Steinhoff's (SNHJ.J) Mattress Firm Inc, the largest US mattress retailer, has filed for voluntary bankruptcy protection, giving it breathing room to restructure and shore up its finances as its South African parent company fights for survival.
The company could eventually close 700 of its 3,000 locations.
"The bankruptcy will not affect any stores in ME", a store manager at the one of the company's Portland area locations told the Bangor Daily News, requesting anonymity. The closures will start with around 200 stores over the next few days. "As a result, many Mattress Firm stores are in direct competition with other Mattress Firm stores, resulting in disappointing sales".
The company is saddled with more than $1 billion in liabilities.
"Mattress Firm is some sort of giant money laundering scheme".
In a statement announcing the bankruptcy, Mattress Firm's CEO Steve Stagner said up to 700 stores could be closed in the next few months.
Mattress Firm had planned to open a store there, but later changed its mind after construction was delayed to comply with environmental assessments.
Two stores are less than a mile apart on Town Center Parkway. "The Company intends that warranties, guarantees and other customer programs will be honored as usual", it said. The four-year-old company wants to gain exposure with shoppers who prefer trying out a mattress at a store first - and increase impulse buys that can only come from browsing physical locations.
The company said in the release it will continue to operate through the bankruptcy after receiving commitments for debtor-in-possession financing of $250 million and commitments for $525 million of senior, secured credit facilities.
The company's difficulties include an accounting scandal at its parent company, Steinhoff International, and losing a large contract with Tempur Sealy International previous year.
The Houston-based retailer was acquired by South African retailer Steinhoff International Holdings for $3.8 billion in 2016.
The scandal wiped more than 90 percent off Steinhoff's market value and brought the company under intense regulatory scrutiny. Mattress Firm denied the allegations.