Serta Simmons Bedding has concluded its financial restructuring and emerged from Chapter 11, marking the completion of a critical step in the company’s turnaround effort.
“The financial restructuring process we completed signifies an important step forward that will enable us to accelerate our turnaround and strengthen our leadership position in the market,” says Shelley Huff, CEO. “The Serta and Beautyrest brands in our portfolio have a deep heritage in innovation and have played meaningful roles in the lives of consumers for generations. With our financial restructuring behind us, we are taking steps to drive growth by getting back to our innovation roots, reinvesting in our iconic brands, and nailing the fundamentals of our business with a focus on commercial and supply chain excellence.”
SSB, which has been executing on its strategic initiatives over the past 18 months, is advancing its turnaround across the following pillars:
- Leading with product innovation — The company is bringing significant newness to the market this year through the refresh of the vast majority of its product portfolio. Looking ahead, SSB will more frequently update its product mix to deliver consumer-driven innovations as well as high-value products across brands and price points.
- Brand reinvigoration — Alongside SSB’s commitment to innovation, the company is increasing marketing investments and sharpening its brand positioning to create greater differentiation for the brands in its portfolio, as well as maximize the potential of each brand.
- Commercial excellence — As it brings new products to market, SSB is focused on better supporting retail partners and their sales associates to drive sales growth. The company is also leveraging its direct-to-consumer platforms to test new shopping concepts and improve the omnichannel consumer experience.
- Operating a high-performing supply chain — The investments SSB continues to make in its supply chain are enabling the company to efficiently deliver quality products and excellent service levels to retail partners and sleepers. Supply chain enhancements include the implementation of new processes and technology as well as the optimization and upgrading of its manufacturing network.
“As we execute our turnaround, we will become an even stronger partner to retailers and will help them better serve their customers with our trusted brands and refreshed product portfolio,” adds Huff.
As SSB emerges from Chapter 11, a new board of directors has been appointed to oversee the company. Previous board members Huff and Brandi Thomas (group vice president and chief audit executive, General Electric) will continue to hold board positions. Established private equity investor Mark Genender (managing partner, Bristol Growth Capital LLC), who previously sat on the Simmons board, will serve as chairman.
The rest of the board is made up of business leaders with relevant experience in manufacturing, consumer durables and retail, including Charlie Eitel (former CEO, Simmons Bedding Co.), Jim Fogarty (CEO, Fullbeauty Brands), Alan Shaw (former president and CEO, North America, Electrolux), and an additional board member to be announced.
“I look forward to partnering with Shelley and the management team, as well as the rest of the board of directors and the company’s investors, to help advance SSB’s turnaround effort,” says Genender. “Serta and Beautyrest are among the most valuable brands in the industry. These brands, in combination with SSB’s strategic areas of focus, executive leadership and investor support, will drive the next phase of growth for the company.”
SSB is emerging with ample liquidity and a more flexible capital structure that will enable it to execute its turnaround, according to the company. As a result of the Chapter 11 process, SSB successfully reduced its funded debt from approximately $1.9 billion to approximately $315 million.
The nearly $1.6 billion debt reduction lowers the company’s annual cash interest expense by more than $100 million, enabling more investments back into the business. In addition, in connection with its emergence, SSB has obtained a $100 million revolving credit facility which, along with substantial cash on hand and cash generated from operations, will provide additional financial flexibility to support the company’s strategic initiatives.
During the Chapter 11 process, Weil, Gotshal & Manges LLP served as SSB’s legal counsel, Evercore Group LLC served as SSB’s investment banker and FTI Consulting Inc. served as SSB’s financial and restructuring adviser. Gibson, Dunn & Crutcher LLP served as legal counsel, and Centerview Partners served as financial adviser and investment banker, to an ad hoc group of SSB’s priority lenders.