The two largest publicly traded mattress companies in the United States reported quarterly earnings this afternoon, and investors sent the stocks in dramatically opposite directions. Tempur-Pedic, known for its memory-foam mattreses, beat expectations and is up more than 13% in after-hours trading. Select Comfort, maker of Sleep Number beds, disappointed investors, who have driven the stock down more than 18%.
Tempur-Pedic and Select Comfort both command large valuations for their ability to charge a premium for specialty mattresses that have been called the “smartphones” of an otherwise sleepy industry. They are also seen as better capable of surviving a long-overdue disruption of mattress businesses, which are loathed for their sales tactics and large markups.
But the two mattress giants couldn’t be more different in their approach to bedding Americans. Tempur-Pedic promises a mattress that conforms to your body, doesn’t sag, and won’t disrupt your partner when you roll over. Which is all well and good, except that people don’t just sleep in their beds. As Barron’s reported at length last year, memory foam is simply not conducive to sex. “It’s like trying to do it in quicksand,” was one of many vivid quotes in the story.
Select Comfort, meanwhile, is geared toward flexibility. Its Sleep Number beds allow each partner to choose a setting, from hard to soft, and adjust it as needed. That may be gimmicky, but it allows the mattress to perform in a variety of circumstances. However, sales, which had been strong throughout 2012, fell sharply at the end of the year.
Though both companies still maintain strong positions in the American mattress industry, Tempur-Pedic’s sleep-over-sex approach is today’s winner. It’s possible that investors are optimistic about Tempur-Pedic’s acquisition of Sealy, which is expected to close in the first half of this year. Sealy is a much smaller maker of more traditional mattresses, which are adequate for supine activities of all kinds. In 2011, before the takeover, it aired a suggestive Super Bowl ad that ended with the slogan, “Whatever you do in bed, Sealy supports it.”
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