Posturepedic Launch Brings First-Quarter Loss to Sealy

TRINITY, N.C.-The rollout of the Next Generation Posturepedic line in late January was a key factor in Sealy's $902,000 net loss in the first quarter.

Larry Rogers, president and CEO, cited "significant strategic investments" in the new line, which represents a refreshment of about half of Sealy's entire product portfolio, and which included a national advertising campaign to support the Next Generation debut. These and other costs associated with the launch slimmed gross margin by 382 basis points to 38.8 percent in the first quarter, which ended on Feb. 27.

Slow sales and heavy discounting on existing Posturepedic products brought first-quarter net sales down 2 percent to $305.5 million, which included a 3.1 percent decrease in U.S. sales. Selling, general and administrative expenses rose 3.4 percent and gained 180 basis points as a percentage of sales, to 34 percent, again due to costs associated with the Next Generation launch.

Rogers said Sealy is on target with its plan to have the new line shipped to at least 60 percent of its retail customers by Memorial Day, and that the company should see improved financials beginning in the second quarter.

HFN Staff | News & Commentary

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