Mattress Firm expects lower sales, higher earnings
Larry Thomas -- Furniture Today, July 17, 2012
HOUSTON — Bedding retailer Mattress Firm has trimmed its sales projections for the second fiscal quarter and fiscal year, but slightly boosted its earnings estimates due to strong cash flow and operating efficiencies.
The retailer, which acquired the 180-store Mattress Giant chain on May 2, said Monday that earnings for the fiscal quarter ending July 31 will be 27 cents to 29 cents per share, including acquisition-related costs of 11 cents per share.
That compares with a forecast of 26 cents to 29 cents per share, including acquisition costs, that was issued on June 5.
Sales for the quarter are projected at $260 million to $265 million, down from the June estimate of $270 million to $275 million.
For the fiscal year, sales are now projected at $1.01 billion to $1.03 billion, down from the June estimate of $1.03 billion to $1.06 billion.
Fiscal year earnings are now projected at $1.48 to $1.52 per share, up from the June estimate of $1.46 to $1.50 per share. Both estimates include acquisition costs of 17 cents to 19 cents per share.
The news sent Mattress Firm's stock down more than 14% in early-morning trading on the NASDAQ exchange. Shares closed Monday at $29.77, but traded below $25 per share in the first hour of trading, and tumbled below $23 at one point.
The company had sales of $703.9 million in the most recent fiscal year, but opened or acquired about 340 stores between January 2011 and May 2012.
"We believe our ability to reaffirm and raise our earnings expectations in light of the downward pressures on sales experienced during the second fiscal quarter reflects our ability to positively impact our cash flows and earnings through our flexible operating model," said Steve Stagner, president and CEO. "We are also pleased that sales during the key Memorial Day and July Fourth holidays met the company's expectations.
He said the retailer is "making significant progress" integrating the Mattress Giant stores into the company and is pleased with the results of the acquired stores.
"We remain committed to executing on our growth strategies, which include continuing to selectively expand our store base in underpenetrated markets and providing our customers with great brands to drive our growth, further strengthening our position as the largest specialty bedding retailer in country," Stagner said.
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