Sales, Margin Gains Drive Tempur-Pedic to Record Q3
LEXINGTON, Ky.--Strong increases in net sales and gross margin propelled Tempur-Pedic to a record net income of $61.9 million, up 40 percent from the third quarter of one year ago.
The specialty mattress manufacturer posted net sales of $383.1 million, 30 percent more than last year, in the quarter, which ended on Sept. 30. Sales logged significant gains across the company's product categories, both in North America and internationally.
Also--as Dale Williams, executive vice president and chief financial officer, observed in a conference call on the quarter to industry analysts yesterday--increases in dollar sales were greater than the increases in unit sales, indicating that Tempur-Pedic enjoyed gains in average unit selling price throughout its product categories.
Those increases in particular helped boost the company's gross margin 139 basis points in the quarter, to 52.4 percent. Mark Sarvary, president and CEO, told the analysts that this increase in margin enabled Tempur-Pedic to boost its spending on marketing in the quarter by 55 percent. As a whole, selling, marketing, general and administrative expenses were up 26 percent in dollars, but declined by 79 basis points as a percentage of sales to 27.1 percent.
Sarvary told the analysts that "we had a strong third quarter in a macro environment that remains challenging, both in the U.S. and internationally. The mattress industry as a whole is significantly below historic norms, is growing very slowly in most geographies and not at all in others. Nonetheless, we project significant growth for Tempur-Pedic in the fourth quarter and in the years ahead."