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Mattress Firm Announces Comparable-Store Sales Growth Of 1.9%

Furniture World News Desk on 3/23/2015


Mattress Firm Holding Corp. announced its financial results for the fourth fiscal quarter (14 weeks) and full fiscal year (53 weeks) ended February 3, 2015. Net sales for the fourth fiscal quarter increased 91.7% over the prior year to $598.3 million, reflecting comparable-store sales growth of 1.9% and incremental sales from new and acquired stores. Comparable-store sales growth excludes the benefit of the fifty-third week. The Company reported fourth fiscal quarter earnings per diluted share (“EPS”) on a generally accepted accounting principles (“GAAP”) basis of $0.19, and EPS on a non-GAAP adjusted basis, excluding acquisition-related costs, secondary offering costs, ERP system implementation costs and fixed asset impairment costs (“Adjusted”), of $0.41.

"Fiscal 2014 was a monumental year for our company as we drove net sales for the full year by approximately 48%, representing year over year comparable-store sales growth of 6.1%, while adding 869 net new stores through nine acquisitions and 232 organic store openings," stated Steve Stagner, Mattress Firm's chief executive officer. "The momentum we’ve generated this year highlights the effectiveness of our growth plan and reaffirms our relative market share strategy.”

Mr. Stagner added, “We are very pleased to report our sixth consecutive quarter of positive comparable-store sales growth, achieved through deliberate operational initiatives we implemented at the beginning of the year that delivered, as expected, a balanced positive result in units, up 2.8%, and average unit price, up 3.3%, while we simultaneously commenced the integration of multiple acquisitions. We are enthusiastic about the overall impact these acquisitions have had collectively on our business to date, particularly the positive sales results and energy contributed by the legacy Sleep Train business in these early months.”

“We are focused on consolidating our operations in 2015 around our three primary brick and mortar brands, Mattress Firm, Sleep Train and Mattress Pro, allowing us to concentrate on enhancing profitability across the enterprise consistent with our proven relative market share model,” Mr. Stagner continued. “We look forward to enhancing our position in 2015 as the nation’s largest mattress specialty retailer."

Preliminary Fourth Quarter Financial Summary
  • Net sales for the fourth fiscal quarter increased 91.7% as compared with the comparable prior year period to $598.3 million, reflecting comparable-store sales growth of 1.9% and incremental sales from new and acquired stores.
  • Opened 69 new stores, closed 10, and acquired 49 bringing the total number of Company-operated stores to 2,094 as of the end of the fiscal year.
  • Income from operations was $23.7 million. Excluding $13.0 million of acquisition-related costs, secondary offering costs, ERP system implementation costs and fixed asset impairment costs, Adjusted income from operations was $36.7 million, as compared with $19.6 million for the comparable prior year period. Adjusted operating income margin was 6.1% of net sales as compared to 6.3% in fiscal 2013, and included 40 basis-points of gross margin improvement, 90 basis-points of expense deleverage from general and administrative expense relating primarily to an increase in costs associated with the Company’s group health life insurance plan as well as to investments in infrastructure to support current and future growth, 50 basis-points of improvement in sales and marketing expense leverage and 20 basis-points of combined operating margin declines in other areas. Please refer to “Reconciliation of Reported (GAAP) to Adjusted Statements of Operations Data” for a reconciliation of income from operations to Adjusted income from operations and other information.
  • Net income was $6.6 million and GAAP EPS was $0.19. Excluding $8.0 million, net of income taxes, of acquisition-related costs, secondary offering costs, ERP system implementation costs and fixed asset impairment costs, Adjusted net income was $14.6 million and Adjusted EPS was $0.41. Please refer to “Reconciliation of Reported (GAAP) to Adjusted Statements of Operations Data” for a reconciliation of net income and GAAP EPS to Adjusted net income and Adjusted EPS, respectively, and other information.
Preliminary Full Fiscal Year Financial Summary (53 weeks ended February 3, 2015)

  • Net sales increased $589.2 million, or 48.4%, to $1,806.0 million, for fiscal 2014 from $1,216.8 million in the prior year period as a result of incremental sales from new and acquired stores and comparable-store sales growth of 6.1%.
  • Company-operated stores increased by 869, or 70.9%, to 2,094 at year end, as a result of acquisitions that added 668 stores, opening 232 new stores, while closing 31 stores.
  • Income from operations was $97.7 million. Excluding $40.8 million of acquisition-related costs, secondary offering costs, ERP system implementation costs, fixed asset impairment and severance costs, Adjusted income from operations was $138.5 million, as compared with $103.1 million for the prior year period. Adjusted operating income margin was 7.7% of net sales as compared to 8.5% in fiscal 2013, and included 70 basis-points of expense deleverage from general and administrative expense relating primarily to an increase in costs associated with the Company’s group health life insurance plan as well as to investments in infrastructure to support current and future growth, 10 basis-points of improvement in sales and marketing expense leverage and 20 basis-points of combined operating margin declines in other areas. Please refer to “Reconciliation of Reported (GAAP) to Adjusted Statements of Operations Data” for a reconciliation of income from operations to Adjusted income from operations and other information.
  • Net income was $44.3 million for fiscal 2014 and GAAP EPS was $1.27. Excluding $26.3 million, net of income taxes, of acquisition-related costs, secondary offering costs, ERP system implementation costs, loss on debt extinguishment and impairment and severance charges, adjusted net income was $70.6 million for the full fiscal year and Adjusted EPS was $2.03. See “Reconciliation of Reported (GAAP) to Adjusted Statements of Operations Data” below for a reconciliation of net income as reported to adjusted net income.
Acquisitions Completed During the Fourth Fiscal Quarter

On January 6, 2015 the Company acquired substantially all of the mattress specialty retail assets and operations of Sleep America LLC, which operated Sleep America retail stores in Arizona, related to the operation of 45 mattress specialty retail stores, for a total purchase price of approximately $12.4 million, giving effect to certain preliminary adjustments, and is subject to further customary adjustments.

On January 13, 2015 the Company acquired substantially all of the mattress specialty retail assets and operations of Mattress World, Inc., which operated Mattress World retail stores in Pennsylvania, related to the operation of four mattress specialty retail stores, for a total purchase price of approximately $2.2 million, giving effect to certain preliminary adjustments, and is subject to further customary adjustments.

About Mattress Firm Holding Corp.: With more than 2,200 company-operated and franchised stores across 40 states, Mattress Firm Holding Corp. (MFRM) has the largest geographic footprint in the United States among multi-brand mattress retailers. Founded in 1986, Houston-based MFRM is the nation's leading bedding retailer with approximately $2.0 billion in 2014 sales pro forma for the Sleep Train and Back to Bed acquisitions, including franchise sales. MFRM, through its family of brands, including Mattress Firm, Sleep Train and Mattress Pro, offers a broad selection of both traditional and specialty mattresses, bedding accessories and other related products from leading manufacturers, including Sealy, Tempur-Pedic, Serta, Simmons, Stearns & Foster, and Hampton & Rhodes. More information is available at http://www.mattressfirm.com. MFRM's website is not part of this press release.