In-store traffic is down. So are tickets. But close rates are up, and so are sales. And e-commerce is soaring.
Those are five key takeaways from the second-quarter business update that Tempur Sealy International shared the other day. As we wrap up June, let’s take a closer look at those trends and see what they portend for the all-important summer selling season.
Let’s start with the really encouraging news. TSI reported “strong sales” in May and early June.
“There is no question,” said Scott Thompson, the company’s CEO, “that post-April order trends have been strong.” So perhaps the industry hit the bottom of the COVID-19 pandemic slump in April, a month that Thompson called “very challenging.” That would be great news: The mattress comeback is on. Let’s do this!
That comeback is already well along in the online world, which never had to shut down during the pandemic, and benefitted from the widespread brick-and-mortar store closures.
In its most recent update, TSI said its global e-commerce is up more than 125% quarter-to-date. The online business model is benefitting from lower customer acquisition costs, an important shift in the market. Remember when those escalating costs were a big concern?
It’s beyond obvious by now that retailers should have their online games in order. Online mattress sales are clearly growing in the current retail climate.
Now about that in-store traffic. We would like it to be up, not down, of course, but not all traffic comes in the physical front door. Some of it comes in the virtual front door, and that traffic is probably way up. And not all traffic is equal. We can easily lose the “tire kickers,” but we do want the serious shoppers.
We would like to see sales tickets going up, not down, but there is evidence that tickets are improving. TSI reported that in the U.S., its largest market, both its Tempur-Pedic and Sealy branded products have grown year-over-year in the month of May and through June to-date.
The growth of those Tempur-Pedic products is especially significant, in our view, and it suggests that better goods can do well in the months to come.
How significant is the fact that closing rates are up even as in-store traffic is down? Not terribly. With more serious shoppers coming into stores, we would expect to see higher close rates. And many of today’s shoppers are coming into stores having done their bedding homework.
TSI now estimates total second quarter net sales to be down only 15% compared to the prior year. In an earlier update, the company said it expected second quarter net sales to be down approximately 30% compared to the prior year, so the latest update provides much more encouraging news on that front.
There was a lot of good news in that recent TSI update. Let’s hope that continues to play out in the July Fourth sales that will soon be upon us. And happy birthday, America!