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Sealy 2Q sales drop 20.5%

By Larry Thomas -- Furniture Today, July 6, 2009

ARCHDALE, N.C. — Bedding major Sealy Corp. swung to a net loss of $5.2 million in the quarter ended May 31 as sales fell 20.5%.

The loss included one-time charges of $11.9 million stemming from the company's recent refinancing of its senior credit facility.

The loss in the most recent period, the second quarter of Sealy's fiscal year, equals 6 cents per share. In the same quarter last year, the company had net income of $12 million or 13 cents per share.

Worldwide sales totaled $298.5 million, compared with $375.4 million in last year's second fiscal quarter.

Wholesale domestic sales, which don't include third-party sales from Sealy's components plants, were down 13.8% to $217.9 million. Domestic unit volume tumbled 13.2% and the average unit selling price fell 0.7%, the company said.

International sales were $76 million, a 34.9% drop from last year's second quarter, due largely to a weak retail environment in Canada and Europe.

“During the second quarter, we were able to strengthen our competitive position, execute consistently on our strategic initiatives, and substantially improve our operating performance compared to the first quarter of fiscal 2009, despite the continuation of challenging global macroeconomic conditions and a difficult retail environment,” said Larry Rogers, president and CEO.

Sealy said its selling, general and administrative expenses in the quarter were 17.9% lower than in the same period a year ago. Part of the decline was due to reductions in national advertising spending, personnel costs, product launch costs, and related fixed operating costs.

For the six months ended May 31, worldwide sales were down 20.7% to $608.4 million.

The six-month loss totaled $492,000 or 1 cent per share. That compares with net income of $28.2 million or 30 cents per share in the first half of the previous fiscal year.

As of May 31, Sealy's debt, net of cash, stood at $760.9 million.

Sealy
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.

Quarter ended 5/31	2009	2008	Change
(a) Includes restructuring expenses and asset impairment charges of $1.3 million in the 2009 quarter, $1.4 million in the 2009 six months and $541,000 in the 2008 six months. Also includes royalty income, net of royalty expense, of $4.6 million in the 2009 quarter, $4.3 million in the 2008 quarter, $8 million in the 2009 six months and $9.1 million in the 2008 six months.
Sales	$298,455,000	$375,375,000	(20.5%)
Operating income	26,570,000	32,014,000	(17.0%)
Net income (a)	(5,238,000)	11,957,000	—
Earnings per share	(0.06)	0.13	—
6 months ended 5/31	2009	2008	Change
Sales	$608,431,000	$767,304,000	(20.7%)
Operating income	48,124,000	69,006,000	(30.3%)
Net income (a)	(492,000)	28,171,000	—
Earnings per share	(0.01)	0.30	—

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Sealy sales fall 20.5% in quarter

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