Simmons 1Q sales up 14.7%
By Larry Thomas -- Furniture Today, May 14, 2006
Atlanta — Buoyed by the success of a revamped product line and numerous cost-cutting measures, bedding major Simmons reversed a net loss from last year's first quarter on a sales increase of 14.7%.
The company said sales in the first quarter totaled $235.9 million, up from $205.6 million in last year's comparable quarter. Net income came to $6.4 million. In last year's first quarter, Simmons recorded a net loss of $2.2 million.
"We have worked very hard over the past year to make our business leaner and more competitive in the marketplace," said Chairman and CEO Charlie Eitel. "Our first-quarter results show the effectiveness of those efforts."
In recent months, the company has revamped its product line, reorganized its sales force and reworked several manufacturing processes in hopes of improving its financial performance and regaining the market share it lost in early 2005.
"We're lean. We're mean. And we're taking (market) share," Eitel said during a conference call with securities analysts. "We probably are close to where we were in the fourth quarter of '04."
Eitel said wholesale bedding shipments rose 14.4% to $216.9 million, and unit volume jumped 14.6%.
The average unit selling price, meanwhile, was up 3.1%.
The company's Sleep Country USA stores recorded sales of $23.6 million, a 23.5% jump from last year's first quarter. Comparable-store sales increased 9.5%.
During the conference call, Eitel pointed out that selling, general and administrative expenses dropped to $70.9 million from $79.2 million in last year's first quarter, despite the double-digit sales increase.
The decline was due to lower selling expenses resulting from the sales reorganization, as well as more efficient shipping of finished products to dealers.
"We are obsessed with being a low-cost producer," Eitel told analysts.
Gross margins fell by about three percentage points due to increased raw materials costs and additional money paid to dealers in the form of rebates and promotional costs.
| Simmons | |||
|---|---|---|---|
| All figures in parentheses are losses or declines. | |||
| Quarter ended 4/1 | 2006 | 2005 | Change |
| (a) Includes pretax income from licensing fees of $2.3 million in the 2006 period and $2.1 million in the 2005 period. |
|||
| Sales | $235,867,000 | $205,582,000 | 14.7% |
| Operating income | 28,522,000 | 12,255,000 | 132.7% |
| Net income (a) | 6,433,000 | (2,192,000) | — |
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