Sealy sales rise 13.6%; net loss reported
By David Perry -- Furniture Today, July 21, 2002
TRINITY, N.C. — Sealy said sales in its second quarter rose 13.6% to $299.8 million, but the bedding sales leader reported a net loss of $8.4 million.
Earnings were affected by a $5.8 million noncash charge related to the shutdown of Sealy-controlled American Mattress Centers, which sold bedding in Wal-Mart stores. Earnings also were hurt by an $18.3 million hike in bad-debt expense. During the quarter, the company took a bad-debt charge of $19.5 million related to its affiliates.
Sealy did not identify the affiliates. The Mattress Firm and Mattress Discounters, two major bedding specialty chains, are affiliated with Sealy's parent, Bain Capital.
Adjusted earnings, before interest, taxes, depreciation and amortization, or EBITDA, were $19 million for the quarter, compared with $30.5 million a year earlier.
Sealy said second-quarter sales grew both domestically and internationally. Domestic sales grew 2.6% in average unit selling price and 11.3% in volume. The success of new products in both the Sealy Posturepedic and Stearns & Foster brands drove average unit selling price and volume gains, the company said.
For the first half, Sealy reported sales of $591.5 million, an increase of 13.2% from $522.6 million a year earlier. Adjusted EBITDA was $59.8 million, compared with $66.8 million for the first six months in 2001. Net income was $54,000, a decrease from $5.7 million last year.
The adoption of new accounting standards had the effect of reducing net sales and selling, general and administrative expenses by $22.7 million and $16.3 million for the six months ended June 2, 2002 and May 27, 2001, respectively.
"We are pleased with the strong operating performance of our core business in the quarter and six months, although this was offset by the one-time charge related to our affiliates," said David McIlquham, president and chief executive officer. "Our strategy is not to own or control retail operations."
| Sealy | |||
|---|---|---|---|
| All figures in parentheses are losses or declines. | |||
| Quarter ended 6/2 | 2002 | 2001 | Change |
| Sales | $299,755,000 | $263,942,000 | 13.6% |
| Operating income | 9,822,000 | 18,620,000 | (47.3%) |
| Net income | (a)(8,392,000) | (b)716,000 | — |
| 6 months ended 6/2 | 2002 | 2001 | Change |
| Sales | $591,528,000 | $522,550,000 | 13.2% |
| Operating income | 42,899,000 | 47,591,000 | (9.9%) |
| Net income | (a)54,000 | (b)5,651,000 | (99.0%) |
| (a) Includes pretax charges for stock-based compensation of $654,000 in the 2002 quarter and $1.2 million in the 2002 six months, a $5.8 million pretax business closure charge in both periods and royalty income of $3.1 million in the 2002 quarter and $5.6 million in the 2002 six months. The 2002 quarter also includes a $5.8 million income tax benefit. (b) Includes royalty income of $2.6 million in the 2001 quarter and $6.1 million in the 2001 six months and a $679,000 extraordinary loss on the early extinguishment of debt in both periods. The 2001 six months also includes a $500,000 pretax charge for stock-based compensation, a $1.2 million pretax restructuring charge and a $152,000 extraordinary gain, the cumulative effect of an accounting change. | |||
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