Tempur Sealy International Inc (TPX) Hits the Mat on Dismal Sales Forecast

Tempur Sealy International Inc (NYSE:TPX) stock holders are waking up with a kink in their spine this morning, as TPX shocked shareholders late Tuesday evening by estimating its third-quarter sales would come in below guidance.

Tempur Sealy International Inc Hits the Mat on Dismal Sales ForecastThe mattress provider, with brands such as Tempur-Pedic, Sealy Posturepedic and Optimum, revealed that it also expects a full-year sales decline ranging from 1% to 3%.

That didn’t sit well with investors, and Tempur Sealy stock has now sold off to the tune of 22% early Wednesday morning. But the bad news didn’t stop there: TPX lowered its Ebitda for the full year to between $500 million and $525 million from $525 million to $550 million.

Here’s what Tempur CEO Scott Thompson had to say:

“While our net sales are below expectations, our operational initiatives are going well and are continuing to drive considerable margin expansion. The net impact of the revenue shortfall and our continued margin expansion is that we felt it was appropriate to lower the midpoint of our adjusted EBITDA guidance by 5%. The midpoint of this updated guidance implies an increase in adjusted EBITDA of approximately 12% and approximately 20% growth in adjusted earnings per share compared to 2015.”

Notably, Thompson was brought on by activist investors who previously criticized TPX for its slimming margins.

Longbow responded by downgrading TPX stock from “buy” to “neutral,” saying the company blindsided its shareholders with negative sales after such a great second quarter. What’s more, Piper Jaffray slashed its price target on Tempur Sealy stock from $84 to $63 while keeping its “overweight” designation. Jaffray, for its part, doesn’t see Tempur’s sales slump rolling over into 2017.

Tempur Sealy next reports earnings on Oct. 27.

As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/tpx-tempur-sealy-stock/.

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