Sealy 2nd half stronger
By Furniture Today Staff -- Furniture Today, March 7, 2004
ARCHDALE, N.C. — Despite a successful product launch that helped boost second-half business, bedding major Sealy Inc. said sales essentially were flat in its 2003 fiscal year.
The company said the launch of its revamped Sealy Posturepedic line at mid-year failed to offset the difficult business climate that existed earlier in the year. Additionally, top-line revenues were hurt when retailers Mattress Discounters and Mattress Firm, who had carried Sealy merchandise exclusively, opted to become multivendor dealers.
In the fourth quarter ended Nov. 30, sales rose 8% to $306.8 million. Sealy said that, excluding the effects of lower sales to former affiliates Mattress Discounters and Mattress Firm, sales were up 6% during the second half of the year.
Net income in the fourth quarter, excluding liquidation preference charges for two classes of common shares, plummeted 82.4% to $1.5 million.
Total sales for the year came to $1.2 billion, an increase of $700,000 from fiscal 2002. Domestic sales were off 2.3% to $950.7 million.
"In spite of the challenging economic environment faced during 2003, we were able to record a record level of sales, and experienced strong sales momentum during the fourth quarter," said David McIlquham, president and CEO.
Net income for the year, excluding liquidation preferences for the two stock classes, totaled $18.3 million, an increase of 8% from fiscal 2002. Including the liquidation preferences, the company recorded a net loss of $2.2 million. That compares with a net loss of $1.7 million the previous year.
Sealy's earnings before interest, taxes, depreciation and amortization rose 9% to $129.9 million in the year.
In its Form 10-K filed with the Securities and Exchange Commission, Sealy said the Posturepedic product launch, which saw the entire flagship line converted to a proprietary single-sided design, cost the company about $11.3 million in the second half of the year. The costs came in the form of promotional spending and labor inefficiencies due to manufacturing and design changes.
The company said its high-end Stearns & Foster line will be revamped later this year, incorporating similar design features.
| • Sealy | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Year ended 11/30 | 2003 | 2002 | Change |
| (a) After liquidation preference charges for common L and M shares of $20.5 million in the 2003 year and $18.6 million in the 2002 year; includes pretax stock-based compensation charges of $1.3 million in the 2003 year and $771,000 in the 2002 year, pretax plant/business closing and restructuring charges of $1.8 million in the 2003 year and $8.6 million in the 2002 year and royalty income of $12.5 million in the 2003 year and $11.2 million in the 2002 year. (b) Based on average shares outstanding of 31.1 million in the 2003 year and 30.9 million in the 2002 year. |
|||
| Sales | $1,189,860,000 | $1,189,168,000 | 0.1% |
| Operating income | 97,664,000 | 99,040,000 | (1.4%) |
| Net income (a) | (2,189,000) | (1,679,000) | — |
| Earnings per share (b) | (0.07) | (0.05) | — |
-
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