Tempur-Pedic's Wide Awake Second Quarter...Net Up 58 Percent
LEXINGTON, Ky.-The Tempur-Pedic financial engine was in high gear in its fiscal second quarter, with a gain in net income of 58.4 percent to $53.1 million.
The bottom line for the specialty mattress manufacturer was fueled by a strong 30 percent increase in net sales, to $342.2 million, and a boost of 424 basis points to its gross margin, to 52.9 percent. Sales for the quarter, which ended on June 30, rose significantly both in North America (up 29 percent) and internationally (up 34 percent). Speaking yesterday to analysts in a conference call (with the transcript obtained from SeekingAlpha.com), Mark Sarvary, Tempur-Pedic's president and CEO, said gross margin was helped by a favorable product mix in sales and the company's ability to leverage fixed costs.
Selling, marketing, general and administrative expenses rose 32.3 percent, with much of this increase coming from a 45 percent rise in selling and marketing expenses. Sarvary said Tempur-Pedic's gross margin improvement allowed the company to continue its "significant investment" in marketing, which has yielded positive results in the form of greater brand awareness and growing traffic to the company's website, tempurpedic.com.
Based on the second quarter, Tempur-Pedic now expects net sales for all of 2011 to range between $1.37 and $1.4 billion, which would be an increase of from 25 percent to 27 percent over fiscal 2010.