Lexington-based mattress maker Tempur Sealy said Thursday that despite losing $145 million in sales in the second quarter, quarterly profits were up 15 percent.
Tempur Sealy reported second-quarter earnings of $24.5 million, up 15 percent over the same quarter of 2016. On a per share basis, the company reported earnings of 45 cents per diluted share, up 28.6 percent from the same quarter of the previous year.
For the first six months of the year, Tempur reported a loss of 4.1 percent, with earnings falling to $58.4 million. Earnings were up 8.1 percent per diluted share, to $1.07, for the first six months.
For the quarter, sales declined 18 percent to $659.3 million, due to the ending of the company’s relationship with its largest retailer, Mattress Firm. But Tempur Sealy has recaptured some of the lost sales: in the same quarter of 2016, sales to Mattress Firm were $191.4 million; in the second quarter of 2017, they were $1.2 million.
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But Tempur said sales in North America outside of Mattress Firm were up 10 percent, with growth across all brands.
For the first six months of the year, overall sales are down 9.4 percent to $1.38 billion, from $1.53 billion last year.
“While worldwide industry trends continue to be a bit sluggish, we have outperformed our expectations and are raising the midpoint of our 2017 financial guidance,” said Tempur Sealy International Inc. Chairman and CEO Scott Thompson in a statement.
Mattress Firm had accounted for 20 percent of the company’s sales last year but, Thompson said in a conference call to discuss the earnings, their business strategies no longer aligned and they “respectfully parted company.”
Thompson said the sales growth was slightly ahead of expected sales growth with other sellers picking up the sales lost from Mattress Firm, which liquidated its Tempur Sealy stock. Tempur Sealy has filed a federal lawsuit against Mattress Firm over the liquidation pricing, Thompson said.
Direct-to-customer sales in North America were up 137 percent in the quarter, with a 190 percent increase in web sales, Thompson said.
“Tempur Sealy should earn its fair share of this niche market,” he said.
Thompson said he expects sales growth for the third quarter, excluding Mattress Firm, to be greater than 17 percent.
Based on the gains from other retailers, Tempur on Thursday raised the bottom end of its financial guidance for 2017 from $400 million to $425 million. The company said it now expects adjusted EBITDA to range from $425 million to $450 million.