Mattress Firm Looks To Increase Its Empire

Few weeks ago, after having announced its second quarter results, Mattress Firm thought it had captivating news.

Profit had multiplied three times, contrary to the expectations of analysts.  Having already bought one company during the current year, it planned to buy one more.

But all that failed to impress the investors, who estimated the latest purchase of the company to adversely affect short term profit.   The stock lost 3.2 percent, falling down by $1.03 to close at $31.42 in morning trading session of Friday.

Many analysts attributed the loss to wrong communication as investors remained focused on short term profit and loss rather than long term profits.

Thursday, Mattress Firm, based in Houston, announced its plans to invest $15.8 million for buying Mattress X-Press that has a chain of only 35 stores spread over Georgia and Florida.

Mattress Firm reported that it expected the newly acquired business to add to its revenue right away and to earnings in the coming year.

Mattress Firm had bought another of its rivals, Mattress Giant, in May. Though that added to the revenue of Mattress Firm, it worked hard to match production levels of Mattress Giant with its own.  Analyst reported that closing sales at certain stores of Mattress Giant reflected on profitably.

Market analysts KeyBanc had a long term view.  In a message to its customers on Friday, the analysts headed by Bradley Thomas thought the new acquisitions would provide a strong position to Mattress Firm in 2013 because the recovering housing market should boost sale of mattresses. Taking consideration of the significant improvements made by Mattress Firm in the old Mattress Giant stores, the analysts forecast higher earning for Mattress Firm in the next year.

Thomas pointed out that modernization of mattresses in “specialty” category should prove beneficial for Mattress Firm. Specialty mattresses comprise nearly 49 percent sales of Mattress Firm, one year ago that figure was 43 percent.

But what does this mean for us, people who want to buy reliable and comfortable mattresses at decent prices? I think more competition is the best for the buyer...I would like to hear your thoughts on this.