Mattress Firm Sinks on Missed Earnings

Mattress Firm Holding Corp. (NASDAQ: MFRM) reported its fiscal fourth-quarter financial results after the markets closed on Monday. The company said it had $0.53 in earnings per share (EPS) on $618.5 million in revenue. That compares to consensus estimates from Thomson Reuters that call for $0.56 in EPS on revenue of $623.6 million. In the same period of the previous year, the specialty retailer posted EPS of $0.41 and $598.3 million in revenue.

In terms of guidance, the company expects to have a net loss of $0.07 per share to breakeven in the fiscal first quarter, compared to the consensus estimate of $0.30 EPS. This discrepancy is mainly driven by the dilution from financing the Sleepy’s acquisition.

Separate from earnings, the company announced that Ken Murphy has been appointed president and chief executive officer and Steve Stagner will assume the role of executive chairman of Mattress Firm and chairman of the board of directors. The changes, which are effective immediately, represent part of a long-term succession plan for the organization and will allow for better division of responsibilities for the two executives.

Also during the fourth quarter, the company acquired substantially all the retail assets and operations of Double J-RD, a former franchisee that operated nine stores under the Mattress Firm brand in East Texas and Louisiana, for a total purchase price of roughly $3.7 million.

Stagner commented on earnings:

We are pleased with our fourth quarter results which showed approximately 90 basis points of improvement in Adjusted EBITDA margin and our tenth consecutive quarter of comparable-store sales growth. We delivered strong fourth quarter Adjusted EPS growth of approximately 29% from the prior year, as we continue to execute on our plan. Our Chicago business has turned market-level EBITDA positive and our streamlined organizational structure is generating significant leverage. With the recently completed Sleepy’s acquisition, we believe we are well positioned to realize meaningful synergies and leverage the benefits of national scale, driving continued growth, opportunities and profitability over time.

Shares of Mattress Firm were last trading down more than 13% at $36.99, with a consensus analyst price target of $48.44 and a 52-week trading range of $30.01 to $70.31.

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