LEXINGTON, Ky. – In a business update, Tempur Sealy International cited “strong sales” in May and early June, and said quarter-to-date orders have significantly improved from previous expectations.
TSI now estimates total second quarter net sales to be down only 15% compared with the prior year, “as strong sales in May and early June are mitigating a very difficult April. This improvement in order trends has been broad-based geographically, driven by improving wholesale channel trends and continued robust growth of over 125% from global e-commerce quarter-to-date,” the company said.
TSI said it now expects in the second quarter to achieve at least $50 million of unadjusted EBITDA and to report a ratio of consolidated indebtedness less netted cash to adjusted EBITDA within the company’s target range of 2.5 to 3.5 times. Account receivable aging is consistent with the same period last year, and full quarter operating cash is expected to be positive, officials said.
“This has been a very difficult period to forecast as shelter-in-place orders and other COVID-19 related issues impact the bedding market,” said Scott Thompson, TSI’s chairman and CEO. “But there is no question that post-April order trends have been strong. Internationally, trends have improved as the majority of our markets have returned to growth. Additionally, I am pleased to highlight that in the U.S., our largest market, both Tempur-Pedic and Sealy branded products have also grown year-over-year in the month of May and through June to-date. Most third-party retailers have reported seeing this growth both in-store and online.”
Thompson said that, in stores, “most retailers are experiencing lower average selling prices and reduced foot traffic, with stronger closing rates compared with last year. The online channel for most everyone, including third-party retailers and direct-to-consumer, has been very strong throughout the quarter. In fact, our global e-commerce sales are up over 125% quarter-to-date while experiencing lower customer acquisition costs.”
He said the company’s flexible operating model “has quickly adjusted to the improved trends and increased volume. In the U.S., we have brought back almost all plant employees to facilitate servicing current demand. The rapid change in market conditions over the past few months has resulted in some short-term inefficiencies, but we believe these issues are manageable as compared with the difficulties faced from the significant sales declines in April.”