The company that owns Mattress Warehouse, Sleep Outfitters and Mattress King filed for Chapter 11 bankruptcy protection Friday as the mattress industry reels from overexpansion and bed-in-a-box competition.
In the second major mattress bankruptcy in about three months, Lexington, Kentucky-based Innovative Mattress Solutions filed for protection from its creditors in a Kentucky federal court.
Innovative Mattress Solutions is expected to close some of its 142 stores in the southeastern U.S., according to mattress-maker Tempur-Sealy International, which agreed to provide bankruptcy financing to the retailer.
"Our stores are open for business as usual, and we are focused on taking care of our valued customers," Innovative Mattress Solutions CEO Kim Knopf said in a statement. "IMS now has the backing of Tempur Sealy, one of the biggest and best-known mattress manufacturers, and a longtime supplier partner of our company. We look forward to emerging from this process as an innovative, customer-focused company positioned for profitable operation."
Kristin Micalizio, the company's chief marketing officer, confirmed in an email that the company will conduct "a review of optimizing our retail footprint to focus on strengthening our performance and right-sizing our operating structure."
Analysts say the mattress industry has added too many stores at a time when bed-in-a-box competitors like Casper, Leesa and Tuft & Needle are surging.
The nation's largest mattress retailer, Mattress Firm, filed for Chapter 11 bankruptcy in October after an acquisition spree went awry, discounts undermined profits and digital disruption battered sales. Mattress Firm closed hundreds of its more than 3,200 stores.
Meanwhile, in news related to pressures of the retail environment, Fort Myers-based clothier Chico's FAS has announced that it plans to close at least 250 stores in the U.S. over the next three years.
Mattress manufacturers are also feeling the sting. Innovative Mattress Solutions owes $19.3 million to mattress-maker Tempur-Sealy International, according to its bankruptcy petition.
Tempur-Sealy said Friday that it had agreed to provide up to $14 million in bankruptcy financing to Innovative Mattress Solutions. But the mattress maker will record a charge of $21 million on its fourth-quarter earnings as a result of the case.
"Innovative Mattress Solutions has served over a million consumers and built equity for their and our brands in their markets," Tempur Sealy CEO Scott Thompson said in a statement. "However, we believe iMS' overextended retail footprint and thin capital structure were not designed to effectively respond to the competitive pressures of the recent retail environment."
Tempur Sealy's Thompson said the company "will review strategic alternatives related to iMS during its bankruptcy process with a focus on what is best for Tempur Sealy consumers in the affected markets."
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
This article originally appeared on USA TODAY: Mattress Warehouse, Sleep Outfitters, Mattress King company files Chapter 11 bankruptcy