Tempur Sealy has bought Dreams in a move that it says will take its direct-to-consumer sales to to $1bn (£0.7bn) a year.
The US mattress brand is paying $475m (£334.9m) for the multichannel beds and mattresses retailer, which sells from more than 200 shops and online. In the year to December 31 2020, Dreams turned over $400m and earnings before tax, interest and one-off costs (EBITDA) came in at $75m (£52.9m). In the first year following the acquisition, Dreams is expected to turn over $450m (£317.3m).
Dreams will continue to operate as an independent business, led by its existing management team, alongside the UK Tempur operations and Sealy UK joint venture. Tempur Sealy’s International business is expected to double in size as a result of this transaction, to represent more than 20% of sales.
Dreams chief executive Mike Logue says: “Today marks a milestone for Dreams. It is recognition of the transformation we have delivered and an endorsement of our customer-focused strategy, our culture and our values. With Tempur Sealy, we expect to drive our growth strategy and build on our position as the most recommended specialist bed retailer in the UK.”
Tempur Sealy International chairman and chief executive Scott Thompson says: “Dreams has created a strong retailer brand and business model, known for its outstanding products and customer service. We have worked with Dreams for many years and they are one of the most talented retailers we service. They have consistently demonstrated best-in-class web marketing, customer service and sales capabilities. This acquisition better positions both organisations to service customers and bring innovative products to market. We look forward to welcoming the entire Dreams organisation to the Tempur Sealy family.”
The transaction, which is subject to regulatory approval from the UK Financial Conduct Authority, is expected to close in the third quarter of this year.
Dreams, founded in 1985, employs more than 2,000 people across the UK and is a Top250 retailer in RXUK Top500 research. It makes both mattresses and beds at its factory in Oldbury and delivers to customers through its own delivery centres and fleet. Tempur Sealy is buying Dreams primarily from a Sun Capital Partners business.
Tempur Sealy sells its branded mattresses and other bedding products directly to consumers via its own stores and online channels, as well as wholesale via third-party retailers. This week’s news came as Tempur Sealy said that it expected second quarter net sales to be at 60% of the same pre-pandemic period in 2019.
Thompson says: “Consumer demand for our global brands and products is very strong and broad-based. This improved demand outlook is likely to result in some supply constraints and plant inefficiencies into the third quarter. In order to mitigate what we believe are industry-wide constraints and reduce complexity for retailers during this period, we have elected to delay a portion of our new Sealy US product launch to allow our operations to focus on producing current products to meet this elevated demand.”