Last week, Somnigroup International released its second-quarter earnings report and held a conference call to discuss the state of the company.
There are several important highlights. Scott Thompson, president and CEO of Somnigroup International, made the following comments on the conference call:
- “Preliminary results of the (Posturepedic) campaign are strong, as we believe Sealy has more than doubled its market share of voice since the launch. In addition to our increased investment, this expansion is also supported by our retailers redirecting dollars from nonbranded advertising to Sealy, underscoring the trust retailers have in the new product.
“Our final highlight is the expanded relationship with Fullpower announced this morning. Fullpower’s Sleeptracker-AI technology powers the successful Tempur-Ergo Smart Base, which provides personalized sleep analytics and coaching. As part of the expanded collaboration, Tempur Sealy is making a $25 million equity investment in Fullpower to acquire approximately 15.6% ownership stake. In addition, Tempur Sealy and Fullpower have signed a multiyear extension through 2036 with Tempur Sealy’s exclusive rights to embed Sleeptracker technology in our products.” - “We’ve identified approximately $20 million of marketing efficiencies that we are considering in our cost target. The savings result from leveraging our combined scale to drive sourcing favorability and improve the efficiency of Mattress Firm’s advertising spend by cutting spend in areas of very low returns, such as sports sponsorships and nonworking agency fees. The $20 million of identified marketing synergies does not include the benefit of any enhanced advertising creative, though we continue to believe it’s a compelling opportunity. Additionally, Tempur Sealy and Mattress Firm have historically employed different marketing strategies at times, resulting in mixed messages to the consumer.
“As the two largest advertisers in the industry, this was suboptimal. We can now deliver high-quality messaging that benefits everyone, the combined Somnigroup businesses and the broader U.S. bedding industry. A significant enabler of this higher-quality messaging will be Mattress Firm’s launch of its all-new advertising campaign in the third quarter. The campaign called Sleep Easy is designed to help consumers understand the importance of the right mattress for achieving quality sleep and persuading the consumer to take the next step on their purchase journey. It showcases several of the most widely experienced and acutely felt sleep disruptors and then demonstrates how Mattress Firm and the specific mattress solutions it offers can help. Testing shows this is the highest performing campaign in Mattress Firm’s recent history across all metrics.” - “Although the North American business was down slightly, we believe it continued to outperform the market, which we believe was down high single digits. Our North American performance was driven by the successful launch of our all-new Sealy Posturepedic collection, the largest bedding launch in industry history. Remember, Sealy is the No. 1 brand in the U.S. and the world. The team, our suppliers, our third-party retailers did a great job on a very heavy lift. While the launch did take a bit longer to execute than planned, which impacted the first part of the quarter, we exited the second quarter with solid momentum. The launch targets the mid-entry-level segment. This updated collection is the culmination of a multiyear research and development effort.”
- “Our international business continues to perform very well, reporting robust double-digit sales growth and solid margin expansion. This marks nine consecutive quarters of meaningful sales expansion on a constant currency basis for our legacy international business against the backdrop of industry pressure. Our latest collection of Tempur products continues to be the primary driver of growth with expanded price points broadening our total addressable market. Further, our improved late-stage customization manufacturing process has allowed us to seamlessly tailor products to individual markets, channels and customers.”
