Tempur Sealy reports 4th-quarter sales decline

Tempur Sealy resultsMattress major Tempur Sealy International Inc. reported total net sales in the fourth quarter of 2017 decreased 15.9% to $648.2 million from $771.1 million in the same quarter of 2016.

The Lexington, Kentucky-based company said it gained considerable business in 2017 after the termination of its contracts with retailer Mattress Firm. For example, the Tempur-Pedic brand’s sales in North America were up 19% in the fourth quarter of 2017, when its 2016 Mattress Firm sales are excluded from the calculation. And, overall Tempur Sealy North America net sales rose 4% in the quarter when business with that former retail partner are excluded.

Tempur Sealy’s gross margin under U.S. generally accepted accounting principles increased to 42.2% in the fourth quarter of 2017, as compared with 41.2% in the same period of 2016.

GAAP operating income was $79 million, compared with $103.4 million in the fourth quarter of 2016. GAAP net income was $49.7 million, compared with $52.9 million.

Earnings before interest, tax, depreciation and amortization were $106.6 million, and adjusted EBITDA was $112.3 million.

GAAP earnings per diluted share were $0.91, compared with $0.94 in the same quarter of 2016.

“The team is pleased to report our 2017 adjusted EBITDA was at the high end of our guidance despite rising commodity costs,” said Scott Thompson, Tempur Sealy chair and chief executive officer. “Tempur-Pedic sales in North America grew 19% in the quarter excluding Mattress Firm. … In addition, our North American direct-to-customer channel grew 56%, demonstrating our ability to change with consumers’ purchasing habits.”

Thompson said Tempur Sealy entered 2018 as “a much stronger company, supported by a diversified base of retail partners and a growing direct-to-consumer business. Our manufacturing operations have never been stronger, and we are excited about our innovative new product lineup.”

For the fourth quarter, Tempur Sealy’s net sales in North America decreased 22.1% to $485.5 million. Gross margin increased to 39.8%, compared with 39.4% in the fourth quarter of 2016.

For the full year 2017, Tempur Sealy’s net sales decreased 12% to $2.75 billion from $3.13 billion in 2016. GAAP gross margin was 41.4%, compared with 41.8% in 2016.

GAAP operating income for 2017 was $289.7 million, compared with $411.4 million in 2016. GAAP net income was $152.7 million for 2017, compared with $191.6 million in 2016.

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