Tempur Sealy is jumping into low-cost online mattress sales, the company announced Thursday. Tempur chairman and CEO Scott Thompson said that in the first quarter, the company will launch a website to sell a new Sealy-branded “bed-in-a-box” directly to consumers.
The move will take on the popular — but small — mattress companies, including Casper, Tuft and Needle, Leesa, Saatva, Novosbed and Helix Sleep, which offer mattresses online for less than $1,000.
No price point was released for the Sealy product. Thompson said more details will be released shortly. He said that in 2015, Tempur’s direct-to-consumer business grew at twice the rate of third-party retail sales.
“We strongly believe it’s important to grow the direct-to-consumer business. Tempur actually started by selling direct to consumers, so we believe Tempur can grow a direct sale model that is highly complimentary to third-party businesses,” Thompson said. In addition to the new website, there will be company-owned stores in North America and overseas, he said.
“Although we’re not sure how big the online sales will be, it’s clear the channel at low end is growing, primarily due to the appeal of a simple, time-saving sales process, as opposed to these products being of higher quality or having features other than those sold in traditional bedding channel. As a worldwide bedding manufacturer, we want to be wherever the consumer wants to shop.”
On Thursday, Tempur Sealy reported a fourth-quarter loss and year-end losses, in part due to a $61 million balance sheet charge related to a Danish tax dispute.
For the quarter, Tempur had losses of $11.3 million, or 18 cents a diluted share, compared with profits of $46.4 million, or 77 cents a share, in the same quarter of 2014.
For the year, earnings were $74.7 million, or $1.17 a diluted share, compared with $108.9 million, or $1.75 per diluted share, for 2014.
The $61 million charge stems from a disagreement, going on since 2008, between Denmark and the United States over where Tempur should pay taxes on intellectual property. Tempur executives said they continue to pursue a resolution of the matter but might have to take it to Danish courts, and that could take years.
The mattress maker, which is the world’s largest and has 7,000 employees, had a troubled year, with activist shareholders overthrowing the CEO and other top executives. But Thompson said Thursday that the overall worldwide market for Tempur Sealy products “feels solid.”
New launches at a recent bedding shows in Las Vegas had been well received, he said, particularly a new line of three Stearns and Foster, which will boost the high-end sales margins considerably.
The top of the new line queen size set will go for $5,000, up from the previous $3,300, Thompson said. Despite that price point, the Vegas booth “was buzzing with traffic.”
For 2015, total net sales were up 5.4 percent, to almost $3.2 billion, according to the company, with growth in both North America and internationally. For the quarter, operating income was up 20 percent, to $91.8 million, and up 11.9 percent, to $309.1 million for the year.
The company’s annual meeting will be May 5 in Lexington, and on Tuesday, Tempur Sealy announced plans to downsize the board at that time from 12 to seven, after five directors said they don’t plan to stand for re-election.
Tempur also announced a $200 million share repurchase plan and said that for 2016, the company expects adjusted earnings before interest, tax, depreciation and amortization to range from $500 million to $550 million.