Tempur Sealy Q1 Profits Squeezed by Mattress Firm Expenses

May 4, 2017  by Larry Thomas in Economic News, Industry   

The company said it incurred $25.9 million in charges from the termination, but also received $9.3 million from Mattress Firm to partially offset those costs. 

That reduced net income to $33.9 million or 62 cents per share in the quarter ended March 31, down from $39.6 million or 63 cents per share in last year’s first quarter.

The Mattress Firm charges included the write-off of inventory built specifically for Mattress Firm, promotional incentives and marketing assets.

The company stopped doing business with Mattress Firm in early April, so the most recent quarter included the retailer’s sales of Tempur Sealy products. The retailer accounted for about 20% of Tempur Sealy’s sales in 2016.

The biggest sales growth occurred in the company’s direct-to-consumer channel, which includes e-commerce sales, call centers and a handful of company-owned retail stores. Sales in that channel more than doubled from $10.5 million in last year’s first quarter to $24.1 million in the most recent quarter.

The figure included a 200% increase in sales from its website, the company said.

“These solid first-quarter results are a byproduct of the team’s focus on our long-term initiatives and the overall positive worldwide economy underlying the bedding industry,” said Scott Thompson, Tempur Sealy’s chairman and CEO. “We are pleased with the progress of our new product launches around the world and the positive early market reactions.”

The company didn’t make a sales projection for 2017, but re-affirmed an earlier projection of adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $400 million to $450 million for the year.