Somnigroup (SGI) Q3 2026: Leggett & Platt Deal Masks Legacy Weakness

Somnigroup's third quarter of 2026 tells two separate stories layered on top of each other. On the surface, consolidated revenue rose 10.8% year over year to $2.35 billion, but that entire gain and then some came from the Leggett & Platt acquisition, which closed on August 26 and contributed $372.6 million in net sales during just its stub period from late August through the end of September. Strip that out and the company's pre-existing businesses were shrinking.

The most dramatic drag was UK retailer Dreams, where net sales collapsed 34.7% after a botched ERP system implementation caused widespread operational disruption across the International segment. Tempur Sealy North America and Mattress Firm each posted revenue declines of 5.8% year over year as well, underscoring that softness in legacy operations was broad rather than isolated. Tempur Sealy International excluding Dreams did manage high-single-digit growth, one of the few bright spots in the quarter.

The Leggett & Platt deal also left visible marks on the income statement. Transaction costs of $35.5 million, business combination charges of $14.8 million, and a $13.0 million loss on debt extinguishment weighed heavily enough to push GAAP diluted EPS to $0.74, well below the adjusted figure of $1.04. That adjusted EPS number itself still missed the consensus estimate of roughly $1.05, while revenue came in about 3% below the $2.43 billion forecast, making this a double miss on the headline metrics.

Looking at the EPS history chart alongside this quarter is instructive. Somnigroup had beaten analyst estimates in five of the prior seven quarters, including a notable beat in Q3 2025 when adjusted EPS of $0.95 topped the $0.86 consensus. The Q3 2026 result marks the first meaningful miss in that stretch, and it arrived in the same quarter the company absorbed its largest acquisition.

Management revised full-year 2026 adjusted EPS guidance to a range of $2.85 to $2.95, which the company described as approximately a 7% increase over 2025 adjusted EPS at the midpoint. The outlook carries a list of caveats including tariff risk, trade policy changes, geopolitical events, and broader macroeconomic uncertainty. The company also declared a quarterly cash dividend of $0.17 per share, payable December 7 to shareholders of record November 23.