By Craig Patterson
Sleep Country Canada has announced that it has acquired Toronto-based mattress-in-a-box brand Endy for $88.7-million. It’s the latest development in the hyper-competitive mattress-in-a-box category that has seen a constant influx of new brands looking to gain market share.
The deal is comprised of $63.7 million in cash to be paid at closing, and up to $25 million in cash to be paid in early 2021 based on the achievement of certain growth and profitability targets in 2020. The Sleep Country and Endy businesses will be run separately to encourage “the same competitive spirit that positioned both companies as leaders in their respective spaces”. General oversight of the Endy business will be provided by a board comprised of the senior management of Sleep Country and Endy. Rajen Ruparell will Chair this board.
“We launched Endy as a disruptor in the Canadian e-commerce space three years ago, and this announcement today is a testament to the incredible dedication of the entire Endy team,” said Rajen Ruparell, co-founder and Chairman of Endy and the company’s majority shareholder. “This acquisition will allow Endy to continue to grow rapidly and exceed customer expectations in a rapidly evolving retail climate, while remaining separate.”
Endy is seeing explosive sales growth in Canada as the company continues to grow its operations. Despite increasing competition, the company is seeing rapid year-over-year growth of 300%, resulting both from expansive marketing efforts as well as consistently high ratings among purchasers. Growth has been so rapid that the company announced in the summer that it was opening a distribution centre in Western Canada to keep up with the demand.
In August, Endy announced that it had partnered with professional baseball player José Bautista, who was with the Toronto Blue Jays from 2008 to 2017. Mr. Bautista is an investor in the company, as well as a spokesperson.
Endy’s expanded assortment includes The Endy Pillow, The Endy Sheets, and The Endy Mattress Protector.
Regarding the Sleep Country/Endy deal, Mike Gettis, co-founder and CEO of Endy, said, “After getting to know the Sleep Country team, we can think of no better partner to help us achieve the dream we set out to accomplish when we founded Endy. By remaining a deeply rooted Canadian company, we can continue to scale our business and raise the bar even further as champions for our customers.”
Endy was founded in 2015 as an online ‘sleep brand’ and the company is in line to do in excess of $50-million in sales this year. Canada is Endy’s target market and remarkably, the company’s revenue is now about 10% of that of Sleep Country Canada, which is the largest bedding retailer in the country with 264 brick-and-mortar stores as well as expansive e-commerce.
Sleep Country Canada launched its own mattress-in-a-box brand called Bloom last year and in March of this year, Sleep Country announced that it had partnered with Europe’s leading mattress-in-a-box creator, Simba for exclusive distribution in Canada.
Pairing Canada’s biggest mattress brand with Canada’s top-selling mattress-in-a-box brand makes sense, and could propel both brands in terms of sales and built-in efficiencies. Endy’s customer ratings are quite often five-stars and it boasts exceptional customer loyalty.
Sleep Country Canada, which is also rapidly expanding its operations in Canada, is in the process of rolling out stores in major shopping malls where foot traffic is generally higher than in more traditional big-box locations. The mall expansion was accelerated after the demise of Sears Canada, which was Sleep Country Canada’s biggest competitor. In an earlier interview with Retail Insider’s Mario Toneguzzi, Sleep Country’s Chief Business Development Officer Stewart Schaefer said, “We’ve been opening on average about 10 stores every year for the last 10 years. That hasn’t slowed down. Last year, we opened up 12 stores. This year we’ll probably end up opening closer to 12 to 15 stores because the opportunities have presented themselves.”
Sleep Country Canada was founded in Vancouver in 1994 with four stores, which expanded into Toronto and then the Calgary markets. The retailer now operates 264 stores coast-to-coast as mentioned above, as well as 16 distribution centres Canada-wide.
The mattress-in-a-box concept is still relatively new and yet its business is exploding in Canada. Competitor Casper, which opened its first Canadian store at CF Sherway Gardens in May and next week will open a second store in downtown Toronto, has celebrity backers including Leonardo DiCaprio, Tobey Maguire, Adam Levine and Ashton Kutcher.
Various other brands continue to enter the market, such as Leesa and Tuft & Needle, with more brands seemingly coming online. There’s even now a plant-based mattress called Haven Mattress Company, based in Kelowna.
Craig Patterson, now based in Toronto, is the founder and Editor-in-Chief Retail Insider. He’s also a retail and real estate consultant, retail tour guide and public speaker.