Mattress Maker Sags on Results, Outlook, Lawsuit (TPX, ZZ, SCSS, MFRM, LEG)

Companies and Brands

Published: October 24, 2012 10:03 am

Tempur-Pedic International Inc. (NYSE: TPX) reported disappointing earnings results after markets closed last night and the company’s shares are paying the price today. Shares were down more than 20% in the first 10 minutes of trading.

The company’s comments on the competitive landscape and on international sales are having an adverse effect on competitors Select Comfort Corp. (NASDAQ: SCSS) and Mattress Firm Holding Corp. (NASDAQ: MFRM). Leggett & Platt Inc. (NYSE: LEG), which makes bedding components, has so far escaped the downturn.

Tempur-Pedic’s adjusted earnings per share (EPS) of $0.70 was a penny above the consensus estimate, but the company posted a GAAP EPS loss of $0.03. Sales were down 11% in the quarter and gross margins declined by more than 3%. Tempur-Pedic also lowered its EPS guidance to $2.55, well under the consensus estimate of $2.78.

The company’s $229 million merger with Sealy Corp. (NYSE: ZZ) is also under fire. Including assumed debt, the deal is valued at around $1.3 billion. Announced late last month, the deal has attracted investor lawsuits claiming that the deal is not in the interests of shareholders other than Sealy’s controlling shareholder, KKR & Co. (NYSE: KKR). KKR paid Bain Capital Partners LLC $1.6 billion for Sealy in 2004.

The deal for Sealy is not subject to Sealy shareholder approval because KKR reportedly has added enough votes to its 46% stake to push the total shares in favor of the acquisition above 50%. That does not mean, of course, that the lawsuits could not materially impact KKR, Sealy or Tempur-Pedic.

Shares of Tempur-Pedic are down 22.2% at $24.77 in a 52-week range of $20.70 to $87.43.

Paul Ausick

Travel Cards Are Getting Too Good To Ignore (sponsored)

Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.

We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.

It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.

We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.