Serta Simmons Bedding (SSB) announced late Monday evening that the company has entered into a “Restructuring Support Agreement” with its key financial stakeholders that will reduce Serta’s Simmons debt.
SSB has been struggling for a few years so this will not be a surprise to industry insiders, but it will create some disruption.
This move will reduce the Serta Simmons funded debt from $1.9 billion to $300 million. SSB has a commitment for a $125 million exit ABL credit Facility after Ch 11 is done, and a debtor in possession (DIP) financing package in the form of a $125 million ABL Credit Facility. The company also has $170 million in cash on hand to assist in the turnaround.
Can Serta Simmons Bedding battle back to their former #1 spot?
In recent years the leadership at SSB has watched top talent in the executive office and in the sales organization leave, or they have pushed them out in downsizing. If it’s true that you are only as good as your people, then they have some work to do adding back support in key areas. In addition to their opportunities around people, we are told by some retailers that they need to work on a better merchandising strategy to further define their two flagship brands in Serta and Simmons, and then determine how they are going to increase sales and profit margins at the same time. That part may be harder than climbing Everest.
Their internal issues will be a challenge but consider that they are also going head to head with Scott Thompson and the team at Tempur-Sealy. These guys are firing on all cylinders and are not going to lay down as SSB tries to rebuild, creating even more headwinds for the company. Layer into this, strong D2C brands pushing hard into brick and mortar, a tough economy and the potential of TSI buying Mattress Firm, and you realize just how difficult this is going to be.
But here’s the thing. In 2007 Wim Hof, also known as The Iceman, climbed to an altitude of 7,400 metres (24,300 ft) on Mount Everest wearing nothing but shorts and sandals. He was able to do it because of his training, a deep sense of purpose, and an incredible dose of willpower. So what I’m saying is; Serta Simmons Bedding has a chance.
How will the leadership at SSB respond? What will the turnaround strategy be?
As always, we try to point out that when this stuff happens, it is incredibly disruptive to a workforce. For everyone at SSB or at a company that may be impacted by what is happening to SSB we send you our best wishes and hope that you navigate what comes next with little to no impact to you or your families.
Tune in as we cover the story on the Dos Marcos podcast and try to address these questions and so much more!
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