Somnigroup International disclosed that it has acquired a 25% stake in Kingsdown, a move that it said will enable it to benefit from an expanded Kingsdown presence on Mattress Firm sales floors.
Kingsdown said earlier that SGI, the world’s largest bedding company, had acquired a minority share in Kingsdown and would be a passive investor in the company. Kingsdown did not disclose the size of the SGI stake in that announcement.
On its recent earnings call, Scott Thompson, SGI’s chairman, president and CEO, provided some insight on why SGI made the investment in Kingsdown, a company with which it competes in the mattress marketplace.
“We are pleased to report our investment in Kingsdown, acquiring 25% passive interest in this leading North America luxury mattress manufacturer and valuable buyer to Mattress Firm,” he said. “This will allow SGI to participate in expected growth in Kingsdown sales and profits as their presence on Mattress Firm’s floor expands, and they pursue other growth opportunities.”
Thompson added that the Kingsdown investment “reflects our disciplined capital allocation strategy, which is focused on high-return investments to strengthen our competitive position and drive long-term value for shareholders.”
Asked where Kingsdown will fit into the assortment at Mattress Firm, Thompson said: “They’ll be at the high end and they concentrate primarily in the spring area.” He added that Kingsdown has “good brand strength in Canada and the Northeast. So they’re good people, and we’re glad to be a passive investor.”
Thompson also said that it was “apparent that Kingsdown was under-represented at Mattress Firm compared to what we think the customers want and the retail sales associates want, and brings some more differentiated product to the floor. And then when we looked at that, it was clear that they were going to be expanded, some in the store. And when we thought about the financial impact of that, it appeared to us the best way to participate in that economics was with a passive equity investment so that we could win in that success, and they could win.”
Kingsdown CEO Frank Hood had no comment on Thompson’s statements about the Kingsdown stake and what it means for Kingsdown and for SGI.
In an exclusive interview with Bedding News Now at the recent High Point Market, Hood spoke at length about the SGI stake and about how Kingsdown will compete with SGI moving ahead.
In his report on the SGI results, Piper Sandler analyst Peter Keith offered this analysis of SGI’s 25% stake in Kingsdown: “Though a passive stake, it would give SGI more exposure to Kingsdown’s premium innerspring ramp-up on Mattress Firm floors.” He added: “Kingsdown has been a positive standout among smaller brands in our monthly mattress survey for most months year to date.”
