On May 27, Tempur Sealy International Inc. provided an update on its expected second-quarter sales. The Lexington, Kentucky-based company reported sales had accelerated and now were expected to increase 60%, compared with the second quarter of fiscal 2019, which was unaffected by the pandemic. The mattress major also announced it planned to acquire Loudwater, England-based specialty retailer Dreams, primarily from an affiliate of Sun Capital Partners Inc.
The improved sales outlook was driven by sales of Tempur-Pedic products in the United States, which are higher margin than the company’s average. Also, while chemical and foam supplies have improved, the accelerated sales also increased the company’s order backlog, the company said. As a result, TSI said it would delay part of the new Sealy U.S. brand launch to focus on producing Tempur products.
Valued at approximately $475 million, the purchase of Dreams is expected to close at the end of the third quarter. The retailer has a multichannel sales strategy with more than 200 brick-and-mortar stores and healthy online sales, as well as manufacturing and delivery capabilities.
TSI expects the U.K. retailer to generate annual sales of approximately $450 million in the first year. It will operate as an independent business unit with the current management team remaining in place.
After this transaction closes, TSI worldwide direct-to-consumer business is expected to reach $1 billion in sales on an annual basis, and its international segment will represent more than 20% of sales.