Tempur Sealy Posts Q2 Loss as Company Adjusts to Merger
July 29, 2013,
LEXINGTON, Ky.-The costs of integrating Sealy into Tempur-Pedic were a major factor in Tempur Sealy's second-quarter loss of $1.6 million, compared to second-quarter net income of $29.1 million from one year ago.
Tempur-Pedic closed on its acquisition of Sealy in March, and the company changed to the Tempur Sealy moniker in May. These results do not reflect Sealy's financial performance from last year, according to the company.
Selling, general and administrative expenses were up 67 percent from last year, reflecting those additional costs, although as a percentage of sales SG&A fell 424 basis points to 21.2 percent. In addition, gross margin plummeted 1,206 basis points to 38.6 percent.
Reflecting the addition of Sealy, Tempur Sealy's net sales more than doubled in the quarter to $660.6 million. However--as CEO Mark Sarvary told analysts in a conference call last Thursday--the quarter, which ended on June 30, did not turn out as expected. Softer demand for the company's existing products combined with slower-than-expected rollouts for the new Tempur-Choice and the Ergo Premier adjustable-base lines to reduce the company's sell-through opportunities, Sarvary said.
He added that Tempur Sealy is continuing with the growth initiatives debuted earlier this year, including the rollouts of the new Tempur-Choice line in North America and the launch of several new products at this week's Las Vegas Market. The company has also ramped up on advertising, including new campaigns for both Tempur-Pedic and Sealy collections, along with the return of the "Ask Me" campaign, which will be tagged with a unique promotion event for Labor Day, Sarvary said.