Tempur Sealy has net Q2 loss, doubles sales with Sealy purchase
Furniture Today Staff -- Furniture Today, July 26, 2013
LEXINGTON, Ky. — Tempur Sealy International swung to a net loss of $1.6 million in the second quarter as the company absorbed several one-time costs and tax adjustments from its March acquisition of Sealy Inc.
Sales for the quarter ended June 30 were double last year's second quarter due to the Sealy purchase, but sales of higher-margin Tempur-Pedic mattresses fell 5.2% in North America and 6.1% internationally.
Gross margin also fell 12.1 percentage points to 38.6% as a result of the inclusion of Sealy's sales, which have lower margins than Tempur-Pedic products.
Worldwide sales for the quarter totaled $660.6 million, up from $329.5 million in last year's second quarter, which didn't include Sealy.
The company said Tempur-Pedic's North American mattress sales were $199.5 million, down from $210.5 million in the comparable quarter.
Sealy's mattress sales totaled $325.1 million in the most recent quarter, but no comparable figure was available since Sealy was still an independent company in 2012.
The company's net loss, which equals 3 cents per share, compares with net income of $29.1 million, or 45 cents per share, in last year's second quarter.
The company said its adjusted net income, which doesn't include the Sealy acquisition costs and related tax adjustments, totaled $22.3 million.
"The steps we have taken to return Tempur North America to growth are appropriate, but are taking longer than expected," said CEO Mark Sarvary. "As a result, we are lowering our financial outlook for the year."
He said Sealy and Tempur International sales were in line with company projections, and said the integration of Sealy is progressing well.
"Cost synergies are being realized ahead of plan, and we are more confident than ever that the combination provides significant competitive advantages," Sarvary said.
The company is now forecasting 2013 sales of $2.425 billion to $2.45 billion - down from a May forecast of $2.5 billion.
Adjusted earnings per share are now projected at $2.25 to $2.40. That's down from the May forecast of $2.75 per share.
For the six months ended June 30, worldwide sales were $1.05 billion. That's up from $713.9 million in the first half of 2012, a figure that doesn't include Sealy sales.
Six-month net income totaled $10.9 million, or 18 cents per share. That is down from $85.3 million, or $1.31 per share, in the first half of last year.
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