Mattress Firm Q2 Profit Rises, But Misses View; Trims FY13 Forecast

(RTTNews) - Bedding retailer Mattress Firm Holding Corp. (MFRM) reported Friday a higher profit in its second quarter, reflecting lower one-time costs and increased net sales, even as comparable sales edged down. Adjusted earnings and sales, meanwhile, missed Wall Street estimates. Going ahead, the company trimmed its fiscal 2013 forecast sharply for earnings and sales.

The company's second-quarter net income was $14.12 million or $0.41 per share, compared to prior year's $10.09 million or $0.30 per share. The latest quarter results included ERP system implementation costs of $0.02 per share, while last year's results included $0.12 per share of acquisition -related costs.

Adjusted earnings, which excluded items, were $14.7 million or $0.43 per share, while last year's earnings were $0.42 per share. On average, 9 analysts polled by Thomson Reuters expected earnings per share of $0.51 for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the second quarter rose 15.5 percent to $302.54 million from $262.02 million last year, reflecting incremental sales from new and acquired stores. Seven analysts estimated revenues of $323.42 million for the quarter. Meanwhile, comparable-store sales declined 0.3 percent.

Gross profit from retail operations increased to 39.8 percent from 39 percent in the previous year.

Steve Stagner, Mattress Firm's president and chief executive officer, said, "We saw revenues increase by 15 percent over the prior year to $303 million, which evidences that our growth is outpacing the mattress industry, which has experienced mid-single digit growth during the comparable period."

The company noted that the former Mattress Giant stores continue to generate strong sales growth that is driving operating margin expansion. The company opened 35 new stores and closed 10 stores bringing the total number of company-operated stores to 1,121 as at the end of the fiscal quarter.

Looking forward, Mattress Firm now expects fiscal 2013 earnings per share of $1.66 to $1.74, compared to previous forecast of $1.81 to $1.89 per share. Adjusted earnings are now estimated to lie between $1.75 and $1.83 per share, compared with its earlier range of $1.90 to $1.98 per share. Annual net sales forecast is also reduced to $1.194 billion to $1.207 billion from previous forecast of $1.237 billion to $1.25 billion.

Eight analysts project full-year earnings of $1.97 per share, on revenues of $1.24 billion.

Comparable-store sales growth is now projected to be flat, compared to earlier expected low single digit growth.

Stagner said, "We expect that the second half of the year will benefit from a return to higher industry-level advertising media spend relative to recent quarters that we anticipate will drive improvement in customer traffic and sales trends in our business."

Mattress Firm shares closed Thursday's trading at $41.69, up $0.44 or 1.07 percent.