Shares of Tempur Sealy plunged in morning trading after the mattress maker cut its fiscal outlook on weak third-quarter sales.
The stock fell almost 23 percent in morning trading.
Lexington-based Tempur Sealy International Inc. now expects sales to fall between 1 percent and 3 percent in 2016. It previously said it expected a sales boost in the low single digits.
The stock fell $16.90, or 22.7 percent, to $57.55 in morning trading. Its shares are down almost 19 percent over the past year.
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In a news release from the company, Chairman and CEO Scott Thompson said, “Third quarter net sales are below our prior expectations,” but “our operational initiatives are going well and are continuing to drive considerable margin expansion.”
Some of the softness they are seeing is industry-wide but not all, Thompson said.
“We made some mistakes,” he said. The company cut promotions, which hurt, and had focused advertising on the high end products and did not provide enough support for the lower-priced mattresses.
Sales of Tempur’s high-end mattresses, including the new Breeze did well, he said, but sales of lower-end Tempur mattresses dropped, Thompson said at a financial conference Tuesday.
“We need to revise our expectations for the full year. We see net sales down 1-3 percent compared to last year. before we were thinking they would be up 1-2 percent,” Thompson said, adding that this is a conservative computation.
He said that he does not think the sales drop stems from growing sales from “bed-in-a-box” competitors, who he said have show commensurate increases. Instead, the drop in sales came in August and September, when Tempur Sealy stopped its promotions on everything but the high-end products.
“This was more internal than external,” he said. Bed-in-a-box is “taking some share but it’s very minor. It’s very much a niche business.”
Based on expected third-quarter results, Tempur Sealy, “has changed our marketing plan for the fourth quarter. ... We were a little over-promotional last year and in hindsight it doesn’t look very smart. So we cut it back,” Thompson said.
The company will report third quarter results on October 27 and host an investor call.
The Associated Press contributed to this report.