Who's No. 2 depends on allowances
Factored out, Serta moves ahead of Simmons
David Perry -- Furniture Today, June 18, 2006
High Point — Who is the No. 2 bedding producer?
Depending on how you do the accounting, it's Simmons ... or Serta.
The reason for the confusion on that point is an accounting change adopted by companies who make filings with the Securities and Exchange Commission.
That change, in accordance with Emerging Issues Task Force Issue 01–09, stipulates that companies must record reductions to revenue for customer incentive programs, including volume discounts and promotional allowances, in their public filings.
This year, those allowances are especially significant for two of bedding's three largest producers: Simmons and Serta.
For its main bedding market share rankings, Furniture/Today allows producers to add those allowances back into their shipment figures. By that measure, Simmons ranks No. 2 with wholesale bedding shipments last year of $849 million, while Serta ranks No. 3 with shipments of $811 million.
But Simmons and Serta switch positions when the allowances are subtracted. Simmons' shipment figure drops to $754 million; that producer has substantially more allowances than Serta. Serta's shipment figure, minus allowances, is $784 million. On that scale, Serta is $30 million ahead of Simmons.
In 2004, Simmons ranked No. 2 whether the sales allowances were included or excluded. But the situation changed last year, giving Serta the opportunity to claim, by one accounting measure, that it has moved into the coveted No. 2 position.
Market share leader Sealy's shipments total, minus allowances, is $1.2 billion.
The accompanying table shows how the shipment figures for Sealy, Simmons and Serta look if the sales allowances are excluded. Note, too, that the adjusted numbers reflect slightly different percentage changes in sales growth for each of those Big Three producers.
Privately held Serta does not report sales figures. But that company once again provided audited figures to Furniture/Today. Sealy and Simmons do make public filings, and the net shipment figures in those filings exclude the sales allowances.
| Shipments minus sales allowances and incentives | |||
|---|---|---|---|
| in $ millions | |||
| Company | 2005 | 2004 | Percent 2004 to 2005 |
| Figures are for estimated U.S. wholesale bedding shipments, excluding EITF 01–09 sales allowances, incentives and cash discounts. All figures are for calendar 2005 and 2004. Figures have been rounded to the nearest million. Source: Furniture/Today market research |
|||
| Sealy | $1,249 | $1,124 | 11.1% |
| Serta | $784 | $757 | 3.6% |
| Simmons | $754 | $788 | -4.3% |
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Factoring in allowances
Jun 12, 2005
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