So what's going on under the covers at Tempur-Pedic (NYSE:TPX) these days? Fools with exceptionally good memories might recall that I last talked about Tempur-Pedic in the wake of disappointing earnings guidance that cratered the stock. I found management's excuses laughable at the time, but nonetheless, the company continues to gain share in the bedding market and regain a lot of that sacrificed market cap.

Sales were up 14% this quarter, as 21% growth in the retail channel continued to offset weaker performance in channels like direct sales and health care. Unfortunately, it's not all perfect news. Because the company is selling more units in general through retail, and more mattresses than pillows, gross margins are hurting. Gross margins fell about two-and-a-half points this quarter, though the company gained back some of that at the operating-income line.

Although I don't have up-to-date industry information on the bedding sector, I think it's a very safe bet that Tempur-Pedic is continuing to gain share. Unit sales were up 22% this quarter in the States. Sealy (NYSE:ZZ), a market leader, saw unit sales down this past period, which would suggest more unit-based market share for Tempur-Pedic and its higher-end product.

I don't doubt that Tempur-Pedic and Motley Fool Hidden Gems recommendation Select Comfort (NASDAQ:SCSS) can continue to gain share by offering newer and better products for the market. Heck, specialty bedding is now about one-quarter of the market, and most of the larger players are talking about getting into the space in a bigger way. I suppose that's a potential threat to Tempur-Pedic's margins, but let's not forget two important things: Wanting to compete is not the same as competing, and Tempur-Pedic could give up some margin and still be sitting pretty.

My single biggest issue with Tempur-Pedic is that I just don't see the long-term future here. The company has a great concept, but its products are all basically just variations on a single theme. Perhaps that means it's destined to be bought by a rival bedding company, a consumer-goods conglomerate, or private equity. In any case, there's enough value here to merit curiosity about the short term. After all, good companies have a way of figuring out new products and new markets that often weren't obvious years before.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).