Struggling furniture chain files Chapter 11 bankruptcy
When the economy gets tight, people cut back on expenses, eating out less often and keeping the car an extra year.
People also put off replacing worn-out household items, like couches and beds, that have an indeterminate life span. It's hard to know the exact time to replace some items because while a sofa might get a bit threadbare and a mattress might be a little worn out, they still work.
They're not like a washing machine, refrigerator or other appliance that stops working. There's no clear signal that suggests it's time to replace a mattress, so when people are worried about their jobs and the economy, they put off expenses like buying new furniture.
In addition, many Americans improved their homes during the covid pandemic. With more people spending a lot of (or all) their time at home, many invested in new furniture and appliances.
That pulled forward demand and created an uneven sales cycle for many furniture companies. This dangerous cycle claimed a number of big-name players, including Mitchell Gold + Bob Williams, which was liquidated, and Z Gallerie, which filed for Chapter 11 protection, then sold its assets in May.
Now, another long-tenured local chain has filed for Chapter 11 bankruptcy for many of the same reasons that disrupted its peers.
Bed Bath & Beyond was also liquidated after a bankruptcy filing. Image source: TheStreet
Regional Mattress chain fights for survival
Family-owned-and-operated Factory Mattress has been operating mattress stores in Texas since 1977. The chain operates 21 stores serving the Austin and San Antonio markets.
"When you visit any one of our locations throughout Central Texas, you’ll discover the largest selection of discounted name-brand sleep sets; with mattresses and foundations from Sealy, Simmons, Tempur-Pedic, iComfort by Serta, and Sleep Designs," the company says on its website. "And it doesn’t stop there. … [From] bed frames and memory-foam pillows to mattress protectors and adjustable bases, we carry just about every item needed to create the perfect sleep environment."
The company built its business by offering quick delivery on its own trucks and by giving customers a year-long, no-questions-asked return period.
More bankruptcy:
It now has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Western District of Texas.
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Factory Mattress plans to continue
Steve Frey, who founded and owns the chain, cited road construction limiting access to his stores as one of the problems that led to the bankruptcy filing.
“The reorganization is a mandatory step to get economic relief. Our stores will have no interruption in operations for sales and support to our customers,” he told Furniture Today.
In its bankruptcy filing, Southwest Mattress, the parent of Factory Mattress listed estimated assets of $1 million to $10 million with estimated liabilities totaling $1 million to $10 million. It has an estimated 50 to 99 creditors. Those are standard ranges that are choices on the bankruptcy form.
Among its liabilities, the company shows $434,458.70 owed to Tempur-Pedic, $134,964 to Sealy, $72,755 to Kingsdown, $65,734.96 to M.D. Mattress, $49,264 to Serta, $41,366 to Nectar and $35,376 to Sleep Designs. Lines of credit and rents make up most of the rest of its top 20 unsecured debts.
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The company has not outlined a funding plan or made mention of how it hopes to emerge from bankruptcy. There is no mention of the Chapter 11 bankruptcy on its Facebook page or website.