L&P lowers 4Q expectations
By Furniture Today Staff -- Furniture Today, January 17, 2005
Carthage, Mo. — Largely because of weak sales of mattress innersprings, Leggett & Platt expects fourth-quarter earnings will be at the lower end of the guidance it previously issued of 31 to 36 cents per share.
U.S. innerspring unit sales in the first two months of the fourth quarter were down 10% from the same period last year, the company said. The slump in that key business is outweighing a gain in sales of components for upholstered furniture, which is running about 10% ahead of a strong quarter a year ago, executives said in a conference call.
Other factors affecting earnings to a lesser degree include a weaker dollar and higher costs for transportation, wood and oil-related raw materials like foam, resins and fiber, Leggett said. The company has increased prices to recover most of the higher costs.
Karl Glassman, L&P's president, said the decline in innerspring sales is consistent with the dip in U.S. mattress sales this fall. "We believe the trough was in October. We've seen some relative strength in December," he said.
He also noted that this has been a year of change in bedding, with changes in ownership and/or management at the largest companies and a new law in California requiring that mattresses be fire-retardant as of Jan. 1.
Felix Wright, Leggett chairman and CEO, said some bedding makers have been redesigning, remerchandising and repricing products to cope with changes, including FR regulations and higher component costs. Many changes were completed with October High Point market introductions, and as those begin to ship in January, business should start to improve, he said.
For 2005, the company said it expects earnings per share of $1.50 to $1.70 on sales growth of 6% to 10%.
