Tempur-Pedic Q4 Net Down 58.3 Percent
LEXINGTON, Ky.-A combination of declines in sales and increased expenses slashed into Tempur-Pedic's bottom line in its fourth quarter, which ended on Dec. 31.
Net income plummeted 58.3 percent to $23.5 million, on a sales drop of 7 percent to $341.1 million. In a conference call to financial analysts yesterday, Dale Williams, Tempur-Pedic executive vice president and chief financial officer, said much of the falloff in sales occurred in North America, where sales were down 9 percent.
For the fiscal year as a whole, net income finished at $106.8 million, down 51.4 percent. Net sales declined by 1.1 percent to $1.4 billion.
Back to the quarterly results, selling, general and administrative expenses climbed 13.2 percent in dollars a 624 basis points as a percentage of sales, to 35 percent. The rise in operating expenses included transaction and integration costs related to Tempur-Pedic's proposed acquisition of Sealy, along with restructuring costs. Increased new product costs and product mix combined to reduce the company's gross margin by 212 basis points, to 50 percent.
Regarding the Sealy deal, Mark Sarvary, Tempur-Pedic's president and CEO, told the analysts (as Sealy stated in its quarterly financial report yesterday) that the two companies have cooperated with the U.S. Federal Trade Commission, which is reviewing the proposed acquisition. By agreement, FTC will have 45 days following substantial compliance (which was certified on Jan. 22) to review the information and materials supplied by both Tempur-Pedic and Sealy.
Sarvary added that 2013 has begun for Tempur-Pedic with the launch of a new mattress collection, Tempur-Choice. The new line, which will be priced at the higher end of the company's price range, will be on display at next week's Las Vegas Market, along with other product introductions.