Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Tempur-Pedic Gets Flipped

After all of last summer's rhetoric about whether the housing market would unravel dramatically or coast to a soft landing, we now know which camp was closer to reality. Now it's time to ask similar questions of a different part of the economy: you, the American consumer. Will you feel the kind of pain that Bear Stearns investors are feeling, or will it seem like touching down on a Tempur-Pedic (NYSE: TPX  ) mattress when you finally hit bottom?

If you think the mattress will help break your fall, think again. On Monday, Tempur-Pedic said that it foresees a 50% drop in first-quarter profit, with U.S. sales projected to fall by nearly 20%. The news pushed shares down 38%. But Tempur-Pedic isn't alone: Industry top dog Sealy (NYSE: ZZ  ) recently announced a similar slowdown in U.S. sales.

Foolish investors should keep an eye on consumer activity with respect to pricey discretionary items, because that's where we'll see just how cushioned the American consumer's landing will be. Tempur-Pedic and its peers could be a good barometer, since their products aren't cheap. With prices ranging from $700 to nearly $7,000, mattresses in general fall well within the big-ticket range of consumer goods. And if you're like me, you're not exactly ready to run out and drop thousands of dollars on a new mattress.

It's true that the spate of massive losses from banking institutions must cease before the U.S. economy can return to normal, but a recession stays put until the consumer decides that it's safe to begin spending and has the means to do so. Tempur-Pedic's news may suggest that we'll be tossing and turning for a while.

Further Foolishness:

Read/Post Comments (0) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 601347, ~/Articles/ArticleHandler.aspx, 10/24/2016 1:28:55 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
TPX $51.70 Down -0.70 -1.34%
Tempur Sealy Inter… CAPS Rating: ****
ZZ.DL $0.00 Down +0.00 +0.00%
Sealy Corporation CAPS Rating: No stars