MATTRESS PRICES THESE DAYS ARE ANYTHING BUT SLEEPY

If you haven’t gone mattress shopping recently, you may be in for a restless night.

Mattresses are now big-ticket purchases, with Tempur-Pedic’s “Luxe Breeze” model carrying a price tag of $5,500 for a king-sized model. Instead of a place to relax your mind, mattresses may simply spark head-scratching over how to secure financing for a purchase.

Tempur Sealy and its major competitors have been reshaped by market forces, including the involvement of private equity firms and the demands of an aging American population that’s willing to shell out big bucks for a comfortable night’s sleep. In 2012 and 2014, the average price of mattresses rose at more than double the inflation rate, and wholesale bedding sales have increased at a compound annual growth rate of almost 5 percent since 1995, according to Tempur Sealy.

While that should pay off in the form of higher revenues and profits, the mattress industry itself is doing some tossing and turning. For one, the major makers are facing a growing challenge from internet upstarts like Casper and Leesa, which are enticing shoppers with more affordable prices, free shipping and high-end components such as memory foam.

Interestingly, while private equity has had a major hand in the big mattress retailers, venture capital is backing these smaller internet ventures. Casper, for instance, has raised almost $70 million from 22 investors, including actor Leonardo DiCaprio, according to Crunchbase.

There’s also turmoil within the mattress industry, with Tempur Sealy losing its biggest retailing customer, Mattress Firm, to rival Serta Simmons. Tempur Sealy on Thursday said its first-quarter sales were little changed at $722 million, while per-share profit excluding some items jumped to 96 cents compared with 68 cents a year earlier, beating estimates. Investors cheered the results, sending shares higher on Thursday.

But Tempur Sealy signaled some restlessness ahead. On a Thursday conference call with investors and analysts, CEO Scott Thompson said the company was preparing to spend more money on marketing and to debut new products.

“We’re going to run a little sloppy until we understand how the bedding market resets,” he noted. “I think that’s going to take a couple of quarters.”

Tempur Sealy has also jumped on the internet bandwagon with its Cocoon by Sealy product, which is sold online and shipped in a box, similar to Casper. Cocoon’s California king “Chill” model costs $1,149 and touts its “premium memory foam” and “innovating cooling technology.” Tempur Sealy said North American sales for its internet-based business have tripled.

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