Mattress Firm aims to raise about $100M in IPO

Mattress retailer Mattress Firm Holding Corp. expects to raise about $100 million in an initial public offering to pay down its debt.

The company is offering 5.6 million shares, and expects them to price from $17 to $19 each. Underwriters may buy another 833,333 shares if there's heavy demand.

After expenses the company anticipates net proceeds of about $90 million.

Most of the proceeds will go toward repaying $84.4 million in debt outstanding under a loan.

Mattress Firm began in Houston in 1986. The company and its franchisees run 757 stores in 25 states. It has many competitors, including national department stores that offer bedding, such as Macy's Inc. and Sears Holdings Corp., warehouse clubs such as Costco Wholesale Corp., regional bedding chains and factory mattress stores such as Original Mattress.

Mattress-only sellers such as Mattress Firm have the biggest share of the market, according to industry publication Furniture Today, with about 40 percent. The same publication said that Mattress Firm is No. 2 in sales among such retailers. It had about $11.6 billion in sales last year.

Boston private equity firm J.W. Childs currently owns about 77 percent of the company. It bought the company in 2007 for an undisclosed amount. Mattress Firm will also pay $1.4 million in management fees to J.W. Childs from the IPO's proceeds.

J.W. Childs is expected to own about 64 percent of the company's stock after the IPO. Asset management firm Neuberger Berman expects to own about 10 percent of the company immediately after the IPO.

Mattress Firm's business has been growing as it opens mores stores. In the six months ended Aug. 2, the company posted net income of $4.7 million, up significantly from $104,000 in the same period in 2010.

Revenue grew 41 percent to $331.8 million.

Mattress Firm predicted fiscal third-quarter revenue of $183.5 million, a 40 percent increase from the year-ago period. This period, ended Nov. 1, included the Labor Day holiday. That week is traditionally the biggest sales week of the fiscal year, Mattress Firm said.

It projected that revenue at stores open at least a year rose about 19 percent. This figure is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.