Sleeper of an IPO? Mattress Firm Files To Come Public (MFRM)

Mattress Firm Holding Corp., owner and franchise giant of The Mattress Firm, has filed to come public.  Yes, it is a bedding company.  The listing exchange has not been picked out but the company does plan to list under the stock symbol “MFRM.”  No financial terms were disclosed.

The underwriting syndicate includes Barclays Capital, UBS Investment Bank, William Blair & Company, KeyBanc Capital Markets, and SunTrust Robinson Humphrey.  As far as the use of proceeds, the company plans to pay down debt.  As of February 1, 2011, the bedding retailer owed some $230.2 million under the 2007 senior credit facility and $109.8 million under the 2009 loan facility.

Some of the trademarks that the company owns or has rights to use include “Mattress Firm®,” “Comfort By Color®,” “Mattress Firm Red Carpet Delivery Service®,” “Hampton & Rhodes®,” “YuMeTM,” “Mattress Firm SuperCenter®,” “Happiness GuaranteeTM,” “Replace Every 8®,” “Save Money. Sleep HappyTM,” and “All the best brands…All the best prices!®.”

Mattress Firm is a specialty retailer of mattresses and accessories in the United States and it noted, “we and our franchisees operated 592 and 88 stores, respectively, primarily under the Mattress Firm name, in 49 markets across 23 states.”

It claims to have ranked first among the top 100 U.S. furniture stores in 2010 for both growth in store count and percentage increase in sales, according to Furniture Today. It also has the largest geographic footprint in the United States among multi-brand mattress specialty retailers and rank second in total sales among mattress specialty retailers.  Of the company-operated stores, 75% are located in markets it believes that it had the number one market share position as of February 1, 2011.  Its retail locations  average about 4,800 square feet per location with leading national mattress brands and it also carries its own exclusive brands.

From January 30, 2008 to February 1, 2011, The Mattress Firm grew net sales, as well as adjusted EBITDA, at compound annual rates of 6.8% and 19.2%, respectively.  In fiscal 2010, the company generated net sales and adjusted EBITDA of $494.1 million and $57.1 million, respectively, and it has also achieved 19 consecutive months of positive comparable-store sales growth.  Its income from operations in 2010 was $32.788 million and net income after all taxes and items was $885.000.00.  From January 30, 2008 to February 1, 2011, it has opened 232 new stores, including 38 stores added through acquisitions.

As far as the industry opportunity, the company claims that its industry had net sales of roughly $11.6 billion in 2010. The company calls the market “highly fragmented” and went on to note that no single retailer holds more than a 7% market share.  In more detail, the company’s filing noted that the top eight participants only account for about 25% of the total market. In 2008, mattress specialty retailers had a market share in excess of 40%, which represented the largest share of the market, having more than doubled their share over the past 15 years.

The full IPO filing is available here.

JON C. OGG