A normally sleepy industry announced some big news on Friday. A bedding industry trade group, the International Sleep Products Association, stated that its "April Bedding Barometer" indicated increases in sales compared to last year. And this news has shares of mattress retailers springing up.
Shares of Sealy
This recent announcement comes on the heels of some interesting industry dynamics. In the $4.6 billion U.S. wholesale mattress market, traditional mattress manufacturers, such as Sealy, have been tussling with high-end makers of memory-foam mattresses. The most notable manufacturers of memory-foam mattress include Select Comfort and Tempur Pedic International.
Memory-foam mattresses comprise the fastest-growing segment of the market. In the past eight years, market share for memory foam increased from 14% to nearly 20%. Sealy, which was late to the memory foam segment of the market, has been punished for not jumping on this high-end segment sooner.
|Sealy||Sealy Posturepedic Stearns and Foster||(7.4%)||(23.3%)|
|Select Comfort||Sleep Number||19.9%||2557%|
|Tempur Pedic International||TEMPUR-Cloud TEMPUR-Contour||(14.6%)||328.5%|
Sources: Company websites, The Motley Fool.
One of my Foolish colleagues feels so strongly about Tempur Pedic, in particular, he thinks the company should aggressively buy back shares. I agree. It currently trades near its 52-week low, has great growth potential, and appears undervalued.
The affluent -- and those who value sensational slumber enough to fork over a few grand -- have to rest their heads somewhere. I view the memory-foam mattresses market well-poised for further growth, and I specifically like Tempur Pedic.
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