Tempur Sealy Tumbles After Losing Contracts With Mattress Firmby
Company says it can’t rule out adverse material sales impact
Analysts at several firms downgrade Tempur Sealy shares
Tempur Sealy International Inc. fell the most in 4 1/2 years after saying contracts for all its product lines are being terminated with retailer Mattress Firm Holdings Corp.
The maker of Tempur-Pedic, Sealy and Stearns & Foster mattresses will cease doing business with Mattress Firm during the current quarter after the companies couldn’t reach supply agreements, according to a statement Monday. Tempur Sealy said it can’t assure that the termination won’t have a material adverse impact on sales or profitability.
Mattress Firm notified the company last week that it planned to terminate all contracts in the U.S. if Tempur Sealy didn’t agree to changes, “including significant economic concessions,” Tempur Sealy said. The terminations spurred Raymond James Financial Inc., Stifel Nicolaus & Co. and Piper Jaffray Cos. to downgrade their ratings on Tempur Sealy’s stock. Mattress Firm was purchased last year by South African furniture retailer Steinhoff International Holdings NV for about $2.4 billion. Tempur Sealy had seen profit climb the past three quarters amid gains in consumer confidence and U.S. home construction.
Shares of Lexington, Kentucky-based Tempur Sealy dropped as much as 30 percent in New York to $44.52, the biggest intraday decline since June 2012. Steinhoff shares dropped 3.7 percent to 4.54 euros in Frankfurt.