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Last Update: 05-Dec-12 08:13 ET
Mattress Firm shares fall 23% following much softer than expected guidance
Mattress Firm (MFRM $23.51 -6.81) reported third quarter earnings of $0.47 per share, ex items, $0.01 better than the Capital IQ consensus of $0.46, while revenues rose 51.1% year/year to $277.3 million versus the $271.32 mln consensus. The company lowered guidance for FY13, sees EPS of $1.49-1.52 from prior guidance of $1.67-1.73 ,excluding non-recurring items, versus the $1.69 consensus and revenues of $1.01-1.015 billion from prior guidance of $1.022-1.039 billion versus $1.02 billion consensus.
The Company expects the pending acquisition of 28 Mattress Source stores to add incremental sales during the fourth fiscal quarter of 2012 of approximately $2.0 million. Such sales estimates anticipate temporary closings of the stores while rebranding efforts are undertaken. The Company is updating its outlook for fiscal 2012 to include the anticipated results from the pending acquisition of 28 Mattress Source stores, actual results through the third quarter, and the Company's expectation of future results based on information currently known. Furthermore, the Company intends to rebrand approximately 20 additional stores to Mattress Firm during the first quarter of fiscal 2013 that were acquired in December 2010 and are currently operated under the name Mattress Discounters, which will have an effect on fiscal 2012 results. "Our core strategy of further penetrating our existing and new markets continues to result in increased market share and profitability, and the acquired stores continue to generate total sales above our initial expectations. We believe we are well positioned to drive revenue and earnings in the coming years through store growth and our relative market share strategy. However, our expectations for the balance of this fiscal year are now below our previous plan in light of recent sales trends that continue to be impacted by ticket pressures and, beginning in early November, lower traffic growth. We expect that targeted initiatives being deployed internally will address many of our sales challenges. It is important to keep in context that in fiscal 2012, even after giving effect to our updated guidance, we expect to achieve impressive full year revenue and operating earnings growth in excess of 40% over the prior year. As we look to fiscal 2013, we remain confident that the execution of our growth strategy and improving operating efficiencies will drive market share and EPS gains."
The Company expects the pending acquisition of 28 Mattress Source stores to add incremental sales during the fourth fiscal quarter of 2012 of approximately $2.0 million. Such sales estimates anticipate temporary closings of the stores while rebranding efforts are undertaken. The Company is updating its outlook for fiscal 2012 to include the anticipated results from the pending acquisition of 28 Mattress Source stores, actual results through the third quarter, and the Company's expectation of future results based on information currently known. Furthermore, the Company intends to rebrand approximately 20 additional stores to Mattress Firm during the first quarter of fiscal 2013 that were acquired in December 2010 and are currently operated under the name Mattress Discounters, which will have an effect on fiscal 2012 results. "Our core strategy of further penetrating our existing and new markets continues to result in increased market share and profitability, and the acquired stores continue to generate total sales above our initial expectations. We believe we are well positioned to drive revenue and earnings in the coming years through store growth and our relative market share strategy. However, our expectations for the balance of this fiscal year are now below our previous plan in light of recent sales trends that continue to be impacted by ticket pressures and, beginning in early November, lower traffic growth. We expect that targeted initiatives being deployed internally will address many of our sales challenges. It is important to keep in context that in fiscal 2012, even after giving effect to our updated guidance, we expect to achieve impressive full year revenue and operating earnings growth in excess of 40% over the prior year. As we look to fiscal 2013, we remain confident that the execution of our growth strategy and improving operating efficiencies will drive market share and EPS gains."
