Sex or Sleep?

Sales of memory-foam mattresses have skyrocketed to almost 20% of the mattress market. They induce a blissful snooze but make sex a challenge.

Barrons.com

Something surprising is going on in the American bedroom. In droves, people are outfitting their beds with a plush, squishy, and decidedly controversial type of mattress. While these products support the body just-so during sleep, they distress some people during sex. The complaint is lack of "traction," if you get the drift. "It's like trying to do it in quicksand," one owner writes on an Internet message board. New York sex therapist Sari Eckler Cooper couldn't be clearer: "There's a lack of resistance for the knees and feet. And whoever is on the bottom is sinking into the bed."

These are memory-foam mattresses, and they are far and away the fastest-growing segment of the $4.6 billion wholesale market for U.S. mat-tresses. Memory foam's market share has shot up from 14% to nearly 20% in just the past eight years. In other words, mattress shoppers are weighing the risk -- bad sex -- against the promise -- good sleep -- and are voting with their eyelids: They choose to snooze.

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It's no secret that people are stressed out and exhausted in these hurried times. Baby boomers, the chief buyers of memory-foam mattresses, have the additional problem of creaky bones. Everyone could use a deep, soothing sleep. But at the possible expense of sex?

The idea of sex versus sleep has sparked some spirited marketing in the mattress industry. Sealy (ZZ), the largest maker of traditional mattresses, launched a sexy new ad campaign during last year's Super Bowl. The 30-second spot features a series of couples between the sheets with satiated looks on their glowing faces. And lest you miss the point, the lyrics, "Just a little lovin', early in the morning," play in the background. The commercial, which has garnered more than two million views on YouTube, closes with the slogan, "Whatever you do in bed, Sealy supports it."

The clear target of the ads is Tempur-Pedic (TPX), which makes the majority of memory-foam mattresses. Since issuing shares to the public in 2003, Tempur-Pedic's stock price has soared 274%. Sales have risen to $1.4 billion, topping all other mattress makers. But Tempur-Pedic's rise has gotten bumpier in recent years as traditional-mattress makers have begun offering memory foam.

From January of this year through mid-April, this seeming cult stock rocketed 66%, to an all-time high of $87. Then the company reported first-quarter results, suggesting that a competitor (Serta's iComfort line) was making inroads in the memory-foam market, and the stock plunged 21% in a day. It continued its descent, closing Friday at $52.30.

The 14 analysts who cover Tempur-Pedic have an average price target of $78.75 on the shares, according to FactSet Research. That may be a tempting bet for traders. But the company's market-share growth could be coming to an end. Brad Thomas, an analyst at KeyBanc Capital Markets, notes that Tempur-Pedic's domestic revenue grew 17% in the quarter, compared with 19% growth for the industry. Given the slipping metrics and the stock's extreme volatility, long-term investors might do better hiding their money under the mattress.

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Sealy, which was late to the memory-foam party, has seen its shares fall 89% since KKR took the company public at $16 a share in 2006. Late last week they fetched less than two bucks. Revenue this year, at an expected $1.25 billion, will be 27% below the 2007 peak. The stock has a market value of about $180 million and net debt of $680 million.

Sealy is fighting back on the memory-foam front, and not just with cheeky ads. It has created a special unit to make memory-foam products, and just rolled out a new product meant to address another complaint about the mattresses: They can get uncomfortably hot when bodies are actively rolling around.

The second-largest shareholder of Sealy, H Partners Management, has criticized the company for falling far behind Tempur-Pedic in memory foam. Last month the firm helped spur a vote of no confidence in the company's incumbent directors. H Partners is now looking to oust Sealy's CEO.

The other big publicly traded player in the mattress business, Select Comfort (SCSS), is expected to reach a record $929 million in sales this year, topping its 2006 peak for the first time. The company specializes in air mattresses that can be adjusted for firmness.

MEMORY FOAM IS A DENSE MATERIAL that softens in reaction to body heat; it is both denser and more responsive to heat than standard mattress foam. It consists of tiny air-filled cells that compress when pressure and heat are applied. The cells closer to the body release their air, allowing the foam to mold to the body's shape.

The material dates back to 1966, when it was developed for NASA to absorb shock in spacecraft seats. It also has been used in football helmets and padding for the insides of shoes. A North Carolina-based company called Dynamic Systems still manufactures memory foam for automotive and aircraft seating, though the patents on the technology have long since expired.

Memory-foam mattresses arrived on the market in the late 1990s, as work lives went 24/7 and folks began hunting far and wide for help in getting to sleep. Nearly 60% of Americans experience insomnia symptoms or sleep disorders, according to market-research firm Marketdata Enterprises. That, in turn, has created a thriving market for sleep aids, including pills, high-tech pillows, white-noise machines, aromatherapy, and, of course, premium mattresses.

Memory-foam mattresses, which can cost anywhere from several hundred to several thousand dollars, aren't the most expensive models on the market. A queen-size Tempur-Pedic mattress generally ranges from $3,000 to $7,500, depending on the materials. Mattresses from Sweden's Duxiana, made with multiple layers of more than 1,500 springs, are significantly pricier, at around $10,000, while $15,000 will get you a Relyon mattress, manufactured in the U.K. with hand-made coils. And Hästens, a 160-year-old Swedish manufacturer, makes the Vividus, a $67,000 made-to-order mattress. Hand-stitched, its mattresses are filled with an intricate blend of horsehair (good for ventilation), cotton, wool (for perspiration absorption), and flax (for strength and elasticity).

MEMORY-FOAM IS GEARED more toward the mass affluent, making it the Lexus of bedding, so to speak. Barron's recently visited a Sleepy's store in Manhattan to kick the tires.

We zeroed in on the $3,000 Cloud Supreme from Tempur-Pedic, and lay down on it. The surface seemed to melt away as the mattress began to conform to our particular shape. It seemed very NASA-like, putting us in mind of floating inside a space shuttle. At one point, the salesman put his keys down on the mattress and asked us to lay back down on top of them. The keys initially felt like a lump, then melted away into the mattress, becoming virtually unnoticeable. With memory foam, the princess never would have found that pea.

Then we got to that more delicate matter. "Is it difficult to have, ahem, 'relations' on one of these?" we asked.

The salesman blushed slightly, tripped over a few words, and then provided something of an answer. It isn't so much that it is difficult, he said. "It's just that coils give you bounce, which you don't get on memory foam. It's a lot more physically intense because you're not getting any help from the bed."

Physically intense? You'll find less flattering descriptions in a just a few minutes of Googling "memory foam." It's like "shagging on a ball of clay," suggested "Rusty M." on the review site Yelp. "Clinton K." complains of "losing a pretty good rhythm."

Nick Robinson, the editor and publisher of the mattress-review site SleepLikeTheDead.com, analyzed as many comments about memory foam as he could find on the Web and concluded that about 40% of owners say that sex is less than ideal. Still, Robinson says, some 80% of memory-foam owners are satisfied with their beds -- the highest rate of any mattress variety on the market. The implications of the math are clear: Many people don't really care if the sex is lousy as long as the sleep is good.

Not surprisingly, Tempur-Pedic's CEO. Mark Sarvary, has a different view. He says the company tracks the reasons people give for returning mattresses under its 90-day return policy. People who say the mattresses are too hot make up a tiny percentage, he says. And even fewer return them because of difficulty with sex.

"In all honesty, I have never seen a return for that reason," Sarvary says. "It's conceivable that people aren't buying our beds because of that, but if you speak to the legions of people who own these beds, this isn't an issue for them."

Well, it was absolutely an issue for Kim Browne of Simi Valley, Calif., when her Tempur-Pedic memory-foam bed arrived seven years ago. "My boyfriend and I were laughing the first time we had sex on the bed," Browne, a 44-year-old office manager, wrote to Barron's in an e-mail. "We couldn't move around as easily. I got stuck in a divot, and he couldn't get traction on his knees. We ended up on the floor, thinking we were never going to be able to have sex in the bed again."

Within a month, however, she says they got the hang of it -- and in fact began to like it. "Just think of this little extra challenge as an additional benefit of the bed," she wrote.

Not all adventures on these mattresses end so happily. Sari Eckler Cooper, the New York sex therapist, says some clients decided to give up their memory-foam mattress because it was impeding their sex life and causing marital disagreement. Some others, based on the message boards, have stopped using the beds for sex, taking their hanky-panky elsewhere.

There is, in fact, a long tradition of experimenting with bedroom furniture, says Elizabeth Cromley, a professor of architectural history at Northeastern University. In the 1930s, reflecting Hollywood's then-cautious standards for bedroom scenes, twin beds became fashionable. The 1933 World's Fair in Chicago featured an ultra-modern home whose marital sleeping quarters were divided into two separate wings: His half had a twin bed and shower, while hers had a double bed and a bathtub. "The husband was supposed to visit the wife," Cromley says.

After World War II, houses began to grow bigger and more people started upgrading from double beds to queen- and king-sized beds.

The 1970s welcomed the waterbed, which was also supposed to relieve pressure on the body by conforming to its particular shape. Sales peaked in 1987 at 22% of the U.S. mattress market, and then people grew tired of all the sloshing. Today, waterbeds are little more than a retro novelty.

"In my research, I've found that for every decade, the bedroom is the location for some neurosis," says Cromley. "If it wasn't a sexual worry, it was a worry about dust and germs or a worry about tuberculosis. Now people are working like crazy and are worried that they won't get a good night's sleep."

FOR BABY BOOMERS -- folks in their late 40s through mid-60s -- the fear of not enough sleep comes just as something else is happening in their lives. They are losing some interest in sex, and not just because the frisky days of youth are receding. There's some evidence that they are less interested than similar age groups were in the past.

A 2009 AARP survey of adults 45 and older reported that only 28% of respondents had sex once a week or more, down a full 10 points from the organization's 2004 survey of the same age group. And only 43% said they were satisfied with their sex lives, down from 51% in the 2004 study. As a result of either choice or exhaustion, it seems, they're just not that into it.

For some boomers, then, buying a mattress that may work better for sleep than for sex probably isn't much of a compromise. If you can fool around a little bit once in a while, where's the problem?

That bodes well for memory foam's chances of lasting longer than waterbeds, and in its own way, is a fitting coda to the sexual revolution. At long last, people are rolling over and going to sleep.

Scary Bedtime Stories

There's an old joke about a barrel of fish that changes hands again and again at ever-higher prices until a buyer finally pries open the lid and finds that the fish are all rotten. When he complains, the seller gives him an incredulous look and says, "Those aren't eating fish. Those are trading fish." And so it was with Simmons Bedding, which changed ownership six times in 23 years, with private-equity firms piling on more debt each time, culminating in a bankruptcy filing in 2009.

The company is now owned by Ares Management and Teachers' Private Capital, the private-equity arm of the Ontario Teachers' Pension Plan.

Simmons, which was bought and sold by Wesray Capital, Merrill Lynch Capital Partners, and Thomas H. Lee Partners, among others, is not the only mattress maker favored by private-equity firms. Ares and Teachers' also teamed up to buy Serta in 2005.

Then there's Ohio Mattress, now known as Sealy, which was acquired by Gibbons Green in 1989, just as the junk-bond market was collapsing. The deal, which came to be known as "The Burning Bed," led to the bailout of its main lender, First Boston, by Credit Suisse. Bain Capital and KKR have also owned Sealy, now a beleaguered public company.

Mattresses fit the private-equity profile because they had well-known brands with customer loyalty and ample cash flow to support large debt loads, says Roy C. Smith, a professor of entrepreneurship and finance at NYU Stern School of Business, whose book, The Money Wars, focuses on the buyout boom of the 1980s.

Private-equity firms like to tout innovation and operational improvements in their portfolio companies. But those strategies clearly took a backseat to financial engineering in these mattress-company deals, opening the way for upstart Tempur-Pedic and its memory foam to steal the march from traditional bed makers.

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