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4 Reasons Why The Tempur-Sealy Purchase Of Sherwood Will Pay Off For Everyone

Sorry that I have not posted in a while but Las Vegas Market, some consulting work, and the big Nationwide PrimeTime event have had me running hard! Speaking of Nationwide, check out THIS Dos Marcos review of our time in Houston at the big PrimeTime event if you haven’t already.

As I’m sure you are aware Tempur/Sealy (TSI), has acquired an 80% interest in Sherwood Bedding. The news dropped right before the market in Vegas so I’ve had many conversations about this development since then and I wanted to share some thoughts on the “WHY” behind it all. Before I begin, I want to thank all of you that shared your concern for me and Spink and Co, but this is a great thing for us which I will also explain.

If you look at this strategically, it’s a great deal for TSI, Sherwood, Spink & Co, and best of all for the retail partners, and here are 4 reasons why:

  1. There is a lot of private label business out there so the size of the opportunity is significant. But in order to really capitalize on it you have to have a low-cost structure that will support an aggressive approach in order to win the business. When you are as big as TSI or even SSB for that matter, there’s a lot of overhead in that business model. Sherwood, on the other hand, is about as lean as you can get. Leon Ellman and his two sons Lance and Neil purpose-built Sherwood to do two things…first-be a low-cost provider with as little overhead as possible and second, build high-quality beds that don’t come back. Sherwood has no debt and understands the private label business very well so TSI bought a company that is set up perfectly for this segment of the industry.
  2. Sherwood has much more flexibility when it comes to designing products for each retail partner. TSI has a great portfolio of brands and products but they have to be true to the integrity of their existing programs.
  3. When you have a low-cost structure and the ability to develop compelling products, then you can deliver great value to the consumer and big profits to the retailer which is what this is all about. If you are a bedding brand and you understand that your job is to put the retailer/consumer at the center of everything you do, and then you pay that off, you are going to benefit in a really big way.
  4. As it relates to Spink and Co, TSI has every incentive to encourage growth with our very unique luxury Farm To Bedroom approach. TSI does great with Tempur-Pedic and Stearns and Foster in the more expensive price points but, Spink and Co has something very different to offer. A totally unique and compelling story that captures the hearts and minds of consumers, products that don’t feel anything like what TSI is currently making, and very limited distribution. You may have heard me compare Spink and Co to a craft beer. Budweiser and Coors didn’t grow the beer industry, brands like Sierra Nevada did. So, are there opportunities out there to place an artisans mattress brand that is grown on a farm in England and celebrated by the Queen herself? You bet. Especially if that brand delivers $4,000 tickets with very attractive margins for the retailer.

When I look at this deal I ask myself two major questions. Will this acquisition allow TSI to better serve the needs of its retail customer?  Does this deal set up TSI for incremental growth? The answer is a big YES to both, especially if they allow Sherwood to be Sherwood.

 

Scott Thompson, the CEO of TSI is making things happen for his shareholders and is using their success and momentum to drive growth. The question isn’t “Will it work?” The questions is… WHAT’s Next?!”

 

 

 

 

One thought on “4 Reasons Why The Tempur-Sealy Purchase Of Sherwood Will Pay Off For Everyone

  1. If Sherwood continues to be Sherwood, then we’re getting somewhere, however, what does that mean as it trickles all the way down to the sales floor? Probably not much, as most salespeople don’t really know nor care where the bed came from. TSI is becoming VW, in that they’ll probably span from Lamborghini to a Golf. At the EOD, it’s all the same bucket.

    Is Spink really a Sierra or is it a double aged, single barrel, distillers choice? I can walk into any dive bar and get a Sierra, but if I am handed a leather bound menu of select bourbons, I know it’s a different price point as well as a different level of product.

    It’s business and we’re all in business for one goal: success and money.

    It’s probably a step in the right direction for all parties involved.

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