Tempur Sealy Surges After U.S. Housing Market Helps Fuel Resultsby
Mattress company’s second-quarter earnings top estimates
U.S. housing starts reached a four-month high in June
Tempur Sealy International Inc. shares jumped the most in almost four years after the mattress company’s earnings topped estimates, helped by a rise in U.S. home construction.
Second-quarter profit rose to 92 cents a share, excluding some items, the Lexington, Kentucky-based company said on Thursday. That beat the 69 cents estimated by analysts, according to data compiled by Bloomberg.
Higher consumer confidence and a healthy U.S. housing market have given a boost to the bedding company, Tempur Sealy Chief Executive Officer Scott Thompson said in an interview. New home construction in the U.S. rose more than expected in June to 4.8 percent, or 1.19 million units, according to the Commerce Department. That was the fastest pace since February.
“When you have more housing, you’re going to think about your bedroom, your bedding, your furniture,” Thompson, who took the helm last September, said in an interview. “That usually becomes a time that mattress sales do a little bit better than they were otherwise.”
The stock jumped as much as 18 percent to $79.94 in New York on Thursday, the biggest intraday gain since September 2012. Before the rally, Tempur Sealy had been down 10 percent this year.
Sales also topped analysts’ projections, rising to $804.4 million last quarter. The average estimate was $785.4 million.
The company has revamped products and introduced new models, including the Tempur-Pedic Breeze and its Stearns & Foster line. More emphasis is going toward advertising online, where customers can get the information they need to complete a purchase at stores, Thompson said.
“The vast majority of people want to lay on the bed and experience the bed before they buy it,” he said.
A growing middle class in Asia also helped lift overseas results, the company said.
“We continue to expect North America to be strong and see Asia as a major long-term opportunity,” Thompson said.