Increased competition sends Tempur-Pedic's sales down 7%

Larry Thomas -- Furniture Today, January 25, 2013

LEXINGTON, Ky. — Bedding major Tempur-Pedic said its sales fell 7% in the fourth quarter and profits tumbled more than 30% as it continued to feel the effects of increased competition in the specialty bedding marketplace.

Profits also were hurt by costs stemming from its proposed acquisition of Sealy Corp., and a one-time income tax charge from repatriating its foreign earnings.

Worldwide sales for the quarter totaled $341.1 million, down from $366.8 million in the fourth quarter of 2011. North American mattress sales, its largest business segment, were off 4.8% to $158 million.

Net income totaled $23.5 million, or 39 cents per share. That's down from $56.3 million, or 84 cents per share, in the previous year's fourth quarter.

The most recent quarter included $6.7 million in transaction and integration costs related to the proposed Sealy acquisition, $1 million in restructuring charges, and a $6.2 million income tax provision for repatriation of foreign earnings.

Excluding those one-time charges, Tempur-Pedic said earnings would have been 60 cents per share.

"Our performance in the fourth quarter was in line with our projections, both in North America and internationally," said Mark Sarvary, CEO. "We continued to see signs of stabilization in our North American business driven by initiatives we launched in the third quarter."

He said several new products being launched at next week's Las Vegas Market also should help the company return to growth.

"We remain very confident in our company's growth potential and our strong brand, and are very excited about our proposed combination with Sealy," Sarvary added.

For the full year, worldwide sales were $1.4 billion, down 1.1% from $1.42 billion in 2011.

Net income for the year was $106.8 million or $1.70 per share. That was down from $219.6 million or $3.18 per share in 2011. The 2012 figure included a $48.1 million tax provision for repatriation of foreign earnings, $8.2 million in transaction and integration costs from Sealy acquisition, and $1 million in restructuring costs.

For 2013, the company is projecting sales of about $1.425 billion and earnings of $2.55 per share. Tempur-Pedic said the guidance doesn't assume any contribution from the Sealy acquisition, but said new guidance will be issued once the deal is completed.

Tempur-Pedic said it expects to finalize the acquisition in the first half of this year.