Moody's upgrades Mattress Firm

Moody's Investors Service said it upgraded Mattress Firm, Inc.'s corporate family rating to B1 from B2, probability of default rating to B1-PD from B2-PD and senior secured term loan rating to Ba3 from B1. The outlook was changed to stable from positive.

The upgrades reflect substantial recent earnings growth and the view that over the near-to-intermediate term operating performance will continue to be supported by consumer demand and Mattress Firm's business execution, the agency said.

Moody's said it forecasts mattress demand to remain healthy over the next 12-18 months on robust housing activity, elevated consumer savings rates, and growing employment and wages.

“Nevertheless, the industry is cyclical and as demand moderates over time, Mattress Firm's earnings could face pressure. Moody's expects leverage to decline slightly to 2.2x over the next 12-18 months based on steady to modestly higher earnings,” the agency said in a press release.

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