Things are all topsy-turvy in the mattress sector. Though both Tempur-Pedic (TPX) and Select Comfort (SCSS) reported weak sales trends (I, II), TPX is up 16.5% premarket while SCSS is off 15.6% as the former company beat estimates and the latter one lagged. The most important message flowing out from the sector is that both sales and margins fell during Q4. Mattress Firm (MFRM) is up 1.1% premarket, while Sealy (ZZ) is inactive, but both look set for some volatility of their own.
Tempur-Pedic (TPX) rips higher in the post session as its Q4 easily beat Street expectations. Net earnings fell 58% Y/Y however, on weaker mattress sales and tighter margins. The company also posted mixed guidance for FY13, expecting to earn $2.55 on revenue of roughly $1.43B. Analysts are looking for $2.72 on $1.43 billion, respectively. The strong upside move likely has to do more with short covering. Recent market data has short interest pegged at 5.64M shares, or 9.3% of its float, which is a formidable position even for a multi-billion dollar company. Shares +17.7% AH.
More on Tempur-Pedic's (TPX) Q3: The company continues to get hammered by pricing pressure in the sector, with sales in North America falling off 14% Y/Y for the period, only partially offset by a 3% gain in global sales. Gross profit margin slipped 320 bps to 49.2%. The outlook for 2012 sales is lowered to $1.4B and 2012 EPS is taken to $2.55. Shares -14.4% AH. (PR)
Tempur-Pedic (TPX) roars to a 14.2% gain in premarket action as traders latch on to the synergistic possibilities that could flow out of its purchase of Sealy (ZZ). At $30.63, shares trade right at where they began the week before the sector sold off.
More on the Tempur-Pedic (TPX +5.4%) / Sealy (ZZ) deal - Tempur-Pedic is paying $229M to acquire Sealy, although the whole transaction is valued at $1.3B including the Sealy debt that Tempur-Pedic has agreed to assume or repay. Having ended at $2.14 yesterday, Sealy shares spiked 10% earlier but have settled down a bit and are +4.2% to $2.23, above TPX's offer price of $2.20.
Shares of Tempur-Pedic (TPX -4.9%) fall even after Longbow Research comes out with a positive take on the bedding name. Analysts say the company's sales are outpacing the industry, while it's also keeping its advertising costs relatively flat. If the trend holds, margins could improve.
Mattress stocks are on watch for a shakeup after Mattress Firm clipped its estimates for FY13 earnings. Organic sales in the sector are now in focus with investors as companies start to run out of ways to buy growth. Premarket: MFRM -10.1%, SCS -1.3%, TPX -1.5%, ZZ inactive.
More on Mattress Firm's FQ2: Same-store sales growth of 5% a major slowdown from FQ1's 16.1%. MFRM is acquiring Mattress X-Press, owner of 35 mattress stores in South Carolina and Georgia, for $15.8M. Mattress X-Press is expected to add $7M-$9M to 2H FY13 revenue; reduce FY13 EPS by $0.03-$0.04, and increase FY14 EPS by $0.09-$0.12. The company expects FY13 revenue of $1.022B-$1.039B and EPS of $1.47-$1.50 vs. a consensus of $1.02B and $1.49. MFRM -12.1% AH. TPX -2.5%. (PR)
Shares of Tempur-Pedic (TPX +6.1%) trade higher with the company announcing the opening of its first retail store in Natick, Massachusetts. In addition to its own proprietary bedding products, the store also features related items from other manufacturers.