20131204-汤森路透-EDITED_TRANSCRIPT_MFRM_-_Q3_2013_Mattress_Firm_Holding_Corp_Earnings_Conference_Call_15页_232kb

Mattress Firm Holding Corp Q3 2013 Earnings Conference Call Summary

Core Content

Mattress Firm Holding Corp reported its third-quarter 2013 earnings on December 4, 2013, highlighting positive growth in sales and market share despite a challenging consumer spending environment. The company emphasized its relative market share model, which has driven both total and comparable store sales growth, as well as adjusted operating income.

Main Points

• Sales Performance:

  • Net sales increased by 18% to $326 million.
  • Comparable store sales grew by 2.9%, driven by a 4.2% increase in units and a 1.3% decrease in average unit price (AUP).
  • The company opened 40 new stores, bringing its total number of Company-operated stores to 1,155 at the end of the quarter.

• Acquisitions and Integration:

  • Acquired stores, particularly the former Mattress Giant locations, contributed significantly to growth.
  • These stores delivered 15% comparable sales growth and added 200 basis points to the overall comparable sales improvement.
  • The company announced two new acquisitions: Mattress People (5 stores in Nebraska and Iowa for $1.8 million) and Perfect Mattress (39 stores in Wisconsin and Illinois for $6.3 million), expected to close in Q4 2013.

• Strategic Initiatives:

  • The company implemented several sales initiatives to boost unit sales and market share:
    • Enhanced focus on unit capture and market share through increased transactions.
    • Aggressive pricing on select points.
    • Broadening third-party consumer financing options.
  • These initiatives started to show results in late Q3 and continued into November.

• Margin Trade-offs:

  • The company intentionally reduced AUP by 130 basis points and product gross margin by 110 basis points to drive unit sales.
  • However, the specialty mattress category saw an increase in AUP, attributed to manufacturer advertising, particularly from Tempur-Pedic.
  • The specialty mattress sales mix increased by 160 basis points sequentially.

• Financial Highlights:

  • Gross profit increased by 14.4% to $126 million, but as a percentage of sales, it decreased by 110 basis points to 38.6%.
  • Sales and marketing expense increased by $7.1 million, but as a percentage of sales, it improved by 150 basis points to 22.9%.
  • Advertising expense as a percentage of sales rose to 8.2%, up 10 basis points.
  • General and administrative expense increased slightly on a GAAP basis to $21.2 million, but as a percentage of sales, it improved by 100 basis points to 6.5%.

• Operating Margin:

  • Operating margin on a GAAP basis was 9.7%, while on an adjusted basis, it declined by 10 basis points to 10%.

• Debt and Cash Flow:

  • Total debt was $225 million, with $15.2 million in cash at the end of Q3.
  • Operating cash flow was $30.3 million, with $13.5 million in capital expenditures and a $7.5 million reduction in debt.

• Financial Guidance for FY2013:

  • Full-year sales are expected to be in the range of $1.217 billion to $1.224 billion, an increase of 21% from FY2012.
  • Adjusted EPS is expected to be $1.75 to $1.83, with GAAP EPS in the range of $1.65 to $1.73.
  • The company anticipates mid to high single-digit comparable store sales growth for Q4 2013, leading to flat to low single-digit growth for the full year.
  • It expects 140 to 150 new organic stores and a net increase of 110 to 115 stores.

Key Information

• Consumer Trends:

  • The company acknowledged the ongoing pressure on consumer spending and the decline in consumer confidence.
  • It emphasized the importance of advertising in driving specialty mattress sales and expects the industry to return to previous levels of advertising spend.

• Acquisition Impact:

  • Acquired stores are expected to contribute to future growth, but will have a slight drag on adjusted EPS in Q4 2013 before becoming accretive in FY2014.

• Future Outlook:

  • The company remains optimistic about the future, especially with the anticipated increase in advertising and the continued performance of acquired stores.
  • It is focused on maintaining momentum in unit sales and traffic, even at the cost of margin trade-offs, until macroeconomic conditions improve.

Conclusion

Mattress Firm Holding Corp demonstrated resilience in Q3 2013, achieving growth in sales and market share through strategic initiatives and successful integration of acquired stores. While the company faced margin challenges due to its focus on unit growth, it remains confident in its ability to sustain performance and deliver value to shareholders.