Simmons sales jump 21.7%
By Larry Thomas -- Furniture Today, August 18, 2003
Atlanta — Despite a soft economy and a sluggish mattress industry, bedding major Simmons Co. said second-quarter sales jumped 21.7%.
The company said the quarter was a strong one for its wholesale bedding operations, which account for the vast majority of revenues, as well as its 104 stores in the western United States.
Wholesale bedding sales jumped 19.6% to $184 million. The figures include a unit shipment increase of 11.5% and an increase of 6.9% in the average unit selling price, said Charlie Eitel, chairman and chief executive officer.
He attributed much of the increase to improved sales of upper-end products from the company's Beautyrest and BackCare lines. "Consumers continue to respond favorably to our product offerings," he said.
Sales from Simmons-owned stores jumped 38.9%, largely due to last year's acquisition of 48 Sleep Country USA stores in Oregon and Washington. However, comparable-store sales from all retail locations rose 13.3%.
"The Sleep Country stores are very well run," Eitel said. "And in Southern California (Mattress Gallery), we really have good business there now ... even though it has taken us four years to get it straightened out."
Eitel repeated earlier statements that Simmons does not plan to be in the retail mattress business longterm, and said he hopes to sell the stores by the end of the year (see accompanying story).
For the quarter, Simmons' net income totaled $4.4 million, compared with $1.8 million in last year's second quarter. The company's earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 19.8% to $18.9 million.
For the first six months of 2003, total sales rose 10.1% to $385.9 million, with wholesale bedding shipments up 9% to $356.1 million. Net income for the first half surged 71.7% to $12.8 million, while EBITDA rose 20.1% to $45.5 million.
Simmons' 2002 and 2003 financial statements were restated to reflect the Sleep Country acquisition. Because Sleep Country was controlled by an affiliate of Fenway Partners, which is Simmons' majority owner, the numbers are presented as if Simmons and Sleep Country had been under common ownership since March 1, 2000.
Looking ahead, Eitel said he is "cautiously optimistic" the economy and the home furnishings industry will improve in the third and fourth quarters.
"The general tone (among retailers) is upbeat. We're probably as bullish as we've been for quite come time," he said.
| Simmons | |||
|---|---|---|---|
| Quarter ended 6/28 | 2003 | 2002(a) | Change |
| (a) Restated. (b) After foreign currency translation adjustment gains of $134,000 in the 2003 quarter, $7,000 in the 2002 quarter, $225,000 in the 2003 six months and $22,000 in the 2002 six months; includes pretax non-cash stock compensation expense of $9.6 million in the 2003 quarter, $6.4 million in the 2002 quarter, $10.4 million in the 2003 six months and $9.5 million in the 2002 six months. |
|||
| Sales | $199,299,000 | $163,804,000 | 21.7% |
| Operating income | 23,046,000 | 17,776,000 | 29.6% |
| Net income (b) | 4,450,000 | 1,755,000 | 153.6% |
| 6 months ended 6/28 | 2003 | 2002(a) | Change |
| Sales | $385,914,000 | $350,611,000 | 10.1% |
| Operating income | 45,504,000 | 38,558,000 | 18.0% |
| Net income (b) | 12,849,000 | 7,484,000 | 71.7% |
