Tempur-Pedic International Inc. (TPX), the mattress maker acquiring rival Sealy Corp. (ZZ), sank the most in more than four months after cutting its 2012 profit forecast amid increased U.S. competition and weakening sales in Europe.
The shares fell 22 percent to $24.81 at 10:08 a.m. in New York and earlier dropped as much as 23 percent for the biggest intraday decline since June 6. The Lexington, Kentucky-based company’s stock had declined 39 percent this year through the close of regular trading yesterday.
Intensifying competition that led Tempur-Pedic to agree last month to buy Trinity, North Carolina-based Sealy for about $229 million is persisting, Chief Executive Officer Mark Sarvary said in a statement yesterday. International sales advanced 11 percent, excluding currencies, slowing from growth of 17 percent in the second quarter.
“The drop off in Europe is an emerging concern,” Peter Keith, an analyst at Piper Jaffray Cos. in New York, wrote today in a note. He rates Tempur-Pedic as neutral, equivalent of a hold recommendation. “The pending acquisition of Sealy only clouds the picture further.”
Profit in the current year will about $2.55 a share, down from a forecast of about $2.80 in July and trailing 12 analysts’ average projection of $2.78. The company trimmed its sales estimate to about $1.4 billion from a previous forecast of $1.43 billion. Analysts estimated $1.43 billion.
The full-year forecast assumes the Sealy transaction won’t be completed in 2012.
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