TRINITY, N.C.–Costs associated with the rollout of the Next Generation Posturepedic line drove Sealy’s bottom line into the red in its fiscal second quarter.
Sealy’s net loss in the quarter, which ended on May 29, was $377,000, compared to net income of $849,000 in the second quarter of last year. The costs associated with the Next Generation Posturepedic line, along with higher raw-materials costs, pushed gross margin down 292 basis points to 38.9 percent. Increased expenses for delivery, cooperative advertising and promotion boosted selling, general and administrative expenses by 9.3 percent. SG&A as a percentage of sales did decline 39 basis points to 33.4 percent.
These factors offset a 10.6 percent gain in net sales in the quarter, to $321.3 million. Larry Rogers, Sealy’s president and CEO, said the Next Generation Posturepedic launch helped drive the company’s sales growth, along with sales gains in Sealy-branded products. “We accomplished these results even as we saw conditions for the industry become more challenging than expected,” Rogers said.
For the balance of the fiscal year, Rogers said he expects economic conditions to remain challenging, but expressed confidence that Sealy’s product portfolio would deliver “improved financial performance.”