QUOTE AND NEWS
SeekingAlpha  11 hrs ago  Comment 
By The Emperor Has No Clothes: 1) Introduction & Valuation We believe Tempur Sealy (TPX) is worth $70 based on multiple of 11x 2015E EBITDA, 5% sales growth and a minor 80 basis point gross margin expansion. This valuation could be...
SeekingAlpha  Feb 21  Comment 
ByAsean Century: Executive summary: Tempur Sealy has a more diversified business model than Select Comfort and will likely outperform Select Comfort going forward. The company is ramping up marketing spending to capture more market...
TheStreet.com  Feb 18  Comment 
NEW YORK (TheStreet) -- Piper Jaffray upgraded Tempur Sealy  to "overweight" from "neutral" on Tuesday and set a $56 target price. The firm noted Europe and North America appear poised to accelerate. The stock was rising 3.51% to $49.82...
Reuters  Feb 18  Comment 
A panel overseeing the United Nations' carbon market has elected a scientist from the Caribbean as its new chair with a German climate policy expert as deputy, the U.N.'s climate change secretariat said.     
SeekingAlpha  Feb 7  Comment 
Tempur Sealy International Inc (TPX) Q4 2013Tempur Sealy International Inc Earnings Conference Call February 06, 2014 / 5:00 a.m. E.T. Executives Mark Rupe – VP - IR Mark Sarvary – President and CEO Dale Williams – EVP and...
Wall Street Journal  Feb 6  Comment 
Earnings fell 2.6% on expenses related to Tempur-Pedic's acquisition of Sealy, masking a boost in revenue from combination of the former rivals.
SeekingAlpha  Jan 15  Comment 
By Henry Kawabe: In the initial days of 2014, Select Comfort (SCSS) has already set the tone as being one of the market's worst performing stocks. Thus far in 2014 it has lost 17% of its value following a sales warning that came in well below...
Automotive World  Dec 23  Comment 
Presentation by Mark Sealy, Engineering Director – Commercial Vehicle Sector, Norgren at Automotive World Megatrends Europe 2013. Download the presentation slides The post Commercial vehicle fluid control technology – the road ahead appeared...
StreetInsider.com  Dec 18  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Synthesis+Energy+%28SYMX%29+Begins+Initial+Production+at+ZZ+Plant/8989359.html for the full story.
SeekingAlpha  Dec 4  Comment 
Tempur Sealy International Inc (TPX) Bank of America Merrill Lynch 2013 Leveraged Finance Conference December 4, 2013 2:50 PM ET Executives Dale E. Williams – Executive Vice President and Chief Financial Officer ...




 

Sealy Corporation (NYSE: ZZ) makes mattresses ranging in price from $300 to as much as $5,000. The company is the largest mattress manufacturer in the United States with a wholesale market share of approximately 19.5%, 1.23 times greater than its next largest competitor.[1] Over 90% of the company's sales come from traditional innerspring mattresses, while competing companies such as Tempur-pedic International (TPX) or Select Comfort (SCSS) focus more on specialty mattresses made of memory foam, air and latex bedding. The specialty mattress sector is growing at a faster rate in the U.S. than traditional bedding, as aging baby boomers are demanding these more expensive specialty beds to ease the pains of getting older.

Sealy is highly susceptible to changes in the U.S. housing market. If subprime lending woes have a prolonged effect on U.S. housing, bedding manufacturers will likely suffer as fewer families upgrade to larger homes (with more bedrooms) and buy second homes, both which drive mattress sales. In addition, the company may itself be over-extended with debt.

Company Overview

Sealy does everything from manufacturing to distributing and selling its mattresses, meaning that the company is vertically integrated (it does not operate its own retail stores). Sealy also operates under a just-in-time model that allows the company to avoid warehouse expenses by processing and shipping finished goods with more efficiency.

Sealy makes generates revenue in two ways. First, the company manufacturers and sells mattresses through its 7,000 retail partner outlets. Second, it gets royalties by licensing its Sealy brands to independent mattress manufacturers

Traditional innerspring mattress brands comprised 91% of sales and include:

  • Sealy
  • Sealy Posturpedic
  • Stearns & Foster
  • Basset

Non-innerspring mattresses that are made from materials such as latex, foam, water and air generated the remaining 9% of sales and include:

  • True Form
  • Spring Free
  • Stearns & Foster
  • Reflexions
  • Carrington Chase
  • MirrorForm

Geographical Distribution of Sales[2]

The company reports its geographic sales in two categories: Americas and Europe

  • Americas (91.3% of net sales): Sales in the US comprised of 73.4% of the sales, Canada 11.7%, and other countries 6.2%.
  • Europe (8.7% of net sales)

Business Growth

FY 2009 (ended November 29, 2009)[3]

  • Net sales fell 14% to $1.29 billion. US sales fell 10.3% due to a 9.8% decrease in wholesale unit volume coupled with a 0.2% decrease in wholesale average unit selling price. The sluggish economy decreased the demand for mattresses leading to lower sales volume worldwide. International sales fell 22.4%.
  • Net income improved to $13.5 million compared to a $3.9 million dollar loss in 2008. The company benefited from a 13.7% decline in SG&A expenses.

Trends and Forces

  • Specialty Sleep is the fastest growing segment of the estimated $6 billion bedding retail market in the U.S. An increasing number of consumers are looking for products to help them get a good night's sleep, and as a result, are buying specialty sleep products, which range from water, foam, air, and visco-elastic bedding (all of which are offered by Sealy). A complementary trend is affecting the pillow segment as well. Sealy is well positioned with its PurEmbrace, TruForm, SpringFree, and other specialty bedding products to capture the trend.
  • Aging Baby Boomers have increasing demands for Sealy's non-innerspring brands. As baby boomers get older, they will have higher demands for specialty sleeping products to address increases in joints and muscles pains.
  • The U.S. Housing Market could affect the overall market for mattresses. If Americans add second homes and buy larger houses, this would likely increase mattress demand. This increased demand would result from a need to buy bedding for a secondary home and an increase in space leads to buying bigger mattresses. On the flip side, if subprime woes depress the housing market, the demand for mattresses will likely fall.
  • Rising Commodity Prices could hurt Sealy's gross margins. Sealy depends on steel and petroleum to produce its steel innersprings and polyethylene products used in many of its mattresses.
  • A Sluggish Economy could adversely affect Sealy's sales. With the majority of revenue being generated in the United States, weak consumer spending could hurt Sealy's margins. Sealy's management has shown a price-cutting strategy in a softening market. If the consumer is overextended, he or she may opt to withhold renewing their mattress or buy the cheaper traditional one. The top end of Sealy's offerings cost as much as $5,000 per mattress.

Competition and Market Share

The mattress industry consists a few large national players:

These six leaders account for more than 60% of sales for the industry, which is made up of approximately 500 U.S. manufacturers. According to International Sleep Products Association, industry wholesale shipments of mattresses and foundations were estimated to be $5.7 billion in 2009, a 9.0% decline compared to $6.2 billion in 2008.[4]

Bedding products fall in either traditional and/or specialty sleep products and most companies have developed products in recent years to address the faster growing specialty segment. Sealy (ZZ), is the largest bedding manufacturer in the world by sales and dominates the traditional sleep product market and has made some inroads into the specialty products market.

References

  1. ZZ 2009 10-K pg. 1
  2. ZZ 2009 10-K "Geographic Distribution of Sales" pg. 33
  3. ZZ 2009 10-K "Selected Financial Data" pg. 25
  4. SCSS 2009 10-K pg. 8
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki