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U.S. mattress makers go into slumber as consumer confidence slides -Breaking

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© Reuters. FILE PHOTO – Workers transport mattresses to a Park City hotel on January 23, 2002. REUTERS/Rick Wilking/File Photo

Praveen Paramasivam

(Reuters) – A drop in discretionary income as well as consumer confidence caused by record inflation will likely reduce revenue for U.S. premium mattresses makers. They are currently struggling to maintain the same level of demand that they had during the height of the pandemic.

Tempur Sealy International Inc (NYSE: ) is the industry leader. The company saw its sales increase through the initial months of lockdowns when people updated their homes. However, it expects to continue growing at a slower rate than in the six previous quarters.

Due to record inflation, infrequent purchases of bedding products and falling home sales in the United States due to rising mortgage rates, this slowdown has been caused by a lackluster market for these items.

Atul Maheshwari, UBS analyst said that while inflation was high and gas prices rose, it is actually causing a slowdown in big-ticket discretionary goods.

CONTEXT

Smaller rival Sleep number (NASDAQ:) Corp last week reported a lower-than-expected revenue, profit and earnings due to a delayed supply of the semiconductors needed for its smart mattresses as well as a decline in customer demand.

After March’s lower demand than expected, the company cut its 2022 profit projections. This was due to the fact that the business had to adjust its forecasts for 2022. Analysts expect peer Purple Innovation Inc (NASDAQ:) Inc. to also follow its lead and cut its outlook.

Tempur Sealy is reporting on Thursday its first-quarter earnings. The company has delayed the introduction of a new range of products until next year.

Nevertheless, industry experts believe that Tempur Sealy would have an advantage over other publicly traded competitors because of its better-established supply chains and pricing power.

Curtis Nagle from BofA Global Research said, “Tempur Sealy has been a great performer not only in terms of their execution but also strong relationships with wholesalers – a company that is high-quality and has done all the right things for growth.”

THE FUNDAMENTALS

* Analysts polled by Refinitiv expect Tempur Sealy to report a 15.3% increase in revenue for the first quarter, with its North America division, which accounts for more than four-fifths of its revenue, posting the smallest growth in seven quarters.

* Earnings per share, they expect, will decline 5.5% from a year earlier to 60 cents, marking the first decline in nearly two years.

WALL STREET SENTIMENT

Name RIC Median Stock’s Average Last

Rating YTD PT close

pErformanc price

e

Tempur Purchase -42% $27.30, $37

Sealy Down

18%

From a

Month

ago

Purple Hold -65% $4.67, $5.50

Innovation at a low of 8%

From a

Month

ago

Rest Holding -43%, $49.50 or $43.52

Number down

29%

From a

Month

ago

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