Fendrich ignores Simmons’ struggles
Simmons President Steve Fendrich missed the mark with his recent comments about the financial performance of his struggling company.
Simmons released results for its quarter and year ending Dec. 27, and the figures were not pretty. Net sales for the quarter dropped 23.8%, while the company had a net loss of a whopping $487.4 million. For the year, net sales were off by 8.7% and the company reported a net loss of $492.2 million. While $547.6 million in non-cash goodwill and trademark impairment charges accounted for the net loss, it was still one of the largest losses in the bedding industry in recent history.
As if that news wasn’t bad enough, Simmons also revealed, in a footnote buried on the third page of its press release, that its independent accounting firm expressed “substantial doubt about Simmons’ ability to continue as a going concern.” Analysts say the company is likely to file for Chapter 11 bankruptcy protection. Simmons, which is in the midst of a financial restructuring expected to give the company a new owner, has said that a bankruptcy filing is not the company’s intention.
Fendrich did not directly address the huge losses and the going concern qualification - rather large omissions, it seems to me. Rather than deal with those unpleasant facts, he asserted that Simmons is making “progress” in its financial restructuring and “continues to perform with innovations in all aspects of our business.” And he also said he is “encouraged” by Simmons’ overall financial performance in 2009.
In addition, Fendrich said that Simmons believes it gained market share in the fourth quarter. But that is based on comparisons to a monthly industry survey that does not accurately capture overall industry performance. And Simmons’ performance in the fourth quarter (domestic segment net sales declined by 22.3%, with a 22.5% decrease in conventional bedding unit volume) doesn’t sound like much to brag about, in our book.
It’s understandable that Fendrich would want to put a positive spin on the Simmons results; plenty of bedding producers take the same approach. But he only hurts his credibility by ignoring the bad news at Simmons.
Dan Floris commented:
Anyone hiring former Simmons Managment look out!
S fan commented:
Here is what will happen when simmons gets new owners,arrogant management will start polishing the new peoples apples , do not be fooled this time they are the same ones who ran simmons into the ground! New ownership do not be fooled . Make bold moves! To many layers of management! Sitting in a corner office in front of a computer screen is a thing of the past!Good luck to the new owners.
S fan commented:
Simmons better make changes! At every level.Same old people doing the same old thing. Who ever buys simmons please do something.
"S" brand fan commented:
Simmons can be a great company. Beautyrest is the best selling premium brand. Easy. I laugh at everyone getting wrapped around the axle on who to blame. Yes, Charlie is a phony who claims to author "great game" and growing individuals. Last count he burned through three Presidents (Hellyer, Matthews & Fendrich), three COO's (Brink, Parish & Birch) and countless others who chose not to polish his apple. All this in his whopping eight years in the industry.
The "S" brands will always do OK with any leadership, great with good leadership. History supports that argument. Simmons just needs strong leadership.
This will all happen soon enough. New financial sponsor in the next thirty days. They will take 30-60 days to assess management. They will likely make changes.
Life goes on and Simmons will be OK.
TOTHE REAL TRUTH: commented:
Thank you for your response. You are so right poorly ran is an understatement.The great game of life was a huge joke.And in the factorys are the most arrogant managment teams.They listen to no one all they care about is numbers.It has been very hard to watch,the company going down.Moral is at an all time low.Wish things were better.Hope new ownership pays attention to the workers on the factory floors.They make the products that make them rich.
The Real Truth..Stop the BS commented:
Let's face it the "Simmons" Company will always be remember by its employees and competitors as a good company. But please stop with all of the excuses...The company has been poorly ran from ownership group to ownership group! There has been bout's of innovative success Which has lead to tremendous growth within this organization but the truth is everything from the "great game of lie's or life" to "the tremendous failure of the Olympic Queen and Healthsmart led to one fact alone...Simmons became extremely arrogant in it's success and took it's eye off of the ball and therefore is suffering because of HUGE SELF-SERVING EGOS. Everyone is to blame from Charlie to Steve etc...If you base performance on the "numbers" they have performed poorly and if the same standard applies then they have to go. I dream of the day were leaders hold each other to the same standard that they place on their subordinates. That will never happen when their performance is based on contracts, expense accounts, and huge severance packages. All of you loyalist you need to face the fact if you work for this organization you need to take a close look at their track record they are committed to one thing only and that is making money for their investors. That's their job...That's why they are there, and all decision lead to that end. Stop complaining and face the fact....As long as you work for this company you will forever be apart of a large "Flip" corporation who's goal is to make money for the owners and the executives and not for you!!! Simmons will make it out of this mess but at what cost to you!!!
Iworked4Charlie3 commented:
OK if it is Bob he needs to clean house,that should be the first thing that is done.From the top to the bottom.Everyone!They were all involved in this failure.From corprate all the way down to the factory level.No one in management should be left out.Huge changes need to be made.
IworkedforCharlie2 commented:
My Vote is for Hellyer in 2010.
Neither Fan or Foe commented:
Come on everybody. Steve and Charlie aren't that bad of guys. The only problem with Charlie is he listened to the people that sucked up to him and they aren't that smart. From an outside perspective it seems to be much more of a margin problem than an economy issue.
Lets Be Honest commented:
Wow, all the anger! I worked for Charlie. I would do it again. He is a GREAT leader of people. A few bad calls, but who among us hasn't done that? The problem at Simmons is the same as with Sealy, Spring Air and others. Given a seemingly recession-proof industry history, the private equity guys felt confident highly leveraging the companies. If the industry hadn't dropped 25+%, we wouldn't be having this discussion. We're not the only industry going through this. With regard to Steve Fendrich, he's done a pretty good job of holding the place together while they work there way through these troubling times.
An Observer commented:
Reply to UR Wrong:
Good to hear from you Charlie!
fc commented:
Always blame someone elsefor the vast errors made at Simmons,everything indicates Simmons is going down the wrong path!! New leadership is needed for this company to come back.The same old people doing the same old things you get the same results. Please stop making up excuses for bad bad decisions.Simmons must rid itself of Corporate greed.Start all over and go right down to the production floor.
UR Wrong commented:
Steve is a great leader. Charlie was a great leader as well. The great game of life changed my life. These guys only did what was in everyone's best interest. They always put others first. It is a shame they were made to do what they said they had to by the private equity company. We need Charlie again. Only he can bring the company culture back again. He should never be blamed for anything that happened.
UR Wrong commented:
Steve is a great leader. Charlie was a great leader as well. The great game of life changed my life. These guys only did what was in everyone's best interest. They always put others first. It is a shame they were made to do what they said they had to by the private equity company. We need Charlie again. Only he can bring the company culture back again. He should never be blamed for anything that happened.
UR Wrong commented:
Steve is a great leader. Charlie was a great leader as well. The great game of life changed my life. These guys only did what was in everyone's best interest. They always put others first. It is a shame they were made to do what they said they had to by the private equity company. We need Charlie again. Only he can bring the company culture back again. He should never be blamed for anything that happened.
newsflash commented:
tommy is greedy. charlie was greedy and couldnt tell the truth, steve is greedy and in way over his head. enough! move on.
DA commented:
Mattress Drama--- Charlie had two responsibilities--- Sell the company to the right investment group and recruit the right team. You can't blame THL without pointing a finger at Charlie because he told everyone that THL were the perfect partner- his choice. He inherited the team that lead and kept the dipsticks. Failure on both accounts. New book "Idle Time"
BC commented:
If my team performed like this,we would all be without jobs. 980 million in dept,failed to comply with some of its loans covenants,and missed payments on the notes.When will it end Steve Fendrich should leave and take his team that is not performing with him.Simmons needs new LEADERSHIP!!!
Get Real commented:
Simmons is in the same place as the 90s. They have taken everything out of the product and it is questionable. They are in a fog and there is no one there that knows it\’s broken or has the smarts to fix it. They had it happening and then threw it all away.
An Observer commented:
Has the concept of honesty been dismissed totally? How can someone believe a leader that is not facing up to reality and telling people the way it is? I'm astounded by the excuse makers out there
Mattress Drama commented:
Charlie and Steve built the Company and the people. Thomas H Lee partners built the balance sheet. End of story.
Jim P commented:
Ok, BC, we get you don't like Fendrich. Give it a rest.
BC commented:
Simmons 492.2 million dollar loss,4th quarter net loss 487.4 million,Operating loss 503.7 million. Default on loans. Independant accounting firm "substantial doubt about Simmons ability to continue as a going concern" This is not throwing stones! Follow the money. Steve Fendrich is in charge.No need to say anything more.
perry reader disappointed commented:
so you think he should run around crying and waving his arms? you're right...that's a real sign of strength. and god forbid someone is "encouraged" by positive results. you really knocked this one out of the park, dp.
TL commented:
BC, how do you or anyone else know if Steve does or does not need the money? That is irrelevant. Competitor is right - usually F/T and Dave are fair and spot on, but this is clearly a case of people in glass houses throwing stones. Criticism is important and valuable, but this editorial just seems like an attack. During these tough times, there is so much gloom and doom - we don't need added drama for drama's sake.
BC commented:
If Steve does not need the money then he should resign!Simmons needs new leadership.From top to bottom.
Impressed with competitor of Simmons commented:
Hats off to you and your insights.
A Competitor of Simmons commented:
Come on Dave, let’s be realistic. Steve is leading a company. Do you want him to be running around and shouting the sky is falling? The view I see from the competitor side of the fence, Steve has done a good job based on their financial situation. The Simmons employees are still motivated to do a good job, quality product are still shipping on time and Steve (who probable does not need the money) has stayed on to do what he can to get Simmons out of the distressed situation. Steve needs to keep the company focused on making their day to day goals. Simmons has customers and employees to protect. Unless you believe Simmons/Steve is another Spring Air? I can’t see it. Dave, keep in mind, the industry does not come out publicly and recommend Furniture Today not to ignore their shrinking publications numbers. As FT sells industry suppliers/manufactures for ad space, we don’t ask or expect them to come out and tell us “Yes our FT issues have 30% fewer pages then 2 years ago, but you should pay more then what you paid two years ago. Dave, let’s be realistic. You are normally correct on your assessment of what is or should be happening in our industry, however, this time I am reluctant to agree with you.
mynamehere commented:
springypoo...what is "good riddens"? Nice work.
DF commented:
You must ask yourselves,who is watching the greedy company leaders? Simmons employees is it not time for change? Stand up and be heard! The guys at the top had there chance.
JW commented:
To much leveraged debt. The same for the other bigs S companies that have struggled to live up to the outrageous expectations of the financial community. This is not the fault of the mattress company employees, but the company leaders that took them into this mess years ago for the big quick returns that went into their selfish pockets.
MattMan commented:
Who else has a leader at the helm that founded the largest sleep shop chain in the world and has been on board while Simmons has achieved 12 quarters of growth and is managing the company through a debt restructure? Fendrich is a good guy with a proven track record. To say he isn't credible is off-base.
Mit's Mattress commented:
It's not hard to figure out that Simmons is the best selling product on my floor and on the floors of hundreds of retailers across this country. Thank you Simmons.
CF commented:
Aw, it's nice to see former Simmons exes have found a place to vent. What a great example of breathing one another's exhaust...
Marvin P. commented:
Dave, if you want to crunch numbers, how about Sealy's stockowners losing $8 per share in the last year. Multiplying that by their approx. 91M outstanding shares means their stockowners have taken over a $700M hit. Select Comfort's stock was near $17 at the beginning of 2007; today it is less than one U.S. dollar. Multiplying that by their approx 45M shares means their stockowners have lost over $700M. TempurPedic's stock at the beginning of 08 was near $22.50; it ended 2008 at about $7. Multiplying that $15 loss by their approx, 75M shares means their stockowners took over a $1 billion hit.
George commented:
Isn't the loss based on "goodwill valuation" and is not a cash loss? Isn't this what happens to companies in an economic slow down? I saw where some companies are writing off billions.
What's Next? commented:
OK, so you lost $500m and stripped Beautyrest of all its integrity. What's the plan? Can anyone at Simmons communicate how they plan on turning the company around? Seems to me that should be leadership 101.
In the Corner Watching commented:
With Roger gone, which expense account are they billing executive perks to now?
BRAVO commented:
DP: you nailed it. The emporer has no clothes. Simmons has been trying to get by on smoke and mirrors for the last two years. Remember the relaunch of the bowling ball? BackCare gel? Comforpedic? The great lean manufacturing strategy led to Birch's departure. How can management keep their dividends, it should be criminal. They have ruined a great company. What's wrong with american business today? Simmons performance under the last owner should be the text book.
Don't blame Fendrich commented:
He is merely a pawn in the private equity rape and pillage of Simmons company. Clean house and bring back a management team that has the balls to push back on the next private equity owner. If the direction at Simmons remains keeping key executives flying in private jets and boating the company will continue to fail. If the next CEO focuses on service and quality the company can succeed.
The carpet industry was wise in running the last Simmons CEO out of town. He's no better than his private equity friends.
There is hope! commented:
Poor leadership and lack of industry knowledge led this "once great" company down a path of failure. The "one-sided" innovation eliminated warranty claims. The "NEW" dividend driven direction has taken the quality back out of the product in an attempt to line executive pockets. Really sad, bring back the team who led the innovation and success.
DF commented:
Simmons needs to clean house,Plant Managers , Production Managers, and the floor supervisors.
A concerned observer commented:
Fendrich is a nice guy, who is woefully ill-equipped to save this sinking ship. He's probably as scared as he looks, too.
An Observer commented:
Hey Steve Cumbow, I mean Steve Fendrich, listen to what David says and try honesty. You can't hide incompetancy so why try. It makes you look even more pathetic
An Observer commented:
Hey Steve Cumbow, I mean Steve Fendrich, listen to what David says and try honesty. You can't hide incompetancy so why try. It makes you look even more pathetic
Help Charlie buy another yacht commented:
It is so sad that that the same executives whose poor decisions put Simmons in this position are well compensated for doing so, while the rest of the employees and their customers will be left to pick up the pieces. Maybe they'll downsize the sales force again and have all their customers serviced out of a call center.
Dan Floris commented:
What is really sad is they have said nothing to the hard working employees,it is like everything is ok.Simmons is in big trouble,just think the same people who ran simmons into the ditch are all still there.Who ever buys simmons please replace all of the managment team please!!!The managment team could not run a lemonaid stand.Charlie,GREAT GAME OF LIFE HA.
BC commented:
This pre-dates Fendrich - somebody needs to call Charlie and see how all the debt financed dividends to preferred stockholders is working out now.
springypoo commented:
TOO BAD FOR POOR SIMMONS! WHATS THIS COUNTRY GONNA DO NOW WITHOUT ALL THOSE WARRANTY COMPLAINTS AND RETURNED SAGGING MATTRESSES!
MAYBE IF SIMMONS MADE A BETTER MATTRESS THEY WOULDN,T BE A BILLIONS DOLLARS IN DEBT, AND WOULDN,T BE GOING DOWN THE TUBES!!!
THIS IS ANOTHER STORY OF CORPORATE GREED IN AMERICA! CUT QUALITY TO THE MAX AND JACK UP THE WHOLESALE COST AS HIGH AS YOU CAN! WHATS AMERICA GONNA DO NOW IF THEY WANT TO BOWL IN BED!!! GOOD RIDDENS!!!!!!!!!
Robert McNally commented:
Fendrich is the coach whose team just got slaughtered and he is bragging about his team’s great effort.
