Tempur does not operate its own stores, as mattresses are sold through third-party retailers. As earnings approach for Tempur, this is definitely a concern to monitor, and Select Comfort’s weakness could indicate an even bigger disappointment for Tempur, seeing as how all of its revenue is earned through third parties.
Just so you know, I am not necessarily a mattress bear. I think long-term the space has the potential to be attractive, as the home improvement space and the overall economy continues to expand. However, I am concerned with Tempur’s upcoming quarter and the near future for the space.
Over the last year, Select Comfort traded higher by just 10.5%, meaning that expectations have remained somewhat conservative. Tempur has rallied 75%, mostly because investors expect good synergies with its addition of Sealy. However, in this case, more assets could mean more weakness, and after seeing Select Comfort’s quarter, I’m not sure I’d be too optimistic heading into Tempur’s earnings report.
The article Should Mattress Investors Be Worried About Earnings? originally appeared on Fool.com and is written by Brian Nichols.
Brian Nichols has no position in any stocks mentioned. The Motley Fool owns shares of Tempur-Pedic International. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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