The Truth Behind The Steinhoff Purchase Of Sherwood

Over the last 6 months, it has been a fun game of speculation, hasn’t it? Who is Steinhoff going to buy next? Will Serta/Simmons Bedding end up selling to them due to their new deal with Mattress Firm? Will there be a hostile takeover of Tempur-Sealy after the announcement of the divorce with Mattress Firm and the stock nosedive afterward?  Now we know that Steinhoff picked Sherwood as their manufacturing partner to move forward with. They could have chosen anyone; so why them?

If you know anything about Steinhoff, it was not a surprise to you that they would move backward in the supply chain, especially given the fact that they own the largest distribution platform in the United States. If it were you, wouldn’t you want to benefit from both manufacturing and retail? There are a lot of rumors out there about this topic from people who say they know but actually don’t, so let me clear a few things up. Steinhoff is buying Sherwood because they see a good business run by a very capable management team. If this weren’t true, they would never invest in the company. (I have been closely involved helping Steinhoff look at other deals in the United States over the last several years so I know what they look for.) To the Steinhoff guys, this is just another strategic acquisition. Markus Jooste and team are going to want Lance and Neil Ellman to run a profitable business and grow it in a significant way. It is true that the Mattress Firm is also a Steinhoff company but not much has changed for the Ellman’s. Mattress Firm was their biggest customer before being added to the Steinhoff family, and Mattress Firm is still their biggest customer. The one difference is that Jooste is going to EXPECT Lance and Neil to grow sales and profits in the United States with ALL of their customers and Steinhoff understands that in order to do that, there has to be a wall between the two companies. Don’t believe me? Look at the other countries where they have done this successfully. They know what they have to do to make this work.

People have been asking me if Sherwood is going to continue being the contract manufacturer of Spink and Edgar products in the United States. I have to be honest, when this all started my brother Jeff and I weren’t sure. But after thinking through this logically, the answer was easy. We are staying with Sherwood for the same reasons Steinhoff purchased them. They are incredibly efficient low-cost producers with state of the art factories, making very high-quality products. They have a stellar team in place to run the business, and things can only get better when you consider that they will now have access to the Steinhoff innovation pipeline and raw material purchasing power. But the biggest reason we are staying with Sherwood is the Ellman brothers. Neil and Lance are like extended family to us and they are our business partner in this venture and we don’t want that to change. We all see the upside for Spink and Edgar given the great success of our retailers and we want to see it grow. At the end of the day, we have to make the decision that will best serve our customers and we have definitely done that. I am happy to report that our customers unanimously agree.

For you retailers out there getting an ear full from other producers that want to hinder what Sherwood is doing in their unique ability to offer value and high-quality products across all price points, I want you to consider this.  You need to do what is right for your business. If Sherwood products are compelling to you and can help you make money, you should make them or keep them as your partner. If you want something that doesn’t feel like anything else on the market, that is proven at a best selling price point of $5,000 in queen, and is all natural and built for the luxury consumer, then consider Spink and Edgar. Everything else is noise.

We now live in an industry where Serta/Simmons Bedding has committed MILLIONS, (over $100 million to get a little closer to the number), and delivered an exclusive program to drive Mattress Firm’s business; likely to the detriment of their other retail partners. You have Tempur-Sealy out there promising to open more of their own retail stores, and expand their direct to consumer program. Where will all of these paths lead? Stay tuned.


13 thoughts on “The Truth Behind The Steinhoff Purchase Of Sherwood

  1. On one hand you say SSB committed millions to MF is at the detriment of their other retail partners. But Sherwood, now owned by the same owner as MF is ok for all to buy from? I wouldn’t support my competitor. It’s a principal I’ve always stood by. This story will continue to develop. My best wishes to you Mark.

    1. Stuart, if you look at Steinhoff as a competitor then I guess you would have an issue. Steinhoff can also be looked at as a large company that owns a retailer and AND bedding producer that is putting out some great products. If I were a bedding retailer I would buy from the people that have products and programs that could help me grow my business. If the bedding producer were owned by Mattress Firm who was owned by Steinhoff I would agree with your point, but that isn’t how this is set up. Choosing Steinhoff as a partner vs. some of the other choices out there is easy if you ask me. Thanks for reading Stuart!!! And for your insight and comments, debate is a great thing.

  2. This situation is just another issue/problem facing retailers today, especially the smaller retailer. They are competing not only the other retailers in their market area, but feel they are also competing against manufacturers. So many rules and restrictions.
    So, as smaller retailer, who DO you partner up with?

    1. Just my opinion Dennis but I say partner with:
      1. Whoever delivers the most value for your customer.
      2. The group that services your business the best.
      3. The company that you feel is most concerned about helping you and being a consultant to your business.
      4. Look at all aspects of these companies and decide who is lined up with you strategically the most.
      5. See #1 because at the end of the day that is what matters most.

      Thanks for reading!

  3. Mark, Keep bringing us insights from “Under the covers” that we can’t get from Furniture today and Bed times. We all want the REAL scoop!
    Thank you,
    Mike Wicoff
    Sterling Mattress factory

  4. Mark, I certainly don’t look at MF or Steinhoff as a competitors to me or my company. Sherwood is a competitor to other mattress makers, plain and simple. Now with Sherwood being owned by Steinhoff, they become a competitor to other retailers where Steinhoff has a presence. If other retailers of any significance choose to buy from Sherwood now, it would be a surprise to me. To present it another way, if Sherwood gets inundated with business during a holiday weekend, or has spike in business at anytime, who do you think will get serviced well and who will be placed on a back burner? Then there is competitive pricing issues. The conflicts are extensive. I’m certain Steinhoff plans to take up Sherwood capacity anyway.

    1. Your comments are obviously self serving as you are directing them at retailers who are sold by Sherwood and you would love to sell.

      I believe value service and the best product is the true criteria that buyers base their decisions on.

      Your facts about Sherwood’s ownership should be researched are wrong and your statements about competitive pricing issues and capacity issues are opinions that you are making to suit your own agenda and are not reality.

  5. We are very interested in hearing from other small SSB retailers as how the MF/SSB partnership has affected their business and what they are doing to combat the giant. It is difficult to compete against MF when we have no comparable products to Black Hybrid and iComfort Temp Tech (or millions of dollars in our advertising budget).

    1. That part of this has been pretty interesting Patti. I know that many large and small retailers have put them in the penalty box because of SSB’s big move towards MF. I think that retailers need to really think outside the box on their options. Oddly enough we are getting a lot of interest in Spink and Edgar and Sherwood for these very reasons. The strategic decision people make on partnerships will make a bid difference going forward. The big question for all to consider is, do you even have a “partnership” or is it simply transactional relationship? They make a product, you buy a product. Who is really vested in the health of your company???

  6. Hi Mark,
    thanks for your insights. How has the accounting scandal impacted Mattress Firm and Sherwood. Are they able to get paid from Steinhoff? What will happen to the ownership structure of Mattress Firm and Sherwood?

  7. Thanks for reading Omri. Nobody is totally sure what all is going to happen with Steinhoff so it is a wait and see but I can tell you from the Sherwood perspective, things are running as normal and they are cash positive as a separate business. As for the ownership structure, anything I say would be pure speculation at this point and I am not fond of that game. Both Mattress Firm and Sherwood are desirable assets in the industry so even if Steinhoff wants to sell them off, I would expect that they will have a bright future.

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