Sleepy Sales Hurt Tempur-Pedic's Earnings

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Tempur-Pedic International (TPX Quote) on Jan. 22, 2009, reported a 97.4% decline in its Q4 FY08 earnings on lower sales. Net income plunged to $1.06 million or $0.01 per share from $39.93 million or $0.52 per share in Q4 FY07. However, on an adjusted basis TPX's Q4 FY08 net income was $12.69 million or $0.17 per share, which beat the most recent consensus estimate of $0.15 per share.

During Q4 FY08, total revenue decreased 34.5% to $189.12 million from $288.95 million a year ago, due to decline in lower domestic and international sales on challenging economic conditions. Domestic revenue slipped 39.4% to $108.40 million from $178.78 million, hurt by 39.2% decline in retail sales and 47.2% decrease in direct sales. Similarly, International revenue dropped 26.7% to $80.73 million from $110.18 million, due to 24.4%, 45.0%, and 29.7% decline in retail, direct, and healthcare channels. Mattresses sales decreased 36.5% to $124.76 million, while pillows sales declined 36.6% to $25.99 million. Lastly, other revenue fell 25.2% to $38.38 million from $51.32 million.

During the quarter under review, the company's operating cash flow increased to $29.50 million from $3.50 million in Q4 FY07. Moreover, TPX reduced its total debt by $99.40 million to $419.34 million.

For FY08, consolidated revenue declined 16.2% to $927.82 million from $1.11 billion, hurt by lower mattress and pillow sales. Consequently, Tempur-Pedic International's earnings fell 58.4% to $58.87 million or $0.79 per share.

Looking ahead, Tempur-Pedic issued full-year 2009 guidance for net sales and earnings per share. The management expects net sales for FY09 to range between $770.00 million and $790.00 million and EPS of $0.70 to $0.90 per share.

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