Tempur Sealy International said third-quarter sales slipped 0.5% to $1.277 billion amid continuing softness in the North American mattress market.
Net income was down 14.6% to $113.3 million or 64 cents per share, but gross margin rose to 44.9% from 42.2% in last year’s third quarter. The Lexington, Kentucky-based company also said it achieved “robust” operating cash flow of $230 million in the quarter.
In the quarter ended Sept. 30, North American sales fell 3.2% to $1.024 billion, while international sales rose 12.3% to $253.4 million.
“We realized robust third quarter operating cash flows and expanding gross margins while our sales and earnings were solid against a challenged operating environment,” said Scott Thompson, chairman and CEO. “We believe the company outperformed the broader bedding market. This outperformance and double-digit growth in international sales partially mitigated a challenged U.S. bedding market, which was softer than anticipated in the quarter.”
As a result, the company trimmed its 2023 earnings projections. Tempur Sealy now expects adjusted earnings per share — a figure that doesn’t include one-time costs — to be $2.30 to $2.50. That’s down from a July projection of $2.50 to $2.70 per share.
The new forecast assumes that 2023 sales will be roughly the same as 2022, the company said.
“Similar to the second quarter, we demonstrated the strength of our business model and its ability to produce reasonable returns, even in a less robust market,” Thompson added. “Improvements in operations and supply contracts, combined with the impact of consumer-specific strategies drove significant gross margin expansion, positioning the company well for the future.”
For the nine months ended Sept. 30, worldwide sales were up 0.6% to $3.755 billion. Nine-month net income was down 17.8% to $291 million, or $1.64 per share.
Thompson also noted that Tempur Sealy’s pending acquisition of specialty retailer Mattress Firm is proceeding as planned, and he expects the deal will close in mid- to late 2024. He said the two companies “continue to make joint progress” ahead of the closing and said Tempur Sealy already has signed several post-closing supply agreements that will “solidify important supplier relationships.”
