Sector Snap: Mattress makers mixed on earnings

Shares of Tempur-Pedic soar while Select Comfort declines after reporting quarterly results

Associated Press

NEW YORK (AP) -- Shares of Tempur-Pedic International Inc. soared Friday after the mattress maker reported better-than-expected quarterly results, while shares of rival Select Comfort were down after it fell short of Wall Street expectations.

Mattress companies overall have been struggling as they compete to get consumers to make big-ticket purchases. Although Tempur-Pedic said after the market closed Thursday that its profit dropped in the fourth quarter, its adjusted earnings weren't as bad as analysts expected. CEO Mark Sarvary also said the Lexington, Ky., company is seeing signs of stabilization in North America, with soon-to-be-released beds expected to help grow the business this year. Its acquisition of Sealy Corp. is on track to be completed in the first half of the year.

For the October to December period, Tempur-Pedic said earned $23.5 million, or 39 cents per share. That is down from $56.3 million, or 84 cents per share, in the year-ago period. After adjusting for special charges, it earned 60 cents per share, above the 55 cents per share analysts expected.

Revenue fell 7 percent to $341.1 million, which wasn't as bad as the drop to $339.1 million that Wall Street expected.

KeyBanc Capital Markets analyst Bradley Thomas noted that the results suggest Tempur-Pedic could be turning a corner in 2013. For the near term, however, he said the company faces tough comparison from a year ago and he kept his "Hold" rating.

Meanwhile, Select Comfort shares were down after it reported disappointing results and issued downbeat guidance for the year.

Net income fell to $12.5 million, or 22 cents per share, for the period ended Dec. 29. That compares with $15.4 million, or 27 cents per share, in the same quarter last year. The prior-year's quarter included an expense of 3 cents per share tied to resolution of tax matters.

Total revenue rose 17 percent to $220.6 million. Analysts polled by FactSet expected the company to earn 32 cents per share on revenue of $229.8 million.

Select Comfort said that it suffered a significant slowdown in sales during the last two weeks of the quarter but that sales trends have since improved. It was also impacted by increased investments in marketing and testing products during the period.

The Minneapolis company said it expects to earn between $1.65 and $1.80 in fiscal 2013, which is below the $1.89 per share Wall Street had forecast.

Wedbush analyst Joan Storms lowered her 2013 earnings-per-share forecast for the company to $1.75, from $1.88. But she reiterated her "Outperform" rating, citing Select Comfort's potential to raise brand awareness and gain market share.

Tempur-Pedic shares were up $2.53, or 6.6 percent, at $40.88 in afternoon trading while shares of Select Comfort slipped $5.17, or 18.3 percent, at $23.03. The broader markets were up less than 1 percent.

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