Net sales in the fourth quarter of 2010 inched up 0.4% for bedding major Sealy when compared to the same period a year earlier, but the company ended the full fiscal year with sales up 3.8% over 2009.
The Trinity, N.C.–based company issued quarterly and year–end results for fiscal 2010, which ended Nov. 28.
Net sales for 2010 increased to $1.219 billion from $1.174 billion in the prior fiscal year, a gain of 3.8%. Gross profit for 2010 was $509.5 million, or 41.8% of net sales, versus $487.5 million, or 41.5% of net sales, in fiscal 2009.
Sealy reported net income from continuing operations of $24.7 million and a net loss from discontinued operations of $38.4 million. Net loss for fiscal 2010 was $13.7 million. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in 2010 increased 6.5% to $177.9 million, or 14.6% of net sales, from $167 million, or 14.2% of net sales, in 2009.
“We were pleased to deliver positive year–over–year sales and adjusted EBITDA growth in 2010, despite a difficult retail environment,” said Larry Rogers, Sealy president and chief executive officer. “As we look forward into 2011, we are focused on a successful launch of the next–generation Posturepedic line, driving performance from our 2010 product launches, replenishing our innovation pipeline and making investments to strengthen our brand.”
Looking at fourth–quarter figures specifically, Sealy’s net sales were $296.6 million, an increase of 0.4% compared to the same prior–year period. Total U.S. net sales decreased 3.6% to $224.6 million from the fourth quarter of fiscal 2009. Wholesale unit volume decreased 1.7%, while wholesale average unit selling price decreased 1.8% on a year–over–year basis. Sealy attributed the decline to lower Posturepedic sales, partially offset by the growth in its Sealy–branded promotional line.
International net sales increased $9.5 million, or 15.2%, from the fourth quarter of 2009 to $72 million. Excluding the effects of currency fluctuation, international net sales increased 11.4% from the fourth quarter of 2009. Sealy said promotional activity and strong sales of Stearns & Foster in Canada drove the increase.
Gross profit for fourth–quarter 2010 increased by $1.5 million to $122.9 million from the prior–year quarter. Gross margin increased by 35 basis points to 41.4%, driven primarily by gains in the company’s international businesses and increased operating efficiencies. U.S. gross profit margin decreased 72 basis points to 40.8%—a decline driven primarily by higher discounting on products at the end of their life cycle, an increasing mix of Sealy–branded promotional product and the impact of inflation on material costs, Sealy said. Offsetting the decreases were improvements in operational efficiencies and gains in the company’s international businesses.
Net income from continuing operations for the fourth quarter was $0.03 per diluted share. Net loss from discontinued operations for the period was $0.03 per diluted share. During the fourth quarter, Sealy divested the assets of its manufacturing operations in France and Italy. In addition, the company discontinued manufacturing operations in Brazil. The company now is using licensing arrangements with third parties in those markets.
