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Tempur Sealy to Sell Over 100 Stores to Close $4B Mattress Deal
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Tempur Sealy International, Inc. (TPX - Free Report) is pushing forward with its plans to acquire Mattress Firm, despite an ongoing legal challenge from the Federal Trade Commission. The company has agreed to sell its Sleep Outfitters subsidiary and a portion of Mattress Firm’s footprint.
Tempur Sealy’s acquisition of Mattress Firm could be transformative, positioning the company as a dominant player in the North American mattress market. CEO Scott Thompson remains optimistic about the deal, expressing confidence in a favorable outcome in the coming months.
The case is set to go to trial in November 2024, with hearings expected to last two weeks. If the litigation concludes successfully, the company aims to finalize this $4 billion deal with Mattress Firm by late 2024 or early 2025, as initially planned.
Tempur Sealy’s shares gained 0.7% on Monday.
Tempur Sealy’s Strategic Divestiture Plan
To satisfy regulatory concerns, Tempur Sealy has agreed to sell 73 Mattress Firm locations and its Sleep Outfitters subsidiary to Mattress Warehouse. This sale, subject to the finalization of the Mattress Firm acquisition, includes 103 mattress stores and seven distribution centers. Mattress Warehouse, a well-established retailer, will continue offering Tempur Sealy’s premium products, ensuring continuity for customers.
The divestiture is a strategic move that could benefit Tempur Sealy in several ways. By reducing potential overlap in its retail footprint, Tempur Sealy can alleviate some antitrust concerns while continuing to supply its products to the divested stores. It also strengthens relationships with a key retail partner.
Expanding Retail Reach of TPX
Once the Mattress Firm deal is finalized, Tempur Sealy will operate over 2,800 stores globally, with a significant portion of North American sales coming from Mattress Firm. This expansion will solidify the company’s dominant market position and enhance its retail network. Tempur Sealy also expects to gain $100 million in synergies by the fourth year after the acquisition, boosting profitability and shareholder value.
Tempur Sealy's acquisition of Mattress Firm and the associated divestiture could reshape the company’s growth trajectory. If all goes as planned, the benefits could be substantial, setting the stage for stronger market presence and financial gains.
TPX Stock Performance
The TPX stock has gained 15.3% over the past three months, outperforming the Zacks Retail-Home Furnishings industry’s 11.6% growth. Its omni-channel distribution strategy’s success has been boosting Tempur Sealy’s presence.
Despite challenging macro conditions, the company has been investing in industry-leading product innovation and advertising spend, expanding manufacturing capacity, driving omni-channel expansion worldwide, and working on a balanced capital allocation strategy. For 2024, the company’s brand, products, and omnichannel initiatives will likely drive growth.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TPX’s 2024 earnings per share (EPS) reflects 5.4% year-over-year growth on 0.1% lower revenues. It also has a favorable VGM Score of B.
Tecnoglass Inc. (TGLS - Free Report) currently carries a Zacks Rank of 2. The stock has rallied 63.1% in the past three months.
TGLS has surpassed the earnings expectation in three of the trailing four quarters, the average surprise being 3.1%. The Zacks Consensus Estimate for TGLS’ 2024 sales indicates growth of 7.1% but a decline of 14.1% for EPS from the year-ago levels.
Potbelly Corporation (PBPB - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 77.5%, on average. The stock has gained 5.1% in the past three months.
The Zacks Consensus Estimate for PBPB’s 2024 sales indicates a decline of 6.5% but growth of 33.3% for EPS from the year-ago levels.
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Tempur Sealy to Sell Over 100 Stores to Close $4B Mattress Deal
Tempur Sealy International, Inc. (TPX - Free Report) is pushing forward with its plans to acquire Mattress Firm, despite an ongoing legal challenge from the Federal Trade Commission. The company has agreed to sell its Sleep Outfitters subsidiary and a portion of Mattress Firm’s footprint.
Tempur Sealy’s acquisition of Mattress Firm could be transformative, positioning the company as a dominant player in the North American mattress market. CEO Scott Thompson remains optimistic about the deal, expressing confidence in a favorable outcome in the coming months.
The case is set to go to trial in November 2024, with hearings expected to last two weeks. If the litigation concludes successfully, the company aims to finalize this $4 billion deal with Mattress Firm by late 2024 or early 2025, as initially planned.
Tempur Sealy’s shares gained 0.7% on Monday.
Tempur Sealy’s Strategic Divestiture Plan
To satisfy regulatory concerns, Tempur Sealy has agreed to sell 73 Mattress Firm locations and its Sleep Outfitters subsidiary to Mattress Warehouse. This sale, subject to the finalization of the Mattress Firm acquisition, includes 103 mattress stores and seven distribution centers. Mattress Warehouse, a well-established retailer, will continue offering Tempur Sealy’s premium products, ensuring continuity for customers.
The divestiture is a strategic move that could benefit Tempur Sealy in several ways. By reducing potential overlap in its retail footprint, Tempur Sealy can alleviate some antitrust concerns while continuing to supply its products to the divested stores. It also strengthens relationships with a key retail partner.
Expanding Retail Reach of TPX
Once the Mattress Firm deal is finalized, Tempur Sealy will operate over 2,800 stores globally, with a significant portion of North American sales coming from Mattress Firm. This expansion will solidify the company’s dominant market position and enhance its retail network. Tempur Sealy also expects to gain $100 million in synergies by the fourth year after the acquisition, boosting profitability and shareholder value.
Tempur Sealy's acquisition of Mattress Firm and the associated divestiture could reshape the company’s growth trajectory. If all goes as planned, the benefits could be substantial, setting the stage for stronger market presence and financial gains.
TPX Stock Performance
The TPX stock has gained 15.3% over the past three months, outperforming the Zacks Retail-Home Furnishings industry’s 11.6% growth. Its omni-channel distribution strategy’s success has been boosting Tempur Sealy’s presence.
Despite challenging macro conditions, the company has been investing in industry-leading product innovation and advertising spend, expanding manufacturing capacity, driving omni-channel expansion worldwide, and working on a balanced capital allocation strategy. For 2024, the company’s brand, products, and omnichannel initiatives will likely drive growth.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TPX’s 2024 earnings per share (EPS) reflects 5.4% year-over-year growth on 0.1% lower revenues. It also has a favorable VGM Score of B.
TPX Zacks Rank & Key Picks
TPX currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are:
Ethan Allen Interiors Inc. (ETD - Free Report) presently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ETD’s 2024 sales and EPS indicates a decline of 1% and 3.6%, respectively, from the prior-year levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tecnoglass Inc. (TGLS - Free Report) currently carries a Zacks Rank of 2. The stock has rallied 63.1% in the past three months.
TGLS has surpassed the earnings expectation in three of the trailing four quarters, the average surprise being 3.1%. The Zacks Consensus Estimate for TGLS’ 2024 sales indicates growth of 7.1% but a decline of 14.1% for EPS from the year-ago levels.
Potbelly Corporation (PBPB - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 77.5%, on average. The stock has gained 5.1% in the past three months.
The Zacks Consensus Estimate for PBPB’s 2024 sales indicates a decline of 6.5% but growth of 33.3% for EPS from the year-ago levels.