Tempur Sealy’s 2nd Quarter Is One of “Lows and Highs”

In the second quarter of fiscal 2020, in the midst of the COVID-19 pandemic, mattress major Tempur Sealy International Inc. said it had net income of $23 million, a 45% decrease compared with the second quarter of fiscal 2019. Earnings per diluted share were $0.44, compared with $0.74 in the prior-year quarter. 

Net sales decreased 8% to $665.2 million, compared with the second quarter of 2019. On a constant-currency basis, net sales decreased 7.3% — 2.9% in the North America business segment and 26.9% internationally.

The Lexington, Kentucky-based company said it continues to study and optimize its operations related to the challenges from the COVID-19 crisis. During the second quarter, it experienced a sharp increase in demand, coupled with supply chain constraints that resulted in longer order delivery times, especially for its innerspring Sealy products. The Tempur-Pedic manufacturing process has not been as impacted by current manufacturing conditions because it is less labor-dependent and has fewer components than the Sealy process, the company said.

Tempur Sealy’s gross margin in the second quarter was 40%, compared with 43.4% in the prior-year quarter. Operating income decreased 34.1% to $53.4 million. 

North America net sales through the wholesale channel decreased 6.4% to $494.6 million, compared with the second quarter of 2019. North America net sales through the direct channel increased 27.3% to $75.9 million, primarily driven by an increase of more than 140% in web sales.   

International net sales through the wholesale channel decreased 33.4% to $69.1 million, compared with the prior-year quarter. International net sales through the direct channel decreased 17.4% to $25.6 million. 

As previously announced, Tempur Sealy withdrew its full-year financial guidance for 2020 and will not provide an update until there is a better understanding of the worldwide operating environment. 

Scott Thompson, chair and chief executive officer, said: “It was definitely a quarter of lows and highs, ending clearly on a high note for the industry and our business. Sales trends through the quarter accelerated each month and have continued to accelerate into July unabated. We are currently experiencing tremendous order volume in the U.S. that is broad-based with growth across both Tempur and Sealy brands. In fact, our sales have been constrained by our Sealy manufacturing capacity and our suppliers’ capacity to meet this increased demand.” 

During the past 18 months, the company has been focused on its corporate social values, Thompson said. “With our recent solar energy project at our Albuquerque plant, the founding and funding of our child-focused Tempur Sealy Foundation and our contributions to the fight against COVID-19, we believe we have found the right balance as we serve all of our stakeholders and community.”