Simmons sales rise 3.5%, but profits are down
Rising material and fuel costs squeeze earnings
By Furniture Today Staff -- Furniture Today, May 7, 2008
ATLANTA — Simmons’ sales rose 3.5% in the first quarter on the strength of higher unit pricing, but rising raw material and fuel costs led to lower profits, the bedding major said.
Net income of $2.5 million in the quarter was down 43% from the comparable quarter a year earlier and adjusted earnings before interest, taxes, depreciation and amortization — the company’s preferred profit measure — declined 8.6% to $33 million.
Sales of $276.9 million in the quarter included a gain in domestic sales of 2.9% from a year ago, to $245.1 million. The company said the domestic figure reflected a 7.9% increase in average unit selling price and a 3.6% decline in conventional bedding units sold.
“Despite a very difficult retail and economic environment, we continued to gain market share in the U.S. during the first quarter,” said Chairman and CEO Charlie Eitel. “Our sales growth rate has exceeded that of the industry for nine consecutive quarters due to our strong product offerings across all retail price points, outstanding service and solid relationships with our customers.”
He said results for the quarter were hurt by the increases in raw material and fuel costs.
“While we have taken significant measures to lower our overall cost structure and implemented price increases on certain products in November 2007 and March 2008, the majority of the benefits associated with these initiatives will not begin to be realized until the second and third quarters of 2008,” Eitel said. “We believe our efforts will put us in a position to continue to be successful in this challenging retail and manufacturing environment.”
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