UPDATE: Simmons sales fall 18.6% in second quarter

U.S. sales fall 14.8%, but high-end lines do well

Larry Thomas -- Furniture Today, August 25, 2009

ATLANTA — Bedding major Simmons Co., which has been in the midst of a financial restructuring for months, reported a second quarter net loss of $5.8 million as sales fell 18.6%.

The company said U.S. sales were 14.8% below last year's second quarter, although officials said they were encouraged by the performance of upper-end products such as the Beautyrest NxG and Beautyrest Black lines.

"In light of the current economic conditions, we are generally pleased with our sales performance to date," said Stephen Fendrich, president and chief operating officer. "Our products retailing for $2,000 and up (in queen-size) are doing well. They're outperforming the market and outperforming last year."

He said the company's BeautySleep line, which was rolled out earlier this year, also performed well in the second quarter.

Worldwide sales for the quarter ended June 27 totaled $218 million. That's down from $267.7 million in last year's second quarter.

Domestic sales were $195.3 million, or 14.8% below last year's second quarter. The company said conventional bedding unit volume fell 15.5% and the average unit selling price was down 0.9%.

Gross margin, however increased to 43.2% from 37.8% in the same quarter in 2008, due largely to a 15.6% drop in selling, general and administrative expenses.

The most recent quarter's net loss compares with net income of $1.2 million in last year's second quarter, which was before the company began its restructuring efforts.

Restructuring charges totaled $6.9 million for the second quarter and $14.2 million for the first half of the year.

Worldwide sales for the first six months declined 19.1% to $440.6 million.

Domestic sales totaled $398.9 million for the first half of the year, a drop of 15.9% from the first half of 2008. The company said domestic unit volume dropped 16.9%.

The first-half net loss totaled $9 million. That compares with net income of $3.7 million in the first half of last year.

Simmons, which has approximately $1 billion in debt, has been operating under a series of forbearance agreements from its lenders and bondholders since last fall as it tries to restructure. The latest agreements expire Aug. 31.

The restructuring will likely result in the sale of the company.