Sleep Country Canada CEO seeks acquisitions as revenue soars

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The mattress and bed retailer recently recorded the biggest increase in revenue in its 28-year history

A man walks past a Sleep Country store on Queen Street East in Toronto’s Beach District. Photo by Peter J Thompson/National Post files

Sleep Country Canada Holdings Inc. is looking to expand its accessories business through mergers and acquisitions after posting record first quarter results.

“It’s definitely going to be on our radar,” chief executive Stewart Schaefer said in an interview with Larysa Harapyn of the Financial Post.

According to Schaefer, the company has a 35-40% market share in mattresses, but only an 8-10% market share in accessories. The accessories business is “not as high as we would like” and has “lots of room to grow”, he said.

Earlier this month, Sleep Country recorded the biggest increase in revenue in its 28-year history. The company’s earnings increased by $24 million, from $183 million in the first quarter of 2021 to $207 million in the first quarter of 2022.

“Our strong performance reinforces the resilience of our sleep ecosystem, our proactive measures and our best-in-class team to deliver a seamless customer experience across all of our brands and channels,” Schaefer said in a press release.

One of the reasons the Canadian mattress retailer is doing so well is that it’s managed to stay on top of its inventory. Earlier this year, trucker protests closed the main Ambassador Bridge to the United States, worsening widespread supply disruptions dating back to the start of the pandemic. Sleep Country has avoided some of the pain that other companies have suffered because 80% of its products are made in Canada. Having products in stock gave it a competitive advantage over other retailers.

“Inventory is the new gold,” Schaefer said.

Inventory is the new gold

Stewart Schaefer

Another factor is that people spend more on sleeping. Consumers have become more interested in health and wellness during the pandemic, Schaefer said. As a result, customers began buying better bedding and increasing the size of their baskets.

Consumers are also moving away from e-commerce as the world reopens from COVID-19 restrictions. “The resurgence we’re seeing in our stores has been tremendous,” Schaefer said.

Customers associate online shopping with in-store shopping by doing a lot of research before going to the store.

“The journey can start on your phone, involve the store, and then end on your phone when you get back in the car,” Schaefer said. “There is no doubt that retailers need to be omnichannel now more than ever.”

Sleep Country has not been immune to all the challenges facing the economy. In March, food inflation rose 8.7%, the fastest rate in 13 years. At the same time, gasoline prices have risen steadily since the middle of 2020.

Schaefer said lower-end consumers have been more price-sensitive because they’re the hardest hit by soaring gas prices and grocery bills. But, Sleep Country has had the power to set prices to pass on some of the inflationary costs to mid- to high-end consumers.

He remains optimistic despite the disruptions. “We haven’t seen a pushback from the consumer yet,” Schaefer said. “Our consumer is still strong and the balance sheet appears to be okay.”

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Sleep Country has expanded its physical stores as well as its digital footprint.

The retailer is working on launching a new version of its store with an expanded customer experience in the coming months. “We always try to adapt our strategy to the habits of our clients,” Schaefer said.

The company has also expanded into tertiary markets, including Thornhill, Ontario, while construction in major cities like Toronto, Montreal and Vancouver has been shut down.

With expansion comes hiring. Schaefer said he was bringing people back to the office on May 24 on a hybrid schedule and hoped to entice workers with food trucks, prizes and giveaways, and health and wellness credits.

“It’s always about trying to improve the associate experience to make it the best place to work,” Schaefer said. “It’s a very important part of our culture.”

• Email: novid@postmedia.com

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