Debts as high as $1 billion! The century-old brand filed for bankruptcy for the 8th time

Since last year, news of various big sales and business bankruptcies in the cross-border e-commerce industry has become common.

8 bankruptcies and 7 reorganizations! Simmons, a century-old brand, cannot escape the "bankruptcy curse"

Recently, news came out that Simmons has officially filed for bankruptcy.

It is understood that Serta Simmons Bedding, a well-known American mattress manufacturer, has officially applied for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the Southern District of Texas.

In addition, Simmons has entered into a restructuring support agreement with major creditors and financial backers to reduce the company's debt and enable all creditors and financial backers to continue to make significant investments in its business and brand.

It is understood that Serta Simmons has three major brand lines, namely Serta, Simmons and Tuft & Needle. Among them, the Tuft & Needle brand has many hot-selling products on Amazon, and the reviews of hot-selling items have reached thousands.

At the same time, Serta and Simmons also have very high popularity in the US market.

It is sad to see a century-old brand go bankrupt!

Simmons has gone through seven bankruptcies and seven reorganizations, and currently has a debt of $1 billion, including $537 million in secured corporate bonds , $222 million in unsecured senior notes , $267 million in senior discount notes , and $12.5 million in unsecured industrial revenue bonds .

Speaking of Simmons, many Chinese people are familiar with it, and it has even become synonymous with spring mattresses among the public .

The Simmons brand was founded in 1870 and has a history of 153 years . At that time , founder Zalmon Simmons led 9 employees to make the world's first spring bed, which changed people 's sleeping habits.

In 1895 , Simmons became the world's largest spring mattress manufacturer . In 1935 , Simmons officially entered the Chinese market and subsequently became a household name in China.

Data shows that Simmons' sales network covers 100 countries around the world , with more than 300 stores in more than 100 cities in China .

However, no one expected that a century-old mattress brand would go bankrupt and reorganize seven times.

It is understood that Simmons went bankrupt for the first time in 1979.

Because Simmons began to suffer serious losses in 1976. Even though Simmons dealt with the loss problem by laying off employees and closing factories , it was still difficult to save the company's decline. It was eventually acquired by Gulf and Western Industries and became a wholly- owned subsidiary of the company.

Simmons' second bankruptcy was in 1985, when Gulf and Western Industries decided to sell Simmons in order to streamline the company's business. Simmons was then sold to Wickes Corporation through bankruptcy reorganization .

Simmons' third bankruptcy was in 1986. Due to poor management of Wickes Corporation , Simmons declared bankruptcy in less than a year and was eventually acquired by investment management company Wesray Capital .

Simmons went bankrupt for the fourth time in 1991, when Wesray Capital launched an employee stock ownership plan to sell Simmons shares to employees. However, this plan had a very big loophole, which caused Simmons to go bankrupt again. In the end, Merrill Lynch Capital bought 60% of Simmons' shares for US$32 million.

Simmons' fifth bankruptcy was in 1998. In 1996, Simmons was sold to Investcorp by Merrill Lynch Capital , but it was subsequently poorly managed and was eventually acquired by Fenway Corporation .

Simmons' sixth bankruptcy was in 2003, when it was acquired by Thomas H. Lee Partners (THL) .

Simmons went bankrupt for the seventh time in 2009. The global financial crisis broke out in 2008, and Simmons' revenue was also severely affected. The market demand dropped sharply, and finally it went bankrupt for the seventh time. Then American Ruisheng Investment and Ontario Teachers' Pension Plan of Canada bought Simmons for US$760 million, and then merged with another major American mattress company Serta to become Serta Simmons Company.

In 2018, the company acquired the online brand Tuft & Needle .

Owe a huge debt! Serta Simmons finally failed

According to Serta Simmons ' financial report data, the annual revenue of Serta Simmons Group was approximately US$2.2 billion in the last fiscal year ending in June 2022. This includes the total revenue of the three brands of Serta , Simmons and Tuft & Needle .

As of June 2022, Serta Simmons had a total cash position of $345 million, a decrease of $173 million from the end of 2021, and the asset-based revolving credit facility secured by Serta Simmons had a limit of only $171 million.

At the same time, Serta Simmons is facing huge debts and is even unable to pay many raw material suppliers and logistics companies normally.

In order to ease the company's operating pressure, Serta Simmons has closed mattress factories in Iowa, Virginia and Kansas in 2022 , and laid off hundreds of employees in these three factories.

After closing the factory, Serta Simmons also announced that it would build a new dual-brand manufacturing plant in Janesville, Wisconsin, USA, and planned to merge two existing plants in Wisconsin into the new plant . The purpose of this move is to optimize the company's operating structure to improve operational efficiency.

Despite taking various measures, Serta Simmons still finds it difficult to reverse the company's decline.

Moreover , Serta Simmons has more than $2 billion of debt due in 2023. In the coming year , Serta Simmons ' free cash flow is negative $125 million to $145 million.

An important reason why Serta Simmons is unable to continue is the huge debt brought about by the acquisition.

In 2012, a leveraged buyout led by Advent International , the major shareholder of Serta Simmons Group , resulted in Serta Simmons being saddled with a huge debt of US$2.3 billion .

Since then, Serta Simmons ' overall operations have been under tremendous pressure and eventually became unsustainable.

Multiple mattress brands are facing bankruptcy and the industry is rapidly reshuffled!

Since last year, the global economy has been in turmoil , the prices of raw materials for various products have continued to rise, and logistics costs have also increased. Coupled with continued inflation, prices have risen, consumer purchasing power has declined, and the mattress market has also been directly affected, with sales falling sharply. Many former leading companies are facing losses, bankruptcy, acquisitions ...

In June 2022, Costner , the third largest mattress company in the United States , officially filed for bankruptcy. Since May 2022, Costner has been closing factories one after another, and finally had to go bankrupt due to poor business performance. The main reason for the bankruptcy was the decline in consumer demand and the impact of the company's capital debt.

It is understood that Cosina was founded in 1971 and previously acquired Symbol , and then became the third largest mattress giant in the United States. It has multiple mattress brands, including Renue, Early Bird, Sleep Fresh, Symbol, etc.

In July 2022, Wolf Corp, a well-known American mattress manufacturer, was acquired by independent mattress manufacturer Blue Bell Mattress.

In the same month, the emerging healthy mattress brand Bear Mattress was acquired by American mattress manufacturer Brooklyn Bedding and sleep brand Helix Sleep.

In October 2022, British boxed mattress giant Eve Sleep announced bankruptcy and liquidation due to continued losses and falling stock prices. Its related brands, websites and assets were acquired by another bedding retailer, Bensons for Beds.

In 2023, cross-border sellers still face huge challenges. The collapse of Simmons also serves as a warning to sellers. The market is changing, and consumer demand is also changing. How to better avoid market risks and find new growth points has become crucial.

Simmons

Bankruptcy