When news hit a few weeks ago that Sleep Number is filing for Chapter 11, many in the industry speculated that Somnigroup International would bid on the brand.
While Sleep Country Canada is the stalking horse bidder at the moment, Keith Hughes, an analyst at Truist, said he expects “several of the better capitalized players in the industry (there are only a few) to bid, including SGI.”
After acquiring Mattress Firm and striking a deal with Leggett + Platt, it wouldn’t be a stretch for SGI to buy Sleep Number. But honestly, they don’t need it.
SGI is running strong, and this is confirmed by a recent study released by Zelman & Associates titled, “The strong get strong; Initiating at outperform.”
“Combined with our outlook for better growth in existing home sales in 2027, we believe SGI will remain a secular winner, with ongoing market share gains likely to support accelerating revenue growth and margin expansion,” the report says in its opening. “This, combined with share buybacks, will drive meaningful earnings growth.”
The report is over 50 pages long and highly detailed, but reading through it, there are a few key trends that tell the story of a company that’s doing things differently from others in the industry, and succeeding.
In fact, SGI may be growing while the rest of the industry is stagnant. According to the report, SGI’s organic growth is well above the U.S. mattress industry wholesale growth. This indicates that the company’s acquisition of Mattress Firm has been successful in helping the company continue to grow. The report also says that SGI revenue growth has outpaced the market over time.
“SGI has not gained share every year, but its organic revenue growth has outpaced ISPA mattress and foundation wholesale growth estimates by roughly 600 basis points annually since 2004.”
As if the Tempur brand name wasn’t popular enough before, the acquisition of Mattress Firm allowed it to expand the brand name even further.
With $3.9 billion in 2025 sales on a full-year basis, SGI estimates that Mattress Firm has a 20% market share in the premium segment. Zelman estimates a roughly 10% share of the overall market.
The company has over 2,100 stores across 45 states — a footprint that brings 82% of Americans within 30 minutes of a store — and a national digital platform with more than 75 million annual website visitors.
“The Mattress Firm acquisition expanded the growth strategy from wholesale share gains to the much larger wholesale-plus-retail revenue pool,” the report says. “The share of revenue that Tempur Sealy had within Mattress Firm increased from the low 40% range before the acquisition to the low 60% range. Importantly, the company did not expand the slots taken by its own products on the floor above the $1,500 price point, but after the five-year antitrust limit expires, SGI can increase the number of Tempur Sealy slots, driving its share within Mattress Firm even higher.”
Another big change since the Mattress Firm acquisition? Roughly two-thirds of SGI’s sales are now direct-to-consumer.
“A broad distribution model creates real channel conflict, which is why SGI had to build discipline to manage its wholesale, OEM, direct-to-consumer and owned retail channels,” the report reads. “The company instituted a weekly process to coordinate across pricing, product allocation and promotions, with each channel expected to grow inside its lane rather than cannibalize the others. While the brands operate in multiple channels, the company often makes different SKUs for different channels. Company-owned stores and direct-to-consumer e-commerce improve economics and control because SGI captures both the retail and wholesale profit components while owning the consumer experience.”
A final finding in the report shows that SGI spends more on upper-funnel advertising than the rest of the bedding industry, which could tell us how the company is going to move forward.
“SGI has spent years building wholesale and direct online platforms, giving consumers online and offline purchase options in the vast majority of its 100 markets. The company operates over 40 e-commerce platforms globally and direct online channels capture both retail and wholesale profit and therefore are higher margin. For Tempur Sealy, DTC (direct-to-consumer) is attractive because it already has the product, brand, manufacturing scale, retail stores, delivery infrastructure and consumer trust. When it sells direct, it captures both the manufacturer margin and part of the retailer margin.”
It’s no secret that SGI is doing well, but it will be important to watch what they do. And that’s good news, because as I’ve heard many times over: A healthy SGI is healthy for the bedding industry.
