Simmons 3Q sales jump 13.4% despite 2.3% units dip
By Furniture Today Staff -- Furniture Today, November 11, 2002
Atlanta — Bedding major Simmons Co. said sales jumped 13.4% in the third quarter despite a sluggish economy and a 2.3% decline in units sold.
The company said the improvement, which boosted revenues to $182.5 million for the quarter ended Sept. 28, was due largely to increased sales of higher-priced products and the addition of several retail customers.
The improved sales, coupled with growth in operating margins, helped the bottom line as net income, not including foreign currency translations, rose 87.4% to $9.6 million.
"We are extremely pleased with our sales growth and overall profitability in the third quarter ... especially in this very difficult economic environment," said Simmons Chairman Charlie Eitel. "The 9.5% increase in our average unit sales price ... is an indication that consumers will pay more for a mattress that helps them sleep better."
The sales figures for 2002 and 2001 have been adjusted to reflect adoption of an accounting standard that requires some co-operative advertising payments to retailers to be listed as a reduction in net sales instead of being added to sales, general and administrative expenses.
Without the accounting change, sales would have increased 8.9%, the company said.
In a conference call with securities analysts, Eitel said he believes Simmons gained market share during the quarter because the mattress industry as a whole remains in a slump.
"We're gaining significant share," he said. "August and September were very difficult months for the industry, and I don't think October was much better."
In response to a question, he said he "wouldn't be surprised" if the industry was down 5% to 6% in dollar sales and 2% to 3% in units during October.
"My personal opinion is that we may have hit bottom ... but it's still tough out there," Eitel said.
Sales for the first nine months of 2002 were up 10.1% to $514.3 million. Net income, again not including foreign currency translations, rose seven-fold to $18 million.
| Simmons | |||
|---|---|---|---|
| Earnings per share are fully diluted | |||
| Quarter ended 9/28 | 2002 | 2001 | Change |
| (a) Excludes foreign currency translation losses of $50,000 in the 2002 quarter and $28,000 in the 2002 nine months; includes pretax charges for non-cash variable stock compensation expense of $2.1 million in the 2002 quarter and $11.6 million in the 2002 nine months. (b) Excludes foreign currency translation losses of $44,000 in the 2001 quarter and $52,000 in the 2001 nine months; includes pretax charges for non-cash variable stock compensation expense of $543,000 in the 2001 quarter and $5.5 million in the 2001 nine months and pretax charges for ESOP expense of $647,000 in the 2001 quarter and $1.9 million in the 2001 nine months. | |||
| Sales | $182,515,000 | $160,927,000 | 13.4% |
| Operating income | 24,743,000 | 21,698,000 | 14.0% |
| Net income | (a)9,638,000 | (b)5,143,000 | 87.4% |
| 9 months ended 9/28 | 2002 | 2001 | Change |
| Sales | $514,289,000 | $467,238,000 | 10.1% |
| Operating income | 63,051,000 | 45,239,000 | 39.4% |
| Net income | (a)18,033,000 | (b)2,469,000 | 630.4% |
