Tempur Sealy reports gains in Q2 sales, net income

Tempur Sealy International reported an increase in quarterly sales and net income for the second quarter ended June 30.

Net sales rose to $1.27 billion, up 4.8% from the $1.21 billion reported the same period last year.

Meanwhile, net income rose 2% to $92.4 million, or 52 cents per share, compared to $90.6 million, or 51 cents per share,  in the second quarter of 2022.

Adjusted operating income rose to $171.8 million, up 7.4% from $159.9 million reported the same period last year. Adjusted net income declined 1.2% from $103.2 million last year to $102 million.

For the first half, the company reported $2.47 billion in net sales, up 1.1% from $2.45 billion in net sales reported in the first half of 2022.

For the first half, net income declined 19.7% to $177.7 million, or $1.01 per share, from $221.3 million, or $1.20 per share, last year.

The company said it is still performing a forensic investigation of a July 23 security incident and that it continues to assess the impact of this event on its business, operations and financial results.

“Our continued market out-performance in the second quarter reflects the momentum we are driving through our execution of our long-term initiatives,” said Chairman and CEO Scott Thompson. “All three of our leading U.S. brands — Tempur, Sealy and Stearns & Foster — performed well in the quarter, significantly ahead of where we believe the U.S. industry trended. We were also pleased with the second-quarter performance of our international business. The successful Tempur International launch, combined with Dreams’ crisp retail execution, is driving continued share gains worldwide and positioning us well for the future. This quarter’s results were delivered in markets that were a bit less robust than we expected. Our global industry out-performance partially mitigated the negative impact of these headwinds. While we look forward to a recovering market, this challenged environment has allowed us to demonstrate the strength of our global business model as we realized solid earnings and strong operating cash flows.”

Of the pending Mattress Firm acquisition, he added, “We are currently responding to the Federal Trade Commission’s second request. Mattress Firm’s recent quarterly results, which it reported yesterday, were consistent with our expectations. We continue to expect to close the transaction in 2024 and look forward to bringing the Mattress Firm team onboard.”

Other highlights of the quarterly report were as follows:

+North America net sales rose 5.4% to $1.016.8 billion, compared to $964.7 million in the second quarter of 2022. The company said this was largely because of the success of new product launches for Tempur and Stearns & Foster. On a constant currency basis, the company said North America net sales increased 5.3% compared to the second quarter of 2022.

+ Gross margin in the segment was 39.7% compared to 37.9% in the second quarter of 2022. Adjusted gross margin was 39.9% compared to 38.7% in the second quarter of 2022. Operating margin was 17.1% compared to 15.1% in the second quarter of 2022. Adjusted operating margin was 17.4% compared to 16.5% in the second quarter of 2022.

+ North America net sales through the wholesale channel increased $48.2 million, or 5.7%, to $896.0 million, compared to the second quarter of 2022. North America net sales through the direct channel increased $3.9 million, or 3.3%, to $120.8 million, compared to the second quarter of 2022.

+ International net sales increased 2.7% to $252.9 million compared to $246.3 million in the second quarter of 2022. On a constant currency basis, the company noted that international net sales increased 3.9% compared to the second quarter of 2022. Gross margin was 54.9% as compared to 53.1% in the second quarter of 2022. Operating margin was 13.4% compared to 14.5% in the second quarter of 2022.

+ International net sales through the wholesale channel increased $1.9 million, or 2.1%, to $93.2 million, compared to the second quarter of 2022. International net sales through the direct channel increased $4.7 million, or 3.0%, compared to $159.7 million in the second quarter of 2022.

+ At the end of the second quarter, the company said it had total debt of $2.8 billion and consolidated indebtedness less netted cash of $2.7 billion.

+ The company also said that its board of directors declared a quarterly cash dividend of $0.11 per share, payable on Aug. 31 to shareholders of record at the close of business on Aug. 17.

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