Wedbush's Seth Basham offered an industrywide update on the mattress industry as the sector gears up for its earnings report.
Initial checks point to a "sluggish" start to mattress sales earlier in May, but ticked higher during the Memorial Day period, Basham said in a Wednesday note.
The mattress industry sales for non-Mattress Firm stores increased by mid-single digits during the important Memorial Day period, which marks the unofficial start of the summer selling season.
The analyst's checks also indicate that non-Mattress Firm industry sales for the second quarter are on track for low-single-digit growth, with industry sales (as reported by the International Sleep Products Association) including Mattress Firm, in line with the first quarter's 0.1-percent decline.
Mattress Firm
Mattress Firm introduced a wider selection of Serta Simmons Bedding mattresses within its approximate 3,600 showrooms in April and early May. These products, coupled with several private label brands, including Hampton & Roads, were front and center during the Memorial Day period.
Mattress Firm was incrementally promotional year-over-year, including a 72-month, 0-percent APR financing offer, Basham said.
Tempur-Pedic
Tempur Sealy International Inc TPX offered customers a $400 cash savings on all beds and other promotions during the Memorial Day period to customers who chose to buy directly from the company. The company's promotions were "more aggressive" on a year-over-year basis.
Most Tempur-Pedic branded promotions at specialty retailers appeared to be "less robust" than what was offered directly to consumers, according to the Wedbush note.
Select Comfort
Based on the analyst's checks, Select Comfort Corp. SCSS is on track to report comps in the low-single digit to mid-single digit range coming out of the Memorial Day sales event.
Basham's checks also indicated "positive consumer response" to the company's new i7 and i10 Smart Beds, along with "no significant operational issues" with the new product transition.
The Bottom Line
Basham concluded that he remains "comfortable" with estimates for a 21-percent decline in North American sales and 50 percent decline in earnings per share in the second quarter for Tempur Sealy.
Select Comfort is expected to meet its expectations for the second quarter.
Wedbush maintains a Neutral and $45 price target on Tempur Sealy and a Neutral and $25 price target on Select Comfort.
Related Links:
Risks Remain With Select Comfort After Beat-And-Raise Quarter
Mattress Firm Told Tempur Sealy To Go Sleep On The Couch; Now What?
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