Mattress Firm stores are everywhere.
It’s not uncommon to see two or three in the same shopping center, sometimes even across the street from one another. And not just two different mattress stores to promote competition, but the same exact store: Mattress Firm.
On top of how many Mattress Firm stores there seems to be, there are also all the other brick-and-mortar mattress companies out there, such as Mattress World and BedMart.
In fact, there are currently more mattress stores than McDonald’s—or Starbucks—in the United States, most of which are Mattress Firms, according to USA Today.
Illustrating this point, 42.6% of Mattress Firm stores are within a one-mile radius of one another, according to Business Insider.
The average American only buys a new mattress every seven to 10 years. Plus, most millennials are having their mattresses delivered straight to their doors with bed-in-a-box services, according to USA Today.
So why are there so many Mattress Firms?
A conspiracy theory recently went viral on Reddit after a user suggested that Mattress Firm was a front for a large scale money laundering scheme. How could a company with such a slow-moving product manage to keep so many stores open, many Reddit users wondered.
“Mattress Firm is some sort of giant money laundering scheme,” one user wrote. “I remember seeing four Mattress Firms all on each corner of an intersection once, and there is no way there is such a demand for mattresses.”
“Multiple stores = more places to shuffle money between and more sources for fake money to appear to come from,” another user wrote.
Viral YouTube star Shane Dawson also popularized the idea in a video examining various conspiracy theories that racked up nearly 20 million views.
But what’s really going on?
Shortly after the conspiracy theory went viral, Mattress Firm CEO Steve Stagner announced Mattress Firm would be filing for chapter 11 bankruptcy protection and would be closing nearly 700 stores, especially in areas where it has too many stores “in close proximity to each other,” according to Business Insider.
The abundance of Mattress Firm stores and rapidly declining sales to the rise of bed-in-a-box companies contributed to the company’s continuing downfall.
But the heart of their financial struggles, according to USA Today, lies in the overexpansion of the company, along with the overexpansion of mattress stores in general.
Mattress Firm ballooned considerably after the company bought out other mattress companies like Mattress Giant, Sleep Train and Sleepy’s. After the buyouts, Mattress Giant’s and Sleep Trains were simply rebranded as new Mattress Firm stores, hence why two competing mattress stores across the street from one another became the same store.
Thus the thousands of Mattress Firm stores all within at least a one mile radius of other Mattress Firm stores.
Sounds pretty straightforward—but here’s where things get interesting:
Steinhoff, the second largest furniture-retailer in the world right after IKEA, and Mattress Firm’s parent company, recently acknowledged in a public filing that the company is being accused of accounting irregularities, including overstating how much money the company made, as well as improperly accounting intercompany loans.
In other words, fraud.
The irregularities have been going on for years, but only recently came under public scrutiny in 2017 after Steinhoff CEO Markus Jooste resigned seemingly out of the blue.
Steinhoff is located in South Africa, and has been one of the largest companies on the Johannasburg stock exchange since 1996. The revelations of fraud and Jooste’s resignation marked one of the largest collapses in South Africa’s corporate history, according to Household Name, a Business Insider podcast.
Steinhoff has hired its own auditors to look into the allegations, and investigations and probes from around the world have begun looking into Steinhoff’s financial activities over the years. The full extent of the fraud and tax evasion remains unknown.
Following these revelations, two top executives and the chairman of Steinhoff resigned, according to Business Insider.
In what was criticized for being a terrible idea, Steinhoff bought Mattress Firm in 2016 for $2.4 billion, twice what it was really worth. Shortly thereafter, Jooste got into some kind of argument with one of Mattress Firm’s top suppliers, Tempur Sealy, who then went on to sue Mattress Firm for selling mattresses similar to Tempur Sealy’s iconic Tempur-Pedic Mattress.
On top of all of that, Mattress Firm filed a lawsuit in October 2017 accusing two of its former real-estate executives, an external broker and a group of developers of signing leases above market rates, and expanding Mattress Firm into expensive areas in an effort to financially enrich themselves at the company’s expense.
A spokesperson for Mattress Firm described the incident to Business Insider as “nationwide bribery” and a “fraud scheme.”
At the moment, there’s no way to know whether or not Mattress Firm was bought by Steinhoff in order to shuffle money for other, more lucrative purposes; but one thing is certain—the Mattress Firm debacle is starting to look less and less like just a conspiracy theory.