Lexington, Kentucky-Viscoelastic foam bedding specialist Tempur-Pedic International Inc. said 6 June that its second quarter sales to date in North America have been below the those predicted and as a result, Tempur currently expects net sales for Q2 to be 3-5 percent below last year's second quarter net sales.
The company's stock price has fallen 73 percent in recent weeks, according to a report in Business Digest, as rival companies in memory foam mattresses and pillows eat into its market share with discount prices.
The company has been a resounding success in recent years reporting strong yearly increases in sales of its luxury, expensive memory-foam products. In Q1 this year its sales rose 18 percent, while sales in 2011 rose 28 percent over those in 2010.
Tempur said the Q2 sales drop is the result of its North American sales declining at about 8 percent year-over-year.
As a result, the company said, it currently expects second quarter 2012 diluted earnings per share to decrease by about 50 percent from the second quarter of 2011.
Based on the second quarter outlook and an updated full year review, Tempur added, it currently expects full year net sales to be about $1.43 billion. In addition, the company is updating its full year earnings guidance and currently expects diluted earnings per share to be about $2.70.
Chief financial officer Dale Williams commented, "In light of the current environment for North American sales, our guidance assumes that North American sales for the third and fourth quarters will each be approximately equal to the second quarter sales factoring in modest seasonality. Our international business continues to perform well and we have made no substantive changes to our expectations for international sales."
Chief executive officer Mark Sarvary said in the company's announcement: "Sales trends in our North America business during the second quarter have been disappointing and below plan, primarily due to changes in the competitive environment, including an unprecedented number of new competitive product introductions which have been supported by aggressive marketing and promotion. As a result, we are projecting lower sales than previously anticipated for the rest of the year and are taking actions to realign our expense structure appropriately. However, we remain very confident in our Company's growth potential and our strong brand, and as a result remain committed to our long-term strategic plan."