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Mattress Firm Announces Second Fiscal Quarter Financial Results

Stocks in this article: MFRM

Mattress Firm Holding Corp. (NASDAQ: MFRM) today announced its financial results for the second fiscal quarter (13 weeks) ended July 31, 2012. Net sales for the second quarter increased 45.6% to $262.0 million, compared to $179.9 million in the second quarter of 2011, reflecting comparable-store sales growth of 5.0% and an increase in store units from new store openings and acquisitions. The Company reported second-quarter GAAP earnings per diluted share (“EPS”) of $0.30. Excluding $5.9 million in acquisition-related costs attributable to the acquisition of the equity of MGHC Holding Corporation (Mattress Giant), which closed on May 2, 2012, adjusted earnings per diluted share (“adjusted EPS”) for the second fiscal quarter were $0.42 compared with $0.16 in the second quarter of 2011. See “Reported to Adjusted Statements of Operations Data” below for a reconciliation of net income as reported to adjusted net income.

Steve Stagner, Mattress Firm’s president and chief executive officer commented, “Our performance demonstrates the tremendous capacity of this organization as we successfully integrated and absorbed levels of growth unprecedented in this industry in such a compressed timeframe, while achieving record sales and profitability during the same period. By accomplishing this, it reaffirms that our core strategy of further penetrating our existing markets concurrently with expanding into new markets is driving market share and profitability. With sales results from Labor Day coming in at the levels we anticipated, we remain confident that our comparable-store sales trends will improve during the second half of fiscal year 2012, relative to the second fiscal quarter. Furthermore, comparable-store sales growth should accelerate in the fourth fiscal quarter with the addition of the first wave of approximately 50 former Mattress Giant stores acquired in November 2011 in the comparable-store base.”

On September 4, 2012, the Company entered into an agreement to acquire the assets and operations of Mattress XPress, Inc. and Mattress XPress of Georgia, Inc. (which are referred to collectively as Mattress X-Press), including 30 mattress specialty stores located primarily in South Florida and five stores in Georgia, for approximately $15.8 million, subject to customary adjustments. The closing of the transaction is expected to occur in the third fiscal quarter of 2012 and remains subject to the prior satisfaction of customary closing conditions. The Company, which currently operates Company-owned stores in South Florida and Georgia, intends to rebrand the Mattress X-Press stores as Mattress Firm within one month of closing and expects to see the benefits of future advertising on all Mattress Firm stores in these markets. The average sales per store of the Mattress X-Press stores are comparable to the Company’s overall average for Mattress Firm stores nationwide.

“The pending acquisition of the Mattress X-Press operations further fortifies our market-leading position in South Florida,” stated Mr. Stagner. “The addition of the high-performing Mattress X-Press stores complements our earlier acquisition of Mattress Giant stores in the same markets. Combining these recently acquired stores with the Company’s existing operations in South Florida and Georgia results in an increasingly strong presence by the Company in these markets, which we believe will lead to increased sales and profits and, most importantly, drive long-term value creation for our shareholders.”

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