Mattress Firm Q3 Profit Down, Lifts FY Revenue Outlook

(RTTNews) - Bedding retailer Mattress Firm Holding Corp. (MFRM), Monday reported a decline in profit for the third quarter, hurt largely by higher operating expenses and acquisition costs despite a surge in revenues. Earnings were in line with estimates while revenues trumped expectations.

Houston, Texas-based Mattress Firm's third-quarter profit dropped $15.6 million or $0.45 per share from last year's profit of $18.1 million or $0.53 per share. Earnings for the quarter included acquisition-related costs of $0.18 per share.

Excluding items, adjusted earnings for the third quarter rose to $0.70 per share from $0.55 per share in the prior year quarter. On average, analysts polled by Thomson Reuters estimated earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the third quarter increased 42.3 percent to $464.28 million from $326.23 million a year ago. Analysts had a consensus revenue estimate of $431.0 million for the quarter.

Sales increase reflects same-store sales growth of 8.5 percent and incremental sales from new and acquired stores. The company opened 54 new stores, closed eight, and acquired 460 bringing its total stores to 1,986 as of the end of the fiscal quarter.

Gross margins for the quarter rose to 39.4 percent from 38.6 percent last year, while operating costs, as a percent of sales, rose to 32.9 percent from 29.4 percent last year.

Looking forward to full year, the company continues to expect adjusted earnings of $2.03 to $2.13 per share. The company lifted its sales outlook to a range of $1.77 billion to $1.79 billion from prior outlook of $1.55 billion to $1.59 billion. Analysts currently expect earnings of $2.10 per share on revenues of $1.67 billion for 2015.

MFRM closed Tuesday's trading at $69.62, down $1.41 or 1.99%, on the Nasdaq. The stock further dropped to $0.62 or 0.89% in the after-hours trade.