Tempur Sealy shares slide on 2Q results

LEXINGTON, Ky. (AP) -- Shares in Tempur Sealy International Inc. tumbled Friday, a day after the mattress company posted a quarterly loss and cut its outlook for the year on weak North America sales.

The company, formerly known as Tempur-Pedic International Inc., completed its $228.6 million of Sealy Corp. in March. The deal was expected to give the company an edge in the increasingly competitive mattress industry, combining its specialty products with Sealy's more traditional mattress lines to appeal to a broader audience.

THE SPARK: Tempur Sealy reported on Thursday a second-quarter loss of $1.6 million, or 3 cents per share, for the period that ended June 30. After adjusting for costs tied to an acquisition and other items, it earned 36 cents per share, four cents short of analysts' average estimate, according to FactSet. In last year's quarter, it posted a $29 million profit.

Revenue doubled to $660.6 million because of additional sales from Sealy, slightly below Wall Street's forecast.

The company, citing a slow sales recovery in North America, cut its profit outlook for the year to $2.25 and $2.40 per share, down from its prediction of $2.75 per share in May. Analysts had also been looking for $2.75 per share.

Tempur Sealy also shaved its revenue forecast for 2013.

THE ANALYSIS: KeyBanc analysts wrote in a research note Friday that, despite the disappointing second-quarter results and a more muted outlook for core Tempur-Pedic sales in the U.S., they are optimistic that revenue will benefit from increased advertising in the second half of the year. They have a "Buy" rating on the stock.

SHARE ACTION: Tempur Sealy shares fell $4.75, or more than 11 percent, to $37.21 in afternoon trading Friday. The stock is up about 17 percent this year. It has traded between $24.02 and $51.02 over the past 52 weeks.