Tempur Sealy International Inc. says supply chain challenges drove a $100 million rise in its third-quarter backlog.
“Unfortunately, due to the tremendous demand for Tempur-Pedic products in North America and domestic supply chain issues, the backlog for Tempur-Pedic expanded in the third quarter,” said Chief Executive Scott Thompson on the third-quarter earnings call, according to FactSet.
“We expect to work down this backlog in the fourth quarter and enter 2022 better positioned to fully meet consumers’ demand,” he said.
shares fell 3.5% in Thursday trading after the early-morning earnings announcement despite what the company said was a record quarter.
Tempur Sealy reported net income of $177.4 million, or 87 cents per share, up from $121.4 million, or 57 cents per share, last year. Adjusted EPS of 88 cents beat the FactSet consensus for 85 cents.
Sales of $1.358 billion were up from $1.132 billion last year and also ahead of the FactSet consensus for $1.336 billion.
Tempur Sealy is now expecting full-year net sales growth to exceed 35% compared with 2020, and adjusted EPS of between $3.20 and $3.30. The FactSet consensus is for sales of $5.012 billion, implying 36.3% growth, and EPS of $3.24.
“Beginning in 2022, we anticipate being able to fully service demand and reengage with those new customers who approached us in the past about bringing on our brands and non-branded products,” Thompson said, noting some of the strategies that will drive future growth, including new technologies and an emphasis on the health and wellness benefits of a good night’s sleep.
“We also expect to return to a normalized brand-mix dynamics as supply chain improves for both Tempur and Sealy operations.”
Raymond James rates Tempur Sealy shares a strong buy, calling the company a current analyst favorite.
“All-in, management’s improved 2021 expectations (guidance moved higher) highlight the strength of the company’s portfolio of brands, its expanding omnichannel distribution model, as well as the benefit the entire bedding/ furniture
category continues to see from a strong housing environment,” analysts said.
CFRA, on the other hand, lowered its stock rating to buy from strong buy, and cut its price target to $52 from $58.
“[W]e take a cautious view about store deliveries of Sealy bedding that may persist into 2022,” wrote analyst Kenneth Leon.
Tempur Sealy stock has advanced 67.1% for the ear to date while the S&P 500 index
has gained 22.1% for the period.