From Home Furnishing Business
Mattress Firm Expects Loss During Rebranding
Houston-based, Mattress Firm Holding Corp. warns it expects to post a loss for the year as it moves to rebrand its more than 3,400 stores.
Yesterday, Mattress Firm booked a $139 million charge tied to the store rebranding, which pushed it to a quarterly loss. Shares were down 46% over the past 12 months and fell 11% in after-hours trading to $29.60 – below the 52-week low set last month.
Mattress Firm now projects a loss of $1.57 to $1.62 a share for the year that ends Jan. 31 on sales of $3.83 billion to $3.88 billion, compared with a profit of $1.82 a share on $2.54 billion in sales last year.
On an adjusted basis, Mattress Firm estimated a profit of $1.98 to $2.08, compared with $2.36 a year earlier.
The rebranding, which would bring the company's more than 3,400 stores under the Mattress Firm name, is expected to be completed by the first quarter of 2017.
For the current quarter, the company forecast 27 cents to 32 cents a share in profit, or 62 cents to 69 cents a share on an adjusted basis. Analysts had projected profit of 86 cents a share, or 92 cents on an adjusted basis, according to Thomson Reuters.
Founded in 1986, the Houston-based company has been expanding through acquisitions, including rival Sleepy's in February. The expansion has bolstered sales but also resulted in rising costs. In the latest period, operating expenses more than doubled to $434.6 million.
Overall, Mattress Firm reported a loss of $119.2 million, or $3.22 a share, compared with a profit of $5.4 million, or 15 cents a share, a year earlier. Excluding impairment-related charges and other items, the loss was 17 cents a share, compared with a year-earlier profit of 33 cents a share.
Sales rose 49% to $839.4 million, while sales at established locations fell 1.1%. Gross profit margin narrowed to 31.7% from 35.8% a year earlier.