Sleepmaster collapses

Bedroom products manufacturer falls into administration

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published August 13, 2013 2:06 pm AEST

One of Australia's leading bedroom product companies, Sleepmaster, has gone into receivership as the tough retail sector claims another victim.

Sleepmaster is the owner of iconic brands including Jason, a pillow and quilt brand, blanket brand Onkaparinga and Trailmaster camping equipment. It describes itself as Australia and Asia's leading manufacturer of bedroom product including quilts, pillows, mattress protectors, underblankets and underquilts.

The company has been operating in Victoria since 1938, and has manufacturing, warehousing and logistics facilities in China. Around 500 employees could lose their jobs, both in China and Australia, should the company be wound up.

Sleepmaster sells many of its products through major chain retailers such as David Jones Limited (ASX:DJS), Myer Holdings (ASX:MYR) as well as discount retailers such as Wesfarmers (ASX:WES) owned Kmart and Target, and Woolworths' (ASX:WOW) Big-W stores.

According to BRW, Sleepmaster was placed into receivership on August 8 by secured creditor Bibby Financial. Bibby is one of Australia's largest cash flow lenders, and operates in 15 different countries.

Australia's tough retail sector is proving difficult for many companies to survive. Weak consumer confidence has seen many of our leading retailers suffer falling revenues since the global financial crisis. Add in online shopping and the rise of online retailers, along with stores trading on sites such as Ebay, and consumers have been choosing to go for products with the lowest prices, pushing traditional retailers and producers to the wall. Fashion brand Lisa Ho recently collapsed, while food manufacturer Spring Gully went into administration in April this year.

We also saw the demise of Darrell Lea, the chocolate manufacturer in September 2012 while iconic tomato sauce maker Rosella closed in March.

Foolish takeaway

Price deflation, the high Australian dollar, intense competition in the retail sector, cheap imports and online competition could all be blamed for the demise of Sleepmaster. It just goes to show what the retail sector has been forced to cope with over the past few years. While it's a sad moment, it's no real surprise that some companies haven't made it through the rough patch, given the conditions.

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Motley Fool writer/analyst Mike King owns shares in Woolworths.

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