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From Home Furnishing Business

Mattress Firm Q3 Sales up 42.3 Percent

December 2, 2014  by in Financial Reports, Furniture Retailing, Industry   

That increase reflected comparable-store sales growth of 8.5 percent and incremental sales from new and acquired stores for Mattress Firm, Houston.

Net income was $15.6 million and GAAP EPS was $0.45. Excluding $8.8 million, net of income taxes, acquisition-related costs, ERP system implementation costs and loss on debt extinguishment of, adjusted net income was $24.4 million and Adjusted EPS was $0.70.

"The increase in net sales of 42.3 percent and comparable-store sales growth of 8.5% reaffirms the validity of the relative market share strategy," said Steve Stagner, Mattress Firm's CEO. "Furthermore, the integration of the Sleep Train and Back to Bed operations continues to progress, providing us with the confidence that our Company will derive further benefits from our deliberate strategic growth initiatives. We expect to realize such benefits relatively quickly in the case of Sleep Train, but over time from the Back to Bed operations as we will need to work through the immediate drag period, which  is typical with all of our acquisitions that require the rebranding of stores.

"We estimate that our entry into and operation of the Chicago market in the third quarter resulted in an approximate loss of $0.03 per diluted share, excluding acquisition-related costs. We remain steadfast in our commitment to pursuing the relative market share strategy and creating value for our shareholders as we expand our presence as the leading national mattress specialty retailer."

During the third quarter, Mattress Firm opened 54 new stores, closed eight, and acquired 460, bringing the total number of company-operated stores to 1,986 as of the end of the fiscal quarter.

Through fiscal 2014's first nine months ended Oct. 28, net sales increased $303 million, or 33.5 percent, to $1.2 billion. Comparable-store sales were up 7.6 percent. During the first three quarters, Mattress Firm opened 163 new stores, closed 21, and acquired 619 during the first three fiscal quarters of fiscal 2014, adding 761 net store units.

Year-to-date net income was $37.6 million. Excluding $18.3 million, net of income taxes, of acquisition-related costs, ERP system implementation costs, loss on debt extinguishment and impairment and severance charges adjusted net income was $55.9 million for the three fiscal quarters.

In September, the company completed the acquisition of substantially all of the mattress specialty retail assets and operations of Best Mattress Co. Inc., which operated retail stores in Pennsylvania under the brand Mattress Discounters. The acquisition added 15 mattress specialty retail stores to the Mattress Firm company-operated store base for an aggregate purchase price of approximately $6.0 million, subject to customary adjustments. The Company is currently in the process of rebranding these acquired stores as Mattress Firm.

In September 2014, the Company completed the acquisition of substantially all of the mattress specialty retail assets and operations of Back to Bed Inc., M World Mattress, TBE Orlando and MCStores, which collectively operated Back to Bed, Bedding Experts and Mattress Barn retail stores in Illinois, Indiana, Wisconsin and Florida, primarily in the Chicago and Orlando metropolitan areas. The acquisition added 131 mattress specialty retail stores to the Mattress Firm company-operated store base for an aggregate purchase price of approximately $60 million, subject to customary adjustments. The Company is currently in the process of rebranding these acquired stores as Mattress Firm.

In October, the company completed the acquisition of all of the outstanding equity interests in The Sleep Train, Inc., which, together with its subsidiaries, operates stores in California, Oregon, Washington, Nevada, Idaho and Hawaii. The acquisition added 314 mattress specialty retail stores to the Mattress Firm company-operated store base for an aggregate purchase price of approximately $425 million, subject to customary adjustments, along with the assumption of certain additional liabilities totaling approximately $15 million.

On Nov. 5, Mattress Firm entered into an agreement to acquire Sleep America, which operates 47 Sleep America retail stores in Arizona, for a total purchase price of approximately $12.5 million, subject to working capital and other customary adjustments. The acquisition, which is subject to customary closing conditions, is expected to close in the fourth fiscal quarter.

Click here for the entire Mattress Firm third-quarter 2014 release.