Jessup-based mattress manufacturer Dormia Inc. said yesterday that its retail operation filed for bankruptcy protection, conceding that its push to sell directly to consumers has foundered.
Bankruptcy reorganization will allow the company to refocus on its wholesale business, Classic Sleep Products, which has experienced a more than 15 percent increase in mattress sales this year compared with last year, chief executive Michael Zippelli said.
"That's always been our core business," said Zippelli, who purchased the Jessup plant with a partner in 2000. "But the $1,000 to $3,000 mattress range that the Dormia stores sold is down dramatically. Our business has really been creamed at the store level."
The housing slump and credit crunch have hit the entire retail mattress industry hard, and costs for the petrochemical-based foam that Dormia uses in its products in place of coils or springs have soared with oil prices above $130 a barrel. Mattress sales are predicted to fall 3 percent this year, after declines in the fourth quarter of 2007 and first quarter of 2008, according to the International Sleep Products Association, the industry's trade group.
Even foam bed leader Tempur-Pedic isn't immune to the downturn. Tempur-Pedic said its net sales were down 7 percent during the first quarter, and Select Comfort, which makes the Sleep Number adjustable beds, saw its sales slide 22 percent during that period. Beltsville-based JoAnne Bed & Back Stores filed for Chapter 11 bankruptcy protection in April and was acquired by The Healthy Back Store.
It's a stark reversal from early 2007, when Zippelli promoted plans to expand Dormia's plant and network of stores. Main Street Resources, a Westport, Conn.-based private equity firm, helped finance that planned expansion. It is owed close to $120,000, the largest unsecured claim of Dormia's creditors, according to the bankruptcy petition.
In the filing, Dormia claimed less than $50,000 in assets and between $1 million and $10 million in liabilities for the retail business.
Dormia should focus on marketing its mattresses to competing retail stores that carry a variety of brands, said Wallace W. "Jerry" Epperson Jr., a furniture industry analyst based in Richmond, Va. "They need to strengthen their distribution to go back to those independent stores they may have lost," Epperson said. "They never reached a critical mass in the number of stores they had out there."
