Allowances, incentives affect sales totals, but not rankings
By Furniture Today Staff -- Furniture Today, June 15, 2008
HIGH POINT — Their market share positions don't change, but their wholesale shipment numbers are all lower.
That's the situation when an accounting issue comes to play for the bedding industry's largest players. That issue stems from an accounting change made a few years ago that stipulates that companies that make filings with the Securities and Exchange Commission must record reductions to revenues for customer incentive programs, including volume discounts and promotional allowances, in their public filings.
Sealy and Simmons, bedding's two top producers, are both affected by that accounting issue. When their shipments for 2007 are stated minus sales allowances and incentives, they are lower than the numbers that Furniture/Today reports for those companies in its main bedding table, where the allowances are added back in.
The table accompanying this story shows how the top producers fare when the allowances are subtracted. It reveals that Sealy remains in the No. 1 position, with adjusted shipments of $1.3 billion, a 2.9% increase. Simmons remains the No. 2 player, with adjusted shipments of $970 million, an 11.8% gain. But on this listing, Simmons falls below the $1 billion mark; its volume with allowances added back in is $1.1 billion. Privately held Serta is not required to report figures to the Securities and Exchange Commission, but does provide accountant-verified figures to Furniture/Today, a practice it has maintained for several years. Those figures show that Serta's 2007 wholesale shipments, minus sales allowances and incentives, totaled $850 million, a 1.3% gain.
Most of the Top 15 bedding producers are privately held companies and are not required to identify the amount of their allowances and incentives. Thus, Furniture/Today reports wholesale shipment numbers in its main bedding market share table with the allowances added back in. That is the way the industry typically thinks about the shipment figures for various producers. And that main chart puts those Top 15 producers on a level playing field, Furniture/Today believes.
| Shipments minus sales allowances and incentives | |||
|---|---|---|---|
| Company | Estimated U.S. wholesale beddings hipments in $ millions | Percent change 2006 to 2007 | |
| 2007 | 2006 | ||
| Figures are by estimated U.S. wholesale bedding shipments according to GAAP accounting. Figures exclude EITF 01-09 sales allowances, incentives and cash discounts and exclude returns and shipments to Puerto Rico. All figures for calendar 2007 and 2006. All sales information is accountant-verified or audited. Figures have been rounded to the nearest million. Source: Furniture/Today market research |
|||
| Sealy | $1,318 | $1,281 | 2.9% |
| Simmons | $970 | $868 | 11.8% |
| Serta | $850 | $839 | 1.3% |
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