Tempur Sealy (TPX) Wins Contract Extension From Mattress Firm


Tempur Sealy International, Inc. (TPX Quick QuoteTPX ) has inked a multi-year extension deal with Mattress Firm, Inc. to continue its original supply agreement through 2025 on the same terms as the current agreement.

In 2019, both the firms entered into a mutually beneficial contract to supply Mattress Firm with Tempur Sealy’s portfolio of highly innovative and highly sought-after products. With this partnership, Tempur Sealy’s two leading mattress selling brands in the United States — Sealy and Tempur — are made available in more than 2,300 Mattress Firm stores, providing consumers with additional purchasing options. Markedly, both the companies are now witnessing strong sales.

Tempur Sealy’s chairman and CEO, Scott Thompson, said, “Mattress Firm is a valued retail partner and we are thrilled with the growth potential the extension of our agreement provides for both companies. We believe it also creates a stronger domestic bedding industry, which since 2019 has realized increasing average selling prices and experienced growing advertising share of voice for bedding products engaging consumers and driving foot traffic to all stores.”

Tempur Sealy has been benefiting from strong demand for higher-margin Tempur-Pedic products in the United States. Also, continued investment in brand and product development across boundaries, innovation in assortments, solid manufacturing efficiency and quality along with the omni-channel distribution platform is adding to the bliss.

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For the second quarter, the company’s net sales increased 75.8% and adjusted earnings surged almost four times from the year-ago figure. On a constant-currency basis, net sales rose 72.6%, with 73.8% rise in the North America business and 64.5% improvement in the International segment. Adjusted EBITDA per credit facility increased 146.6% year over year. The uptrend was mainly driven by double-digit global web sales growth, strength in its brands and products combined with M&A activities. It expects to deliver full-year adjusted earnings growth of more than 200% from 2019.

Over the past three months, the stock has gained 16.4%, broadly outperforming the industry’s 4% growth. The solid price performance is primarily a reflection of its decent earnings surprise history, having surpassed the Zacks Consensus Estimate in the trailing 10 quarters. The company believes the strong industry, healthy consumer behavior, pent-up demand and its powerful omni-channel platform to benefit it in future.

Earnings estimates of $3.23 per share for 2021 have moved 14.5% north in the past 30 days, indicating 69.1% year-over-year growth. Also, its earnings are expected to rise 21.5% over three to five years.

Zacks Rank

Tempur Sealy — which shares space with RH (RH Quick QuoteRH ) , Williams-Sonoma, Inc. (WSM Quick QuoteWSM ) and Haverty Furniture Companies, Inc. (HVT Quick QuoteHVT ) in the same industry — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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