Mattress Firm Profit Tops Street, Lifts Outlook; Stock Up - Update

(RTTNews) - Bedding retailer Mattress Firm Holding Corp. (MFRM), Thursday reported an increase in fourth-quarter profit, led by double-digit sales growth that stemmed from acquisitions as also from same-store sales. Earnings for the quarter topped Wall Street estimates while sales were in line with expectations.

Looking ahead, Mattress Firm lifted its adjusted earnings and sales guidance for 2014 to reflect recent acquisitions. Investors cheered the results, sending Mattress Firm shares up 5 percent in after-hours trade on the Nasdaq.

Houston, Texas-based Mattress Firm posted fourth-quarter net income of $8.7 million or $0.25 per share, compared with $7.6 million or $0.22 per share last year.

Excluding items, adjusted earnings for the quarter were $10.4 million or $0.30 per share. On average, eight analysts polled by Thomson Reuters expected earnings of $0.29 per share. Analysts' estimates typically exclude special items.

Sales for the quarter climbed 20.8 percent to $312.1 million from $258.2 million in the prior year. Nine analysts had a consensus revenue estimate of $312.24 million for the quarter.

Same store sales for the quarter were up 6.5 percent.

Mattress Firm's positive results came despite tough economic conditions, with retailers facing difficult times due to weak consumer spending and inclement winter weather.

Results for the quarter were somewhat weighed down by gross margin that declined by 120 basis points to 36.7 percent, the company said in a statement.

During the quarter, Mattress Firm opened 33 new stores, closed nine, and acquired 46 and ended the period with 1,225 company-operated stores.

For fiscal year 2014, Mattress Firm now expect net earnings in the range of $1.67 to $1.76 per share, adjusted earnings of $1.88 to $2.00 per share and sales of $1.46 billion to $1.52 billion. The company had earlier projected net earnings of $1.72 to $1.81 per share, adjusted earnings of $1.85 to $1.95 per share and sales of $1.38 billion to $1.43 billion.

Analysts expect earnings of $1.90 per share on revenues of $1.41 billion for the year.

On March 7, Mattress Firm agreed to acquire the outstanding partnership interests of Sleep Experts Partners L.P., which operates 56 specialty mattress retail stores in Texas under the name Sleep Experts, for $65 million. The company has also been taking over some franchise operations.

Mattress Firm stock closed Thursday at $44.45, up $1.12 or 2.58%, on a volume of 0.56 million shares. In after hours, the stock gained $2.20 or 4.95%, to trade at $46.65. In the past year, the stock trended in the range of $29.19 - $46.85.