Sealy reports sales upswing in 1st quarter

First-quarter snapshot
Net sales $312.3 million
Net income $1.6 million
Gross Profit $122.4 million
Gross profit margin 39.2%

Mattress major Sealy, which has headquarters in Trinity, N.C., reported that net sales for the first quarter of fiscal 2012 increased by $6.8 million to $312.3 million, a 2.2% increase as compared with the first quarter of fiscal 2011.

Gross profit grew to $122.4 million, a 3% increase over the same quarter a year ago. Gross margin increased 40 basis points to 39.2%. U.S. gross profit margin increased 0.8 percentage points to 38.7%.

According to Sealy, the increase in gross profit margin was due to relatively better pricing and a shift in product sales to higher-priced Next Generation Stearns & Foster products. Also contributing to the improvement were advances made in manufacturing processes, including value-engineering efforts. These gains were partially offset by higher material costs related to increased commodity prices, the company said.

Income from operations for the first fiscal quarter grew 31.7% to $25.9 million.

Prior-year results included $3.7 million of higher costs for product introductions and advertising associated with the launch of the 2011 Next Generation Posturepedic line, the company said.

Net income from continuing operations was $1.6 million, or $0.01 per diluted share, compared with net income from continuing operations of $0.1 million, or $0.00 per diluted share, in the prior-year quarter.

“We delivered positive financial and operational performance in the first quarter of 2012,” said Larry Rogers, Sealy president and chief executive officer. “Our positive sales, gross margin and adjusted EBITDA performance for the quarter were driven by the success of our Next Generation Stearns & Foster line, which began shipping in fourth-quarter 2011.”

Total U.S. net sales increased 0.7% to $240.3 million from the first quarter of fiscal 2011. Excluding third-party sales from the component plants, wholesale average unit selling price increased by 4.3%, while wholesale unit volume decreased 4%.

The increase in AUSP was driven by the performance of the Next Generation Stearns & Foster line, Sealy said. The company attributed the decrease in unit volume to lower sales volumes in middle and lower price points, partially offset by growth from the Next Generation Stearns & Foster product line.

International net sales increased $5.2 million, or 7.7%, from the first quarter of fiscal 2011 to $71.9 million. This increase was primarily due to increased sales in Canada, coupled with stronger sales performance in Mexico and Argentina markets, the company said.

In Canada, local currency sales increases of 10.2% translated into increases of 8.2% in U.S. dollars due to a weaker Canadian dollar. Local currency sales performance in Canada was driven by a 15.5% increase in unit volume, offset by a 4.6% decrease in AUSP. Sealy attributed the increase in unit volume and decrease in AUSP to strategic promotional events to drive increases in unit volumes and market share.

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