Specialty bedding retailer Mattress Firm on Monday announced leadership changes and outlined its growth initiatives, which include unifying acquired brands under its national umbrella and closing stores that are under-performing or that overlap with other stores.

President Ken Murphy assumes the title of CEO, replacing Steve Stagner, who now is executive chairman and board chairman at the Houston-based chain, the company announced shortly before releasing fourth-quarter and annual earnings.

Stagner told investors during a conference call that the change has been in the works for about two years and is part of the company's move from "acquisition to integration."

Murphy, 40, began in retail sales with Mattress Firm in 1998 and became president last year. As president and CEO, he will lead the company's core functions: sales, marketing, merchandising and finance and operations.

Stagner, 47 and CEO since 2010, presided over the company's switch to public status and its rapid growth, including the recent $780 million acquisition of retailer Sleepy's, which transformed the company into a true national chain.

Now, officials said, the company will evaluate real estate holdings.

The company has added 1,700 stores during the past two years, Stagner said. Over time, those acquisitions have clustered multiple stores in close proximity in some areas. While these stores typically would be closed once their lease terms end, the company plans to identify "duplicative" and "under-performing" stores, and pay to exit lease terms early, if necessary.

Mattress Firm will begin moving forward this fiscal year with store closures in areas where its existing markets overlap with other recent acquisitions.

Stagner said the company isn't changing its approach to entering and operating in certain markets. The company still believes the overall market can hold one store per 50,000 people. But, he said, the company will close lagging stores, reallocate capital that would have been used to upgrade them and increase revenue and productivity in its other stores.

Mattress Firm will provide a number of store closings and related costs at the end of its portfolio review.

Murphy said he plans to focus on making operations more efficient.

"A lot of our past could have been characterized as a square footage growth story," Murphy said in an interview. "We're really going to try to grow the business that we have."

Murphy said initiatives going forward include beefing up the company's "omni-channel" presence, or broadening the platforms it uses to reach customers including e-commerce.

The company also plans to boost productivity and offer more support for sales associates.

More diverse thought

The leadership changes follow other board announcements. In February, it was announced three board members will retire when their terms end in June. Two nominees have been named to replace them, and Stagner said the company is searching for another independent director.

Stagner said in an interview he would like to bring more diverse thought and experience to the board, including people with experience outside the mattress industry and knowledgeable about today's changing consumer landscape.

Focusing on technology, real estate and workers are three important areas for a business to focus on, said Howard Davidowitz, chairman and CEO of national retail consulting and investment banking firm Davidowitz & Associates. Digital is where growth is occurring, which changes real estate's role in retail, he said.

"Given the pace of change taking place in retail, I think you better get all the expertise," Davidowitz said. "You've gotta go to the next level in almost every area because it's changing so quickly."

Fiscal 2015 was a "landmark period" for Mattress Firm, Stagner said.

During the fourth quarter, the company reported same-store sales growth of 0.7 percent. That's the 10th consecutive quarter of growth, but "distinctly soft and at by far the lowest level of this fiscal year," Columino analyst Neil Saunders wrote in a note about the earnings.

'Disappointing'

"In our view, given that Mattress Firm should still be reaping the productivity rewards of integrating its new businesses, this is something of a disappointing outcome," he wrote. "All the more so when the market for mattresses and beds remained reasonably robust over the fourth quarter."

Mattress Firm reported quarterly net income of 37 cents per diluted share, up from 19 cents per diluted share one year ago.

For the year, the company reported net income of $1.82 per diluted share, up from $1.27 for the last fiscal year.

For fiscal 2016, the company's guidance calls for 180 to 200 more stores, net sales to increase 56 percent to $3.9 billion to $4 billion and adjusted earnings per share to grow 8 percent to $2.50 to $2.60.

Stagner told investors that it has formed an "integration team" for Sleepy's, and the company continues to find potential cost savings as they evaluate that chain.

Mattress Firm closed Monday at $42.69 per share, up about 1 percent.

Mattress Firm, founded in Houston in 1986, has grown episodically since going public in 2011. The chain has grown to 3,500 stores in 48 states with estimated sales of $3.5 billion.