Sealy reports mixed third-quarter earnings

BRIEFLY
Sealy’s third quarter
Net sales $365 million
Gross profit $148.2 million
Gross margin 40.6%
Income from operations $32.6 million

Mattress maker Sealy released its third-quarter results on Sept. 27, the same day rival Tempur-Pedic announced plans to purchase the Trinity, N.C.-based mattress major for about $228.6 million in cash.

Sealy reported that net sales in its fiscal third quarter were $365 million, an increase of $31.4 million, or 9.4%, as compared with the third quarter of 2011. Gross profit increased by $11.2 million to $148.2 million when compared with the prior-year quarter. Gross margin decreased 0.4 percentage points to 40.6%.

Income from operations was $32.6 million, a decrease of $5.2 million when compared with the third quarter of fiscal 2011. Net income from continuing operations decreased $100,000, from $7.5 million in the prior-year quarter.

“Our investments in new products and national advertising delivered strong U.S. sales growth,” said Larry Rogers, Sealy president and chief executive officer. “Our adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and gross margin results were in line with our expectations, as we executed on our enhanced advertising campaign surrounding our successful Sealy Posturepedic Optimum specialty bedding launch.”

The company invested an additional $6.6 million in national advertising in the third quarter to support the gel foam Optimum by Sealy Posturepedic line.

Total U.S. net sales increased 11.2% to $286.2 million over the third quarter of fiscal 2011. Excluding third-party sales from the component plants, wholesale average unit selling prices increased 7.6%, while wholesale unit volume increased 2.7%.

An increase in AUSP was driven primarily by increases in all major innerspring lines, as well as an improved product mix related to the Next Generation Stearns & Foster and Optimum by Sealy Posturepedic product lines, the company said.

International net sales increased $2.5 million to $79.2 million, or 3.2% over the prior-year quarter. The improvement was primarily due to increased sales in Mexico and Argentina, partially offset by lower sales in Canada, the company said.

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