Tempur-Pedic Reports on 2Q, Names Anderson EVP

July 20, 2006  by in UnCategorized   

By Home Furnishings Business in Bedding on July 2006 Foam bedding major Tempur-Pedic reported a 14 percent increase in second-quarter 2006 sales, compared to last year’s period, to $219 million, and a 25 percent increase in earnings per share over second-quarter 2005, up to $0.30.

U.S. retail sales were up 29 percent, while international retail sales rose 20 percent. Worldwide, mattress unit growth increased 17 percent, with domestic growth particularly strong at 22 percent.

“Tempur-Pedic International turned in another solid quarter of net sales and earnings in the second quarter,” said President and Chief Executive Officer H. Thomas Bryant. “We believe the initiatives we put in place to accelerate growth are gaining momentum and we are succeeding in our efforts to control costs. In addition, we continued to selectively add high-quality retail partner stores reflecting our strategy to ensure improved established-account and new-store productivity. We benefited from ongoing efforts to improve the overall financial strength of the business in the second quarter. Strong performance throughout our operations generated significantly improved mattress unit growth, working capital and productivity.”

Bryant noted that shipping began for two new high-end mattresses, GrandBed and RhapsodyBed, late in the second quarter, and that dealer interest in both models has exceeded expectations, leading to stock outs.

“As a result, we had to allocate new products to select dealers. We anticipate fulfilling these orders in the third quarter,” he said. “In July, we began shipping the redesigned Classic model following a successful close-out program on remaining inventory of the old Classic. Dealer and consumer interest for all of our new models continues to be strong and we currently expect to expand floor space throughout the second half of the year.”

Chief Financial Officer Dale Williams said that while Tempur-Pedic’s strategy for growth through retail and mattress share gains has been effective, the company continues to be affected by channel and product mix.

“Direct sales are down and pillow sales are flat versus prior year, which has negative implications for gross margin,” Williams said. “In addition, gross margin was slightly impacted by the close-out of the old Classic. However, initiatives to generate productivity improvements and cost reductions throughout our manufacturing and supply chain operations have yielded significant benefits. As a result of these initiatives, we currently expect gross margin to improve during the second half of the year.”

The company to expect full-year 2006 net sales to range from $940 million to $970 million, an increase of 12 percent to 16 percent over 2005.

In addition, Rick Anderson has been named to the new position of executive vice president and president, North America. Bryant said the move is a reflection of the continued growth of the viscoelastic bedding category Tempur-Pedic created 15 years ago. Anderson’s appointment, he said, helps ensure the business infrastructure and management team to support the company’s goal of becoming the world’s largest mattress manufacturer.

“Rick brings more than 23 years of global management, marketing and sales experience,” Bryant said. “In this new role, Rick will lead our North American sales and marketing organizations.”

Anderson joins Tempur-Pedic from Procter & Gamble after a long career with The Gillette Co., which became part of P&G in 2005. At Gillette, Anderson played a critical role, most recently as vice president of marketing for Oral-B and Braun in North America. Previously, Anderson was vice president of global business management for Duracell, overseeing consumer marketing, branding, product development and strategic planning worldwide.

“Tempur-Pedic is a brand I have long admired for its product innovation, customer loyalty and market development,” Anderson said. “Tempur-Pedic has outstanding products and technology, increasing brand awareness, and an industry-leading sales and marketing organization. I see strong prospects to build on the company’s momentum and enthusiastically look forward to being a part of Tempur-Pedic’s future.”