Daily News
From Home Furnishing Business
Tempur Sealy to Pull Products Out of Mattress Firm Stores
January 30,
2017 by Larry Thomas in Business Strategy, Industry 
Tempur Sealy International (NYSE: TPX) said Monday it has terminated its contract to supply bedding to Mattress Firm, its largest retail customer, and said the company’s products will be out of Mattress Firm stores by the end of the first quarter.
Sales to Mattress Firm represented about 21% of Tempur Sealy’s total sales in 2016, but Tempur Sealy CEO Scott Thompson said the two parties were unable to agree on a new contract following Mattress Firm’s demand for “significant economic concessions.”
“Ultimately, we concluded that it was in the long-term interest of all of our stakeholders to terminate our contracts with Mattress Firm,” Thompson said. “This enables us to immediately reorient our employees and resources to support retail partners that exhibit a long-term commitment to Tempur Sealy's brands."
He said the company met last week with representatives of Mattress Firm and its new owner, Steinhoff International, after the retailer notified the company the supply contract would be ended unless “considerable changes” were made.
"Tempur Sealy is the premium bedding leader, with the most recognized brands in the mattress sector and industry-leading product innovation,” Thompson said. “We remain committed to maintaining our leadership position and to collaborating with our strong global network of retail partners to create value for both our customers and our shareholders."
For the fourth quarter 2016, Tempur Sealy said it expects to report net sales of approximately $770 million, a slight increase versus the prior year, and net income of $61 million to $63 million.
For the calendar year 2016, the company said net sales should be about $3.13 billion, a decrease of 1% versus the prior year. Net income should be $200 million to $202 million.
Excluding sales to Mattress Firm and Sleepy's, which Mattress Firm acquired in 2015, the company said net sales increased approximately 4% and 2% in the fourth quarter and full year 2016, respectively.
Last year, sales to Mattress Firm and Sleepy’s were about 11% below 2015, the company said.
Tempur Sealy will release complete financial results for the fourth quarter and calendar year on Feb. 16.