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Larry Thomas

Mattress Firm says earnings will fall short of expectations

Promotional activity, inclement weather affects results

HOUSTON — Mattress Firm said its sales for the fiscal year that ended Jan. 28 totaled approximately $1.22 billion, but said earnings will fall short of its previous guidance because of heavy promotional activity and inclement weather in several key markets.

In a preliminary financial report, the bedding retailer said earnings per share will be $1.53 to $1.55 for the year. That would be below a projection of $1.65 to $1.73 that was issued in early December.

The preliminary sales figure represents an increase of 20.8% from the previous fiscal year. The figure includes a comparable-store sales gain of 1.3%, which means the bulk of the growth was due to newly opened and acquired stores.

"While we are proud of relentless efforts of our sales force in the face of a tough consumer environment, we now recognize that, although our results are not yet final, our earnings per share for the fiscal year will be below our expectations," said Steve Stagner, president and CEO. "The consumer environment and unusually inclement weather conditions in a number of our primary markets presented challenges that we were unable to fully overcome."

He said heavy promotional activity in the fourth quarter reduced its operating margin by 200 to 230 basis points.

"We remain committed to our strategy of driving continued sales growth, increasing relative market share across the chain and positioning the company for long-term growth of shareholder value as the largest and fastest-growing mattress specialty retailer in the United States," said Stagner.

The company said fourth-quarter sales were approximately $312 million, an increase of 20.8% from the previous year's fourth quarter. Comparable-store sales growth was 6.5%.

Mattress Firm said complete financial results for the fourth quarter and fiscal year will be announced by the end of March.

The company ended the fiscal year with 1,225 stores, a net gain of 168 from the end of the previous year.

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