Tempur-Pedic rocket sputters, panel tackles category's future
David Perry, Executive Editor -- Furniture Today, April 27, 2008
Suddenly, memory foam leader Tempur-Pedic looks all too vulnerable.
The company just reported a whopping 16% sales decline in its domestic business in the first quarter. Net income plummeted from $29.8 million in the first quarter last year to $13.5 million in the first quarter of 2008.
As I ponder those shocking reversals, I have several questions. I admit that I'm not quite sure what to make of the big declines.
It was only a few months ago, after all, that I was standing in Tempur-Pedic's Las Vegas Market showroom, witnessing a festive scene that was part victory celebration and part pep rally.
Company officials, fighting through hordes of dealers who descended on the showroom that day, announced another stellar year of growth — a 26% sales increase for Tempur-Pedic's retail group in 2007.
And, mindful of the forecasts for a difficult year for the mattress industry as a whole, the officials sounded an upbeat call to arms, Tempur-Pedic style. "We choose to grow," declared Rick Anderson, president of Tempur-Pedic North America. "We mean it. As we look at 2008, we see nothing but opportunities to grow, and to grow with you."
The dealers in the room, enjoying fancy appetizers and drinks, cheered his message loudly. It was a scene seldom seen in other mattress showrooms, but one that had become common in the Tempur-Pedic space as the company continued to set a sizzling growth pace that vaulted it to the No. 4 position among U.S. bedding producers.
Now that showroom celebration is but a distant memory, and the growth rocket that was Tempur-Pedic has fallen back to earth, a victim, company officials say, of a macroeconomic climate that has "deteriorated" and "a slowdown in the mattress industry."
But Tempur-Pedic seemed immune to such ugly realities in the past. That's why we wonder what other factors are at play. One of them, we suspect, is increasing competition from conventional bedding producers. Majors like Sealy and Simmons now have compelling memory foam lines of their own, lines that reportedly are doing well. Can they be taking a bite from Tempur-Pedic's apple?
The current state of the specialty sleep category (you may have noticed that airbed producer and retailer Select Comfort also has lost momentum) will be one of the topics that we will address at our upcoming Bedding Conference, set for May 14–16 at the Ritz-Carlton golf resort in Naples, Fla. It's not too late to register for the conference. You can do so online at www.furnituretoday.com, or you can call special events manager Meg Goldsby at (336) 605-1066.)
I'll be asking the producers on our hot topics panel what they see ahead for the specialty sleep segment. It should be an interesting discussion. Join us in Naples next month to see how it plays out.
Contact David Perry at dperry@reedbusiness.com
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