Simmons sales up 7.9% in '04; wholesale shipments jump 9.1%
By Larry Thomas -- Furniture Today, March 27, 2005
Atlanta — Buoyed by healthy increases in its wholesale and retail segments, bedding major Simmons Co. said sales jumped 7.9% in 2004.
The company reported wholesale bedding shipments rose 9.1% for the year, while comparable-store sales from its Sleep Country USA chain in the Northwest jumped 18.6%.
Fourth-quarter sales were up 2% to $206.6 million, despite a 4.6% decline in wholesale unit shipments.
Total sales for the year came to $869.9 million, up from $806.3 million in 2003. Net income was $24.6 million, compared with a loss of $41.3 million in 2003. The 2003 loss was due largely to one-time expenses related to the company's acquisition by affiliates of the Thomas H. Lee equity firm.
"I am encouraged by our strategic accomplishments in 2004 and our overall financial performance, particularly in light of the unprecedented raw material inflation which we encountered during the year," said Chairman and CEO Charlie Eitel.
He said conventional bedding unit volume was up 3.5% in the year, and the average unit selling price rose 6.1%.
Gross margin on the wholesale side slipped, however, to 44.6% from 46.1% in 2003. Eitel said some of the decline could be attributed to an accounting change that requires some co-operative advertising payments to be treated as a reduction of sales. However, margins also were hurt by higher raw material costs and expenses related to the opening of new factories in Waycross, Ga., and Hazleton, Pa.
During a conference call with securities analysts, Eitel said the fourth-quarter unit decline appears to be a one-time blip related to the rollout of the company's 2005 product line in December, and the implementation of a 12% price increase on the 2004 line last October.
He also told analysts that sales of two of the company's newer products, the Sang line of visco-elastic mattresses and the HealthSmart line of beds with removable mattress tops, aren't going as well as expected.
He said the Sang line will be remerchandized with a new cover, and he believes the HealthSmart beds initially were priced too high.
Most HealthSmart models have been retailing for about $1,599 in queen, but changes have recently been implemented that should bring retails down to about $1,299, he said, adding the line was "much more complicated to make that we expected," which drove up production costs.
| Simmons | |||
|---|---|---|---|
| All figures in parentheses are losses or declines. | |||
| Quarter ended 12/25(a) | 2004 | 2003 | Change |
| (a) Reflects the results of the successor company for the periods ended Dec. 25, 2004 and the combined results of the successor company and the predecessor company for the comparable periods ended Dec. 27, 2003. (b) Includes pretax licensing income of $2.1 million in the 2004 quarter and $9.6 million in the 2004 year, pretax plant closing charges of $2.3 million in the 2004 quarter and $3.1 million in the 2004 year and pretax transaction charges of $428,000 in the 2004 quarter and $733,000 in the 2004 year. (c) Includes pretax licensing income of $3 million in the 2003 quarter and $10.8 million in the 2003 year, pretax plant closure charges of $1.8 million in the 2003 quarter and 2003 year, pretax transaction charges of $21.5 million in the 2003 quarter and $22.4 million in the 2003 year and income tax benefits of $18.5 million in the 2003 quarter and $9.7 million in the 2003 year. |
|||
| Sales | $206,557,000 | $202,495,000 | 2.0% |
| Operating income | 19,471,000 | (37,373,000) | — |
| Net income | (b)5,252,000 | (c)(67,824,000) | — |
| Year ended 12/25 | 2004 | 2003 | Change |
| Sales | $869,893,000 | $806,333,000 | 7.9% |
| Operating income | 79,523,000 | 12,826,000 | 520.0% |
| Net income | (b)24,614,000 | (c)(41,286,000) | — |
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