It looks like relatively pleasant dreams at Sealy
For the quarter, net income grew to $21.5 million, or $0.22 per diluted share, from $15.2 million in the prior year, when Sealy was still private. The apparent consensus among the approximately 10 analysts following the company was for the per-share figure to come in closer to $0.19.
Net sales for the quarter, which ended Nov. 26, 2006, were up 8.4% to $395.3 million, from $364.6 million in the comparable prior-year quarter. Of the increase, the company said that 4.9% was attributable to volume growth, while the remaining 3.3% reflected increases in pricing. The company's international sales were significantly stronger, coming in at $110.7 million for the quarter, or up 26.1% year over year. Excluding the effects of currency fluctuations, however, the increase was 18.8%. On the domestic side, net sales were up 2.8% to $284.6 million with the unit selling price increasing 4.4% and unit volumes dropping 1.6%.
Sealy's gross margin improved in the quarter to 44.9% of sales, versus 43.7% a year earlier. The improvement was driven by manufacturing efficiencies that included a lowering of the reserve for workers' compensation claims, offset somewhat by floor sample discounts and the strength of lower-margin promotional lines.
In announcing the results, Sealy's chairman and CEO David J. McIlquham said, "I am pleased with our achievements in 2006, including over 20% growth in our international markets, near doubling of our specialty business, an improving trend in domestic unit shipments, and ongoing strengthening in promotional mattresses, a segment where we were historically underrepresented. We accomplished these in light of a challenging industry and competitive environment ..."
The quarterly release of results for Sealy, which went public last spring, followed solid quarters at rivals Tempur-Pedic
I must admit to being intrigued by the relative performances of the three key participants in the mattress industry, where the players clearly don't travel in a pack. Sealy, for instance, has seen its stock remain essentially unchanged since its early 2006 IPO, while Select Comfort's shares have declined about 15% over the past year -- the same period in which Tempur-Pedic's shares have more than doubled in value.
But looking at Sealy in particular, its shareholders' deficit, and more than $800 million in long-term debt lead me to recommend that Fools sleep on any thoughts of acquiring the company's shares at this time.
For related Foolishness:
- Sealy's No Sleeper Yet
- Foolish Forecast: I Dream of Sealy
- The Best Small Cap for 2007: Tempur-Pedic
- Select Comfort's Cushy Quarter: Fool by Numbers
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