Sealy Corp. reports fourth-quarter loss of $42 million
Worldwide bedding sales tumble 26.2%
Furniture Today Staff -- Furniture Today, January 16, 2009
ARCHDALE, N.C. — Sealy Corp., the mattress industry sales leader, reported a fourth-quarter net loss of $42 million as worldwide sales tumbled 26.2%.
The loss, which included a $27.2 million non-cash charge related to the company's business units in Europe and Puerto Rico, was blamed on an extremely weak retail business climate and double-digit increases in raw materials costs.
Domestically, bedding sales fell 29.4% and unit volume was 34.2% below last year's fourth fiscal quarter, which had one extra week.
Taking out the extra week from a year ago didn't make the comparisons much better, as sales fell 23% and unit volume plunged 28.1% on a comparable basis.
"The quarter was even more difficult than we anticipated," said Larry Rogers, president and CEO. "Bedding demand became increasingly weak during our fourth quarter (which ended Nov. 30), and retail traffic was down."
Total sales for the quarter were $325.8 million, compared with $441.3 million for the quarter ended Dec. 2, 2007.
The most recent quarter's net loss, which equals 46 cents per share, compares with net income of $17.1 million, or 18 cents per share, in the same period a year earlier.
During a conference call with securities analysts, Rogers said demand was especially weak at price points above $1,000 in queen. And he said smaller, independent furniture stores appear to be struggling more than sleep shops and department stores, which have more resources for advertising and promotion.
"Further consolidation at retail will probably result," he told analysts. "We expect continued near-term pressure."
Despite the difficult environment, Rogers pointed out that during 2008, Sealy was able to amend its senior credit agreement, complete the launch of the new flagship Posturepedic line, remove more than $9 million in fixed costs, and pay back $22 million in debt.
"We will continue to focus on serving our customers and executing the initiatives that can positively affect our business to generate cash and further enhance our position as the leader in the bedding industry," he said.
For the fiscal year ended Nov. 30, sales fell 12% to $1.5 billion.
The company had a 12-month net loss of $2.87 million, or 3 cents per share. In the previous fiscal year, Sealy had net income of $79.4 million, or 82 cents per share.
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Sealy loses $42M in 4Q
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