‘Awesome' Tempur-Pedic Maintains Momentum
David Perry -- Furniture Today, May 27, 2011
David Perry Executive editor
The bedding veterans were impressed. They used words like "awesome" and "breathtaking" to describe the phenomenon that is Tempur-Pedic.
I checked in with a couple of senior bedding executives the other day when Tempur-Pedic released its soaring first quarter results. These executives are familiar with the strong showings Tempur-Pedic has been making recently. But they displayed fresh appreciation for Tempur-Pedic's success upon reviewing the company's latest performance.
Net sales in the first quarter jumped 28% to $325.8 million. That's an impressive increase, obviously, but a breakdown of the sales figures reveals even stronger gains in some segments. North American mattress sales soared 36%, and domestic retail sales grew 45%. North American pillow sales jumped 24%.
Distribution is expanding; Tempur-Pedic ended the first quarter with more than 7,000 domestic doors, about a 9% increase.
The bottom line - profit - is also noteworthy. The gross profit margin was 52.3%, up from 49.2% in the year-earlier quarter. The company said those gains resulted from improved efficiencies in manufacturing, a favorable product mix and fixed cost leverage related to higher production volumes.
On the product front, the company is increasing attachment rates for its adjustable bedding base, the focus of a national ad push, and the softer feels of the new Cloud beds are resonating with consumers.
In short, Tempur-Pedic is hitting on all cylinders. I asked one of the bedding executives if Tempur-Pedic can maintain that kind of momentum. "I don't know why it would stop," he responded.
In the old days, Tempur-Pedic was able to generate huge double-digit gains because it was on a fast-growth track, and its sales base was much smaller. But the company is now achieving a much more difficult feat: Posting steep gains on a big sales base.
The company's pull-through marketing continues to drive sales, and that formula can't be replicated by the big "S" brands. Candidly, Tempur-Pedic continues to pull away from the field with its brand-building strategy.
I'm not seeking to dampen the sunny skies in Tempur- Pedic land, but it should be noted that memory foam is not for everyone. It also must be noted that Tempur- Pedic only competes at the premium end of the market, and many consumers can't afford sleep sets retailing for $2,000 and up. Of course, Tempur-Pedic is also helping elevate average unit selling prices overall with its sizzling sales.
The Tempur-Pedic story continues to be a compelling one. The company has written a new set of bedding rules, and it's winning big in the premium bedding arena.
Contact David Perry at dperry@furnituretoday.com www.furnituretoday.com
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