Mattress major Sealy, with headquarters in Trinity, N.C., reported net sales of $321.3 million in the second quarter of fiscal 2011, an increase of 10.6% compared to the same prior–year quarter.
Total U.S. net sales also increased 10.6% to $253.4 million from the second quarter of fiscal 2010. International net sales increased $6.5 million, or 10.5%, from the second quarter of fiscal 2010, to $67.9 million. Excluding the effects of currency fluctuation, international net sales increased 6.3% from the second quarter of fiscal 2010. Sealy attributed the gain primarily to increased sales in Argentina, Canada and Mexico.
Gross profit increased by $3.5 million to $125.1 million from the prior–year quarter.
Income from operations decreased by $4.7 million to $22.4 million. Included in the result is $12.7 million of incremental costs associated with the launch of the Next Generation Posturepedic line, including price discounting for the old line, manufacturing startup costs and national advertising expenses.
Net income from continuing operations for the second quarter was $0.8 million, or $0.01 per diluted share, compared with $3.7 million, or $0.03 per diluted share, in the prior–year quarter.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in the second quarter decreased 18.7% to $32.8 million from $40.3 million in the prior–year period. Adjusted EBITDA margin decreased to 10.2%, compared to 13.9% in the second quarter of 2010.
“We were pleased with our operational and financial performance in the second quarter, which allowed the company to deliver double–digit sales growth over the prior year, as well as sequential growth in gross margin, income from operations and adjusted EBITDA. We accomplished these results even as we saw conditions for the industry become more challenging than expected,” said Larry Rogers, Sealy president and chief executive officer.
“The balance of the year is shaping up to be more challenging, but the ongoing success of our broad product portfolio affirms the confidence we have in our ability to drive improved financial performance—with expected continued revenue growth and improving gross margin and adjusted EBITDA results in the second half of 2011,” Rogers said.
