Mattress Firm Q1 Profit Down, Lifts FY Revenue Outlook - Update

(RTTNews) - Bedding retailer Mattress Firm Holding Corp. (MFRM), Tuesday reported a decline in profit for the first-quarter, hurt mostly by lower gross margins and higher operating costs. The company, however, posted double-digit revenue growth reflecting sales from new and acquired stores as well as from same-store sales. Both earnings and revenues for the quarter fell short of analysts' estimates.

Moving ahead, Mattress Firm reaffirmed its adjusted earnings outlook and lifted its sales guidance for 2014.

Houston, Texas-based Mattress Firm's first-quarter profit dropped to $7.7 million or $0.22 per share from $12.0 million or $0.35 per share for the year-ago quarter.

Excluding items, adjusted earnings for the quarter dropped to $10.5 million or $0.31 per share from $12.8 million or $0.38 per share a year ago. Analysts polled by Thomson Reuters expected earnings of $0.36 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the first quarter grew 20.9 percent to $333.50 million from $275.96 million a year ago. Analysts had expected revenues of $336.83 million for the quarter.

Sales growth was driven by same-store sales growth of 4.3 percent and contribution from new and acquired stores. The company opened 56 new stores, closed eight, and acquired 92 stores bringing the total number of company-operated stores to 1,365 as of the end of the fiscal quarter.

Gross margins for the quarter dropped to 36.2 percent from 37.8 percent last year, while operating costs, as a percent of sales, rose to 32.0 percent from 30.1 percent last year.

For the full year 2014, the company now expect earnings of $1.53 to $1.61 per share, adjusted earnings of $1.88 to $2.00 per share and sales of $1.50 billion to $1.56 billion. Analysts currently expect earnings of $1.95 per share on revenues of $1.50 billion for the full year.

Previously, the company expected earnings of $1.67 to $1.76 per share, adjusted earnings of $1.88 to $2.00 per share and net sales of$1.46 billion to $1.52 billion.

Chief Executive Steve Stagner said, "With an accelerated infrastructure build up to support additional store growth and the recent unprecedented level of condensed product changes to our floor materially behind us, we are focused on improving our EPS performance as we move through the year."

MFRM closed Tuesday's trading at $45.49, down $0.34 or 0.74%, on the Nasdaq. However, the stock gained $0.71 or 1.56%, in after-hours trade.