Sealy sales up 6.1% in second quarter
Stearns & Foster line, better buying environment drove gains, company says
Jay McIntosh -- Furniture Today, June 30, 2010
ARCHDALE, N.C. — Bedding major Sealy reported that sales in its fiscal second quarter ended May 30 were up 6.1% from a year earlier, its third consecutive quarter of year-over-year sales growth.
Net income was $849,000 compared with a loss of $5.4 million in the same period a year earlier, although both quarters were affected by one-time financing charges. The company said its adjusted EBITDA, or earnings before interest, taxes depreciation and amortization, for the quarter declined 6.6% to $38.9 million.
U.S. net sales were up 3% to $229.1 million, with unit sales growing 2.2% and the average unit selling price rising 0.7% from a year earlier, the company said. Continued success of the new Stearns & Foster line and a "more stable retail environment" drove the gains, Sealy said.
International sales - led by success in Canada with the new S&F line, better execution of promotions and improved demand - jumped 15% in the quarter to $87.4 million. Excluding the effects of currency fluctuation, international sales grew 5.9%, the company said.
"Our Stearns & Foster line continues to perform extremely well and take market share in the premium bedding category," said Larry Rogers, president and CEO. "Our focus on developing and bringing new and innovative products to market continued, as we began rolling out the Sealy Promotional line and prepare to roll out the Embody specialty bedding line over the remainder of the year."
He said the new products should drive future market share gains, and will position the company to take advantage of "resurgent luxury price points" with the S&F and Embody lines.
In a conference call with analysts, Sealy officials noted that this year's second quarter didn't have the full impact of Memorial Day retail sales, since the holiday was on May 31. Last year's quarter included sales before, during and after the holiday, since it was earlier that year. They declined to give a dollar estimate of the holiday timing's effect on sales.
They said that as in the fiscal first quarter, sales "coalesced" around holidays rather than occurring evenly throughout the quarter.
Rogers said the company also continues to focus on deleveraging its balance sheet, and retired $35 million in senior notes in March. Sealy said its debt net of cash on May 30 was $729 million, down from $760.9 million a year earlier.
Net earnings in the second quarter came to 1 cent per share, or 2 cents after excluding a 1 cent charge for the redemption of notes and payment of certain other interest, the company said.
Earnings of 2 cents per share excluding charges were in line with Wall Street analysts' expectations, according to Thomson Reuters.
For the first half of fiscal 2010, sales were up 7.8% to $656.2 million. Net income was $6.6 million, compared with a loss of $1 million in the same period a year earlier, while adjusted EBITDA rose 14.3% to $88.1 million.
Officials said they were still on track to reach the company's goal of a 10% improvement in EBITDA for this fiscal year.
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