Bedding major Tempur Sealy International Inc. reported total net sales of $669.7 million for the second quarter, a 1.6% increase from the same quarter of 2017.
The company also reported that Tempur-Pedic’s U.S. sales increased 10% in the latest quarter.
On a constant-currency basis, Lexington, Kentucky-based Tempur Sealy’s total net sales increased 1.2% in the second quarter, with an increase of 0.1% in the North America business segment and an increase of 5.4% in the international business segment.
“This quarter marks an important inflection point for the company as we returned to growth, with adjusted earnings per share growing 15.6%, compared with the second quarter of 2017,” said Scott Thompson, chair and chief executive officer. “Our new Tempur and Sealy products are performing extremely well and are taking share in the midpriced segment. We expect sales growth to ramp as we roll out our higher-end Tempur LuxeAdapt and Breeze products in North America over the next few quarters.
“These new products will give Tempur Sealy’s retail partners the tools they need “to drive higher average selling prices and to increase their profitability. We are confident that the combination of these innovative new products, our expanding direct-to-consumer business, and our ongoing productivity initiatives will drive further growth in the second half of 2018 and beyond.”
For the latest quarter, Tempur Sealy’s gross margin under U.S. generally accepted accounting principles was 41.2%, compared with 40.7% for the same period of 2017.
GAAP operating income decreased 1.9% to $55.5 million, compared with $56.6 million in the second quarter of 2017. Operating income in the second quarter of 2018 included $6.9 million of restructuring charges. Adjusted operating income increased 10.2% to $62.4 million, compared with GAPP operating income of $56.6 million in the second quarter of 2017. The company had no adjustments to operating income in the second quarter of 2017.
GAAP net income in the latest quarter decreased 6.9% to $22.8 million, compared with $24.5 million in the same period of 2017. Adjusted net income increased 16.3% to $28.5 million.
Earnings before interest, tax, depreciation and amortization decreased 2.3% to $83.8 million, compared with $85.8 million for the second quarter of 2017. Adjusted EBITDA increased 5.7% to $90.7 million.
GAAP earnings per diluted share decreased 6.7% to $0.42, compared with $0.45 in the second quarter of 2017. Adjusted earnings per share increased 15.6% to $0.52.
North America net sales increased to $527.8 million from $525.4 million in the second quarter of 2017. GAAP gross margin was 38.5%, compared with 37.9% in the second quarter of 2017. GAAP operating margin was 12.2%, compared with 10.6% in the second quarter of 2017.
North America net sales through the wholesale channel decreased $1.7 million to $494.3 million. North America net sales through the direct channel increased $4.1 million, or 13.9%, to $33.5 million, primarily driven by growth from expanded retail stores and increased web sales, compared with the second quarter of 2017.
International net sales increased 6% to $141.9 million from $133.9 million in the second quarter of 2017. International net sales through the wholesale channel increased $0.1 million to $108.5 million and sales through the direct channel increased $7.9 million, or 31%, to $33.4 million as compared to the second quarter of 2017.
Tempur Sealy lowered its full-year financial guidance for 2018 from adjusted EBITDA of $450 to $500 million to adjusted EBITDA of $440 of $460 million. It cited commodities cost increases, net of finished product price increases, and continued competitive headwinds.
