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Mattress Firm shares plunge on weaker outlook

HOUSTON (AP) -- Mattress Firm Holding Corp.'s shares plunged more than nearly 23 percent in after-hours trading Tuesday after the mattress retailer said sales trends were softening and it issued a weak forecast, overshadowing a stronger-than-expected third quarter for the company.

Mattress Firm made $12.5 million, or 37 cents per share, for the fiscal third quarter that ended Nov. 1. That compares with $12.3 million, or 55 cents per share, last year. After adjusting for one-time costs, it earned 47 cents per share.

Revenue increased 51 percent to $277.3 million.

The quarter beat analysts' expectations for earnings of 46 cents per share on revenue of $271.6 million, according to FactSet.

Revenue from stores open at least a year increased 6.6 percent. That is a key indicator of a retailer's financial health as it strips away the impact of recently opened or closed stores.

Mattress Firm added more than 280 stores through acquisitions and openings since the beginning of the fiscal year.

It completed the acquisition of Mattress Xpress Inc. and Mattress Xpress of Georgia Inc. in September. It announced in November that it would buy the assets of Factor Mattress & Water Bed Outlet of Charlotte Inc. It also expects the pending acquisition of Mattress Source stores to boost fourth-quarter revenue.

However, the company said that its expectations for the balance of the fiscal year are below its prior outlook in light of weaker sales trends as fewer shoppers came into its stores and spent less.

Mattress Firm forecast adjusted profit of 30 to 33 cents per share in the fourth quarter with revenue of $261 million to $266 million. Analysts were expecting 51 cents per share on revenue of $281.1 million.

The company expects adjusted earnings $1.49 to $1.52 per share for the year, down from prior guidance of $1.67 to $1.73 per share, on revenue of $1.01 billion to $1.02 billion, versus a previous range of $1.02 billion to $1.04 billion.

Analysts estimated $1.69 per share on $1.02 billion in revenue.

Mattress Firm, based in Houston, operated 1,011 stores as of the end of the quarter.

Shares dropped $6.92, or 22.8 percent, to $23.40 in after-hours trading.