Business

Tempur-Pedic earnings soar

Lexington-based mattress maker Tempur-Pedic announced record fourth-quarter and full-year earnings Tuesday, noting sales grew 25 percent during the fourth quarter and 28 percent for the year.

"We're pleased with the performance throughout 2011 and the fourth quarter as a good end to a very strong year," CEO Mark Sarvary told industry analysts in a conference call after financial markets closed.

Sarvary emphasized that the key to Tempur-Pedic's growth during what he called "a challenging environment" has been a strong investment in brand advertising. He said advertising spending reached record levels for the company in 2011.

Behind the quarterly growth was improved performance in North America and abroad. Sales increased here 26 percent, while international sales rose 25 percent. Adjusted for currency fluctuations, international sales grew 21 percent.

Sales of mattresses jumped 26 percent globally. Mattress-sales growth in North America was 24 percent compared with a 33 percent jump internationally, though that growth was 29 percent when adjusted for currency.

Sales of pillows increased 16 percent globally, with a 15 percent jump in North America and 17 percent internationally. Adjusting for currency, pillow sales were up 13 percent overseas.

The company earned $56.3 million in the quarter, up 22 percent from $46.3 million during the same period a year earlier. Earnings per share were 84 cents in the quarter, up from 66 cents a year ago.

Sarvary said the company's Cloud Collection of products continues to grow in the United States and "has been very successful in its first year of launch internationally."

The company also will unveil soon products that target the $1,000-to-$2,000 price range. Sarvary said the company hasn't meaningfully targeted that price range and noted there was a major opportunity for growth as that segment sees as much spending in the industry as higher ones combined. The products will be unveiled at an upcoming industry trade show in Las Vegas.

Sarvary called the new offerings "the most researched products we've ever launched" and said "initial retailer feedback has been very positive."

For the full year, sales rose 28 percent, to $1.42 billion from $1.11 billion in 2010. Sales increased 30 percent in North America and 24 percent abroad.

The company earned $219.6 million, or $3.18 a share, for the year, up 40 percent from $157.1 million, or $2.16 a share, in 2010.

The strong earnings come after Tempur-Pedic announced plans last year to expand its headquarters operations in Lexington and add 65 jobs during the next five years. Construction on its new 100,000-square-foot headquarters at the University of Kentucky's Coldstream Research Campus is expected to be finished by December.

Company executives also announced they expect sales in 2012 to range from $1.6 billion to $1.65 billion. Earnings per share are expected to range from $3.80 to $3.95.

Tempur-Pedic's board also has authorized spending up to $250 million on a new share repurchase program. The company has about 67 million shares outstanding.

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