LEXINGTON, Ky. (AP) -- Mattress maker Tempur-Pedic's profit dropped in the fourth quarter, in part because of costs associated with its planned acquisition of rival Sealy. But its adjusted earnings weren't as bad as analysts had feared, and shares soared in after-hours trading Thursday.
Tempur-Pedic is seeing signs of stabilization in its North American business, said CEO Mark Sarvary. It plans to announce new products at an industry show next week that it believes will help grow its business in North America in 2013. Mattress makers have been dealing with cost-conscious consumers wary of big purchases, and have increased promotions to tempt them.
The company gave a profit outlook for 2013 that fell short of analyst expectations, but the guidance didn't include any potential benefit from Tempur-Pedic's pending acquisition of competitor Sealy Corp. Tempur-Pedic said Thursday that the $228.6 million deal is on track to be complete in the first half of the year. The acquisition is expected to give Tempur-Pedic an edge in the competitive mattress industry as it will broaden its array of products.
Tempur-Pedic International Inc. said after the market closed that it earned $23.5 million, or 39 cents per share, for the quarter that ended Dec. 31. That is down from $56.3 million, or 84 cents per share, earned in the same quarter of the prior year.
After adjusting for a tax provision, costs associated with the Sealy deal and other special items, it earned 60 cents per share — still down from 84 cents per share the year before. Analysts polled by FactSet had expected the company to earn 55 cents per share in the most recent quarter.
Revenue fell 7 percent to $341.1 million from $366.8 million. Its North American sales fell 9 percent and its international sales fell 4 percent on weaker demand for mattresses and pillows. Analysts had expected a steeper revenue drop to $339.1 million.
For this year, Tempur-Pedic expects to earn an adjusted profit of $2.55 per share on revenue of about $1.43 billion. Analysts had forecast earnings of $2.73 per share on revenue of $1.43 billion for the year.
The forecast does not include costs of buying Sealy, and it also doesn't include any potential sales contribution from Sealy. The company will update its 2013 guidance after the Sealy deal is done.
Shares jumped $7.16, or 19 percent, to $45.51 in after-hours trading. Its stock had increased more than 9 percent to close regular trading at $38.35. Shares have gained 50 percent over the past three months, but are still down 39 percent in the last 52 weeks.
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