt this was the right time to pursue other interests and spend time with his family. We are grateful for his guidance and commitment over the years.”
Goodman declined to comment on speculation that Stagner’s exit from Mattress Firm was connected to a desire to reconnect with Tempur Sealy.
His exit came at nearly the same time that mattress maker Serta Simmons Bedding, the key supplier to Houston-based Mattress Firm, disclosed that its CEO, Michael Traub, is also leaving.
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“While the Board is grateful to Michael for his many contributions, we believe the time is right for this transition,” the new Serta Simmons CEO, David Swift, said in a statement, according to Bloomberg.
The corporate departures come as the latest development in a period of turmoil for an industry that has engaged in intense competition, discounts, expansion and contraction.
Mattress companies are under pressure from digital competition, including surging bed-in-a-box sellers like Casper, which is opening dozens of stores this year to go along with its strong digital sales.
Taken together, the two departures call into question the future of the sales deal between Mattress Firm and Serta Simmons, which was formed after Mattress Firm’s previous deal with Tempur Sealy International collapsed suddenly in 2017.
Piper Jaffray analyst Peter Keith said it’s more than 90% probable that Mattress Firm and Sealy would get back together, with both parties “highly motivated” to renew the deal.
“We believe trust and durability of the relationship was the final hurdle, but these criteria would be hard to meet with Steve Stagner as CEO given his tenure during the period when the (Tempur Sealy-Mattress Firm) relationship deteriorated and ultimately blew-up in what can only be described as an irrational and emotionally charged fallout because it made no economic sense for either party,” Keith said in a research note to clients.
Tempur Sealy CEO Scott Thompson told investors in February that his company, a rival of Serta Simmons, has had “constructive” talks with Mattress Firm.
“When it comes to the Mattress Firm relationship, I would say it’s trending well,” Thompson said at the time.
Mattress Firm, which still has about 2,600 stores, did not respond to questions about the possibility of a sales switch from Serta Simmons to Tempur Sealy.
Thompson had previously criticized Mattress Firm for “irrational” discounts. His company had also sued Mattress Firm in 2018 over accusations that the retailer was selling mattresses that looked like the Tempur-Pedic brand after the contract between the two companies ended.
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But Tempur Sealy said in February that it had settled that lawsuit.
Tempur Sealy’s stock has risen by more than 8% since Tuesday, when the Mattress Firm CEO’s departure was announced.
Tempur Sealy declined to comment Thursday. Serta Simmons representatives did not respond to a request seeking comment.
Serta Simmons CEO Traub told USA TODAY in August that the company had “a very strong relationship with Mattress Firm.” He declined to comment on the retailer’s future but said Serta Simmons was already planning its 2019 products with Mattress Firm.
Casper CEO Philip Krim said digital disruption is roiling traditional mattress companies.
“The incumbents in this space continue to be distressed,” Krim said in an interview Thursday. “They continue to not understand where the consumer landscape is going in this category and the owners of the respective businesses clearly are starting to see that.”
Casper has 23 stores open so far and plans to open “dozens” more this year, Krim said. But he predicted that more traditional retailers will close stores.
“I think you’re going to continue to see a substantial retail shakeout,” Krim said.
For Serta Simmons, supplying Mattress Firm has turned out to be much less lucrative than it originally hoped. Mattress Firm’s 2018 bankruptcy dramatically reduced the retail footprint of the nation’s largest mattress retailer.
S&P Global Ratings estimated in October that the fallout from the Mattress Firm bankruptcy would reduce Serta Simmons’ revenue “by at least the low- to mid-single-digit percent area” while increasing its debt relative to sales.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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