Sealy loses $42M in 4Q
By Larry Thomas -- Furniture Today, January 26, 2009
ARCHDALE, N.C. — Sealy 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 mattress industry sales leader's business units in Europe and Puerto Rico, was blamed on a weak retail climate and double-digit increases in raw materials costs.
Sealy's U.S. bedding sales fell 29.4% and unit volume was 34.2% below last year's fourth fiscal quarter, which had one extra week.
Even taking out the extra week from a year ago, sales fell 23% and unit volume plunged 28.1%.
“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.”
Sales 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 a year ago.
In a conference call with securities analysts, Rogers said demand was especially weak at price points above $1,000 in queen. He also said that small, 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 posted a net loss of $2.9 million or 3 cents per share for the year. In the previous fiscal year, Sealy had net income of $79.4 million or 82 cents per share.
| Sealy | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 11/30 | 2008 | 2007 | Change |
| (a) Includes pretax goodwill impairment loss of $27.5 million in the 2008 quarter and year, and pretax restructuring expenses of $219,000 in the 2008 quarter and $3.1 million in the 2008 year. Also includes pretax debt extinguishment and refinancing expenses of $5.4 million in the 2008 quarter and year, $973,000 in the 2007 quarter and $1.2 million in the 2007 year. |
|||
| Sales | $325,756,000 | $441,290,000 | (26.2%) |
| Operating income | 1,323,000 | 36,864,000 | (96.4%) |
| Net income (a) | (41,980,000) | 17,135,000 | — |
| Earnings per share | (0.46) | 0.18 | — |
| Sales | $1,498,023,000 | $1,702,065,000 | (12.0%) |
| Operating income | 101,475,000 | 164,002,000 | (38.1%) |
| Net income (a) | (2,867,000) | 79,373,000 | — |
| Earnings per share | (0.03) | 0.82 | — |
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