Sealy 2Q sales rise 6.7%
By Larry Thomas -- Furniture Today, July 16, 2007
Archdale, N.C. — Buoyed by strong sales of promotional products, specialty bedding and its revamped upscale Stearns & Foster line, bedding major Sealy said second-quarter sales rose 6.7%.
The company said domestic sales, which represent about 75% of its total business, were 4% ahead of last year's second quarter while international sales were up 15.8%.
The sales increase would have been greater had it not been for a decline in the average unit selling price. Company-wide unit volume jumped 19.3%, but that was partially offset by a 10.6% drop in the average unit selling price.
Domestically, unit volume was up 7.9% and the average unit selling price fell 3.6%.
"We remain focused on driving unit growth and protecting our position with retailers as we navigate through the flame retardency conversion with our customers, soft industry unit trends, growing demand for our specialty products and a challenging competitive environment," said Dave McIlquham, chairman and CEO.
Worldwide sales for the quarter ended May 27 totaled $401.8 million, compared with $376.7 million in last year's second quarter. Domestic sales were $303.2 million, compared with $291.5 million a year ago.
Net income for the quarter totaled $16.1 million or 17 cents per share. That compares with $126,000 or less than 1 cent per share in last year's second quarter.
Last year's second quarter included $34.2 million in one-time, pretax costs related to the company's initial public stock offering and related debt repayment. The most recent quarter included a one-time pretax gain of $2.6 million on the sale of property and $1.7 million in pretax costs stemming from an organizational realignment.
For the six months ended May 27, worldwide sales rose 5.4% to $814.4 million. Net income was $40.8 million or 42 cents per share, compared with $23.1 million or 28 cents per share for the first half of the previous year.
In a conference call with securities analysts, McIlquham said increased sales of promotionally priced products and selected price reductions on specialty sleep and Stearns & Foster models contributed to the drop in average unit selling price.
"We are very focused on driving units and (retail) slot velocity," he said. "When the market slows down, retailers look for every reason to try to kick start their business."
McIlquham vowed to "do whatever it takes" to protect Sealy's retail floor space, even at the expense of short-term profitability.
Looking ahead, he said the company is turning its attention to the higher end of its line, noting that several new memory foam and latex foam mattresses will be unveiled at the Las Vegas Market later this month.
Plus, the upper end of the flagship Sealy Posturepedic line will be revamped in time for the Las Vegas show in January.
| Quarter ended 5/27 | 2007 | 2006 | Change |
|---|---|---|---|
| Sales | $401,828,000 | $376,712,000 | 6.7% |
| Operating income | 36,986,000 | 45,465,000 | (18.6%) |
| Net income | 16,133,000 | 126,000 | 12704.0% |
| Earnings per share | 0.17 | 0.00 | |
| 6 months ended 5/27 | 2007 | 2006 | Change |
| Sales | $814,395,000 | $772,447,000 | 5.4% |
| Operating income | 87,347,000 | 98,558,000 | (11.4%) |
| Net income | 40,767,000 | 23,098,000 | 76.5% |
| Earnings per share | 0.42 | 0.28 | 50.0% |
