Mattress Firm last week announced that CEO Ken Murphy will step down and Steve Stagner, president and executive chairman, will take on the additional CEO responsibilities, effective March 1.
The company called the move a joint decision by Murphy and the board of directors that "reflects the need for a singular voice of leadership for the company as it navigates the next phase of its growth story," according to a company press release.
Stegner has been with Mattress Firm for more than 20 years and previously served as CEO from 2010 to 2016, guiding the company through the Great Recession and overseeing its 2011 initial public offering.
Mattress Firm is struggling in the face of fierce competition from e-commerce upstarts, and it doesn't seem to be getting much help from new owner Steinhoff, which acquired the retailer last year. Steinhoff's plans for Mattress Firm's stores or brands weren't clear from the get-go, and its entry into the U.S. via the mattress category has been fraught with recent disruption.
Manufacturers and retailers in recent decades, including Mattress Firm, established a method of keeping consumers on their toes by selling various models and versions of mattresses to different retailers at a variety of prices, and instituting a series of sales and markdowns that made it difficult for consumers to price compare. Online startups like Casper, Leesa, Yogabed and Tuft & Needle cut through all that by eschewing special sales or markdown events in favor of keeping their "mattress-fits-most" offers in basic bed sizes at a single price paired with long try-out times and free returns.
The turmoil at Mattress Firm comes at an especially tense time for the market, as some of those upstarts look to stoke growth through retail partnerships that include brick-and-mortar expansion. Before being acquired, Mattress Firm in 2014 had bought rival The Sleep Train, which operated 310 stores, for $425 million, a move that increased its costs over sales. But at the end of the year, the company said it would shutter some 200 stores as it tries to regroup.
Mattress Firm's struggles and store closures could provide some relief to department stores, which still traditionally sell a lot of mattresses despite giving up market share to discount players like Mattress Firm and new e-commerce startups. Traditionally, purchasing a mattress has been a sensory experience — customers go to showrooms, listen to salespeople and lie on options to feel their comfort level — to the tune of $14.2 billion in sales.
It could also help the specialty retailers and mass merchants that are helping the new players expand into brick and mortar. In recent months, for example, Target has begun to display and sell bedding from startup Casper Mattress on its site and in stores, and reportedly almost bought the company outright for $1 billion. Williams-Sonoma brands West Elm and Pottery Barn have partnered up with Leesa Sleep.
In a statement (or an understatement), Stegner said the company is "now in a new phase of our development."
"We will look to our experienced leadership team to build on our platform of unique business assets to win at retail, leverage our scale to bring unparalleled value to the customer, and navigate the current environment,” he said.