Mattress Firm Q1 Net Drops on Rising Costs
Posted on June 4, 2014 by
HOUSTON-Increased expenses trumped a healthy gain in sales to drive down Mattress Firm's first-quarter net income by 35.7 percent, to $7.7 million.
Selling, general and administrative expenses were up 28.3 percent in dollars and 185 basis points as a percentage of sales, to 31.9 percent. During the quarter, which ended on April 30, Mattress Firm incurred extra costs from the implementation of an enterprise resource planning system; the acquisitions of company franchisees Yotes and Southern Max, along with the acquisition of Sleep Experts Partners; and the amendment of its senior credit facility to help fund these purchases. In addition, Mattress Firm's gross margin fell 160 basis points to 36.2 percent.
Net sales jumped 20.9 percent to $276 million, including a same-store sales gain of 4.3 percent. The key driver was sales of conventional mattresses, which climbed 34.6 percent. Steve Stagner, Mattress Firm's president and CEO, said the first quarter marked the third straight quarter of an increase in same-store sales.
Looking ahead, Stagner said the company's infrastructure buildup and recent product changes position Mattress Firm for further growth. In addition, the 148 stores the company added through organic growth and acquisitions "fortifies our presence in key markets," he said. "We believe that our steady growth, together with an increasingly streamlined organization, will continue to enhance our operations and drive margin improvement, further solidifying our position as the nation's leading bedding specialty retailer."