From Home Furnishing Business
Tempur Sealy Sales Slip 5.4%, But Profits Nearly Double
Bedding major Tempur Sealy International (TPX) said third-quarter sales fell 5.4% to $832.4 million, but net income nearly doubled as gross margin improved and other costs were reduced.
Net income for the quarter ended Sept. 30 totaled $77.8 million or $1.32 per share. That was up from $40.2 million or 64 cents per share in last year’s third quarter, which included one-time integration and restructuring costs of $7.7 million from its acquisition of Sealy, and $17.6 million to settle a legal dispute in Germany.
Gross margin increased to 43.5% from 40.9% in the same quarter last year.
“The flexibility of our business model was displayed this quarter as our top line sales were below our original expectations, yet we delivered significant margin expansion,” said Scott Thompson, chairman and CEO. “We continue to execute on our core strategy to drive our long term operating performance.”
The company said North American bedding sales, which include the Tempur-Pedic, Sealy and Stearns & Foster brands, fell 3.4% to $667.6 million. Sales of pillows and other comfort products in North America tumbled 38.7% to $30.9 million.
Gross margin in North America was 41.5%, up from 38.8% in last year’s third quarter. Tempur Sealy said the increase was driven by lower operating expenses and occurred despite an increase in advertising spending.
International bedding sales fell 3.7% to $106.1 million.
For the nine months ended Sept. 30, worldwide sales fell 1.1% to $2.36 billion. Nine-month net income was $138.7 million or $2.28 per share. That was up from $84.8 million or $1.36 per share in the first nine months of 2015.