Sealy sales climb 5.9%, but IPO eats income
By Larry Thomas -- Furniture Today, July 31, 2006
Archdale, N.C. — Bedding major Sealy said expenses from its recent public stock offering nearly wiped out its second-quarter profit, but said domestic and international sales showed healthy increases.
Worldwide sales for the quarter ended May 28 came to $376.7 million, a 5.9% increase from last year's second quarter. Domestic sales represented $291.5 million of that total — a 2.5% increase — while international sales jumped 19% to $85.2 million.
Net income, however, totaled just $126,000. In the comparable quarter last year, the total was $6.4 million.
The company said some $34.2 million in expenses from the stock offering reduced net income. In addition, Sealy incurred $6.4 million in one-time costs related to the launch of its new Sealy and Stearns and Foster product lines.
"We are pleased with the results for the quarter and the progress we hade made on our new product introductions," said David McIlquham, chairman and CEO.
In a conference call with securities analysts, he said the Stearns & Foster rollout has been completed, and said the new Sealy Posturepedic line has been placed in 57% of its stores. The rollout should be finished by the beginning of the fourth quarter, said McIlquham.
He said domestic unit volume declined 5.9% during the quarter. He said such declines typically occur as new product lines are being rolled out, and told analysts he didn't think it was attributable to soft retail business conditions in recent months.
Two of the brightest spots on the domestic front are sales of specialty (non-innerspring) bedding and luxury bedding — all of which is sold at retail price points above $1,000.
Specialty bedding sales were up 115% in the first half of the fiscal year, while luxury bedding sales were largely responsible for the 9% jump in the average unit selling price in the first half, McIlquham told analysts.
Internationally, unit volume jumped 12.2% in the most recent quarter. The biggest international star was Canada, where sales were up 37.5% in the quarter and 32.6% in the first half of the fiscal year.
Worldwide sales for the first six months rose 8% to $772.4 million. Net income was $23.1 million, compared with $27.1 million in last year's second quarter.
| Sealy | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 5/28 | 2006 | 2005 | Change |
| (a) Based on average diluted common shares outstanding of 88.4 million in the 2006 quarter, 75.1 million in the 2005 quarter, 82.5 million in the 2006 six months and 77.8 million in the 2005 six months. (b) Includes a $287,000 charge in the 2006 six months for the cumulative effect of a change in accounting principle. | |||
| Sales | $376,712,000 | $355,890,000 | 5.9% |
| Operating income | 45,465,000 | 46,648,000 | (2.5%) |
| Net income | 126,000 | 6,421,000 | (98.0%) |
| Earnings per share (a) | — | 0.09 | — |
| 6 months ended 5/28 (b) | 2006 | 2005 | Change |
| Sales | $772,447,000 | $714,913,000 | 8.0% |
| Operating income | 98,558,000 | 97,367,000 | 1.2% |
| Net income | 23,098,000 | 27,055,000 | (14.6%) |
| Earnings per share (a) | 0.28 | 0.35 | (20.0%) |
