Tempur Sealy International recently announced plans to acquire Dreams, a UK-based mattress retailer owned by Sun European Partners LLP, for nearly half a billion U.S. dollars.
When Mike Logue took over Dreams in 2013, it was not performing well and he did a lot to turn it around. Since he took over, Dreams has delivered six years of consecutive growth and generated sales of approximately $500 million.
Now, led by Logue, Dreams’ management team will stay in place as the company continues its day-to-day operations. The company has 2,000 employees and sells 11,500 mattresses, bases and headboards each week nationwide through its chain of 200 stores and online.
So what does this mean for the mattress industry?
When a manufacturer makes a move into retail, there is always a concern about a negative counter-action from other retailers; about buying beds from a company that is now competing with them at retail.
But TSI skirts this concern by driving value into the market with strong brands and preferred products—they seem to be one of few producers that can pull off purchasing retail operations and still maintaining their retail customer base.
If you look at companies like Nectar, Casper, and Purple—all started as digital-first brands—they’re now expanding their distribution into brick and mortar retail. Tempur-Pedic pioneered that approach more than 20 years ago when it started as a D2C brand sold through television and now is writing another chapter on how to grow a worldwide brand.
Industry insiders say that TSI paid a premium to acquire Dreams, which tells us that they see a bright future ahead for the business and speaks to the importance they place on expanding retail distribution.
Also, this is not the first bite at the mattress apple for Sun Capital. They used to own Mattress Firm and made a big investment in Mancini’s and Sleep Innovations as well.
Stayed tuned to The FAM for more updates.
