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Online mattress group Casper files for IPO

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Via Financial Times

Casper, the mattress company, has fired the starting gun on a long-awaited stock market launch, hoping public market investors will want a stake in what it describes as a “sleep revolution”.

Known for shipping mattresses in boxes to customers’ doorsteps, the New York-based group has grown rapidly since its founding in 2014 and is among a new crop of mattress companies including Purple that is upending the industry.

The rapid expansion of online start-ups such as Casper has put pressure on legacy operators. Mattress Firm, which had about 3,000 brick-and-mortar shops, filed for bankruptcy protection in 2018. Department stores, traditionally a significant route to market for mattress companies, have also fallen out of favour.

Casper’s investors have included celebrities Kevin Spacey and 50 Cent, as well as the S&P 500 retailer Target.

Morgan Stanley, Goldman Sachs and Jefferies are leading a group of Wall Street banks that are handling the float. The company, which was last valued at more than $1bn by private investors, said the offering would raise $100m, a common place holder figure.

“Our mission is to awaken the potential of a well-rested world,” wrote Philip Krim, Casper’s chief executive, in a letter to prospective investors. “The sleep revolution is just getting started.”

The IPO will be one of the first tests this year for public market appetite for unprofitable consumer businesses backed by venture capital, following stumbles by groups such as Peloton, SmileDirectClub and WeWork last year.

Offering documents filed with securities regulators showed Casper’s total losses widened slightly to $67.3m in the first nine months of 2019 compared to the same period in 2018. Revenues rose a fifth to $312m over the period.

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Proceeds from the IPO would be used for working capital and to fund growth, as well as repay debt. Casper has three mattress models, ranging from $395 to $1,395 each.

As well as selling direct to consumers online, the company sells through retailers including Amazon, Costco and Target and operates about 60 stores of its own.

Casper, whose directors include Dani Reiss, chief executive officer of upscale coat company Canada Goose, said it saw an opportunity for more than 200 stores in North America alone over an unspecified timescale.

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