Archive for April, 2006
Larry Thomas — Furniture Today,
Includes interior and exterior renovations
AT THE MARKET – The International Home Furnishings Center is set to begin a massive renovation of its Commerce wing lobby that will make the showroom complex “feel like a new building,” according to IHFC officials.
Tom Lindh, IHFC president and CEO, said work will begin immediately after this market and will take about 12 months to complete.
He wouldn’t reveal details of the project, but said it will be a multimillion-dollar effort that includes interior and exterior renovations.
“The Commerce lobby is our front door to the world, and we are determined to make it a world-class space that is both spectacular and highly functional,” he said. “I give my personal guarantee that our exhibitors and everyone who does business will be very pleased with the change. The industry deserves such a gathering place.”
Prior to the start of this week’s market, Lindh said interior corridors were spruced up throughout the 3.5 million-square-foot complex, and restrooms were remodeled on the second, third and fifth floors of the Wrenn wing.
The building will host cocktail parties from 4 p.m. to 6 p.m. today to celebrate renovations to the second floor of the Green wing and the eighth floor of the Design Center.
Also, directional signs were added to all five IHFC wings, and the 4,000-square-foot Designer Resource Center in the Hamilton wing was enhanced.
Lindh said the renovations are part of the IHFC’s “Market Central” project that emphasizes the building’s position as the largest showroom complex at the world’s largest home furnishings market.
The IHFC has created a new Web site, www.marketcentral.biz, to support its effort.
April 28th, 2006
By: Furniture World Magazine
Responding to industry requests, the National Furniture Bank Association (NFBA) and MGM Transport Corp. announced that exhibitors at High Point International Home Furnishings Market will be able to donate home furnishings directly to a local furniture bank.
Emergency Interiors Furniture Bank will serve the North Carolina region, effective immediately.
The NFBA is the home furnishings industry’s unified non-profit organization, representing furniture banks throughout the country. The mission of the NFBA is to increase the service capacity of existing furniture banks, and to open new furniture banks in areas without one.
Furniture banks collect gently used home furnishings from the general public, then give it to families in need. Typical clients of furniture banks are victims of natural disasters such as Hurricane Katrina; women and children escaping domestic violence; families living below the poverty line; and thousands of others covering the whole spectrum of people in need. NFBA affiliates distribute over 1,000,000 pieces of furniture to over 100,000 families each year. Furniture banks also keep thousands of tons of used furniture out of incinerators and landfills annually.
“The High Point-based Emergency Interiors Furniture Bank (EIFB) is well positioned to become a ‘mega-furniture bank,’” explained NFBA executive director Phil Van Poetsch. “Based on early estimates it seems likely that EIFB will grow to become a major distribution source for other furniture banks in the eastern region.”
MGM Transport Corp., a leader in transportation and logistics in the home furnishings industry, has pledged not only 25,000 square feet of temporary storage at their Eden NC warehouse, but will also be providing equipment and personnel to collect donations from High Point showrooms.
Ed Massood, president & COO of MGM Transport Corp., said that it’s important to see a furniture bank open in High Point. “We’re happy to devote our equipment and personnel to collect donations from exhibitors,” stated Massood. “I’m confident that all sectors of our industry – retailers, manufacturers, and transportation companies – will support the NFBA. Collectively, we have the opportunity to help tens of thousands of children in America.”
The founder of Emergency Interiors Furniture Bank, Kevin Polk, has already been deluged with requests from disaster relief organizations from the southeast to Texas. “We’re not prepared to serve such a large area immediately, so we’ll be focusing on serving North Carolina and South Carolina at first,” said Polk. “I’m very happy that we can begin serving some people right away, but saddened that there are so many thousands of others we can’t help. For now.”
The Federal Emergency Management Agency, the American Red Cross, and many other national relief agencies refer families to the NFBA each day for assistance. FEMA has put together an early preparation committee for the upcoming hurricane season. Emergency Interiors Furniture Bank has been asked to serve on that committee.
Exhibitors wishing to donate product from their showrooms in High Point should send an e-mail to Kevin Polk at kpolk@emergencyinteriors.org or call him directly at (919) 345-8516.
To become a sponsor of the National Furniture Bank Association, please call Don Lawrence at (800) 576-0774 or send an e-mail to dlawrence@Help1Up.org.
About the National Furniture Bank Association (NFBA): The NFBA is the 501(c)(3) non-profit organization of the home furnishings industry. Its mission is to create comfortable home environments by providing essential furnishings to those in need. No child in America should have to sleep on the floor. Kathy Ireland is the Help1Up Ambassador, and the NFBA Board of Directors includes Ray Allegrezza, Editor-in-Chief, Furniture/Today Magazine; Mary Frye, President, Home Furnishings International Association (HFIA); and, Steve DeHaan, Executive Vice President, National Home Furnishings Association (NHFA).
About MGM Transport Corp.:Thanks to an unfailing commitment to reliability and innovation, MGM Transport Corp. (www.mgmtransport.com) has grown into the transportation leader in the home furnishings industry since its inception more than half a century ago. Over the years, the multimillion-dollar, family-owned and operated business has transformed from a traditional trucking company to an innovative, full-service transportation, warehousing and logistics partner for manufacturers and retailers, both domestic and import. The company was the first in the home furnishings industry to offer online tracking and bar coding. MGM Transport Corp. is the specialist in LTL (less than truckload) services, with daily deliveries throughout the East Coast corridor and beyond, as well as direct deliveries from California. Through MGM’s commitment to deliver the best transportation and logistics services to the home furnishings industry, they have also developed MGM Warehousing & Distribution, MGM Home (white-glove, residential delivery), and MGM Nationwide for point-to-point truckload service anywhere in the United States.
Contact:
National Furniture Bank Association
Don Lawrence
Vice President, Communications
(800) 576-0774
dlawrence@Help1Up.org
http://www.help1up.org
MGM Transport Corp.
Paula Powell
Executive Administrator
(336) 812-8207
ppowell@mgmtransport.com
April 28th, 2006
By: Furniture World Magazine
In today’s rocky economic times, it is all too commonplace to see furniture manufacturers in the headlines, usually accompanied by the announcement that they are shutting down operations.
However, Catawissa/Baili Fine Arts & Crafts, a visionary
partnership between Pennsylvania-based hardwood components maker Catawissa Lumber and Chinese furniture designer Baili Fine Arts & Crafts, recently had the rare distinction of making headlines for opening up new markets worldwide.
After a local story about the startup of the Catawissa/Baili Fine Arts & Crafts partnership written by Simon Shifrin ran in Bloomsburg, Pennsylvania’s Press Enterprise on March 5, the story was picked up by the Associated Press Wire Service. The next day the Catawissa/Baili story ran in 15 major newspapers nationwide as far away as California, Texas and Florida. That’s an impressive achievement for a company that only made its first major debut at the International Home Furnishings Market in High Point, North Carolina, last October.
“After our debut at the Fall Market, we were sure we had a good product. The fact that the AP wire service picked up our story, however, confirmed that we are doing something quite unique,” said Bill Gittler, Jr., CEO of American hardwood furniture components manufacturer Catawissa Lumber & Specialty Company, the parent company and the American partner of Baili Fine Arts & Crafts. “We feel it is a tribute to the talents, experience and hard work of both our American and Chinese craftsmen to receive so much interest in the Catawissa/Baili Fine Arts & Crafts line so soon. It shows us that the American public is searching for craftsmanship without boundaries, which is the Catawissa/Baili hallmark.”
A division called the Catawissa Trading Company buys and sells lumber and wood components from Catawissa Lumber’s manufacturing division, then sells them to Beijing-based Baili Fine Arts & Crafts, owned by Chinese designer John Liu. Baili’s artisans handcraft the museum-quality furniture using centuries-old techniques. The finished pieces are then shipped back to Catawissa Trading Company.
The trading company, in turn, markets and sells the finished pieces to interior designers, decorators, home architects and high-end furniture dealers in the United States under the Catawissa/Baili Fine Arts & Crafts brand. (Catawissa Trading Company holds exclusive rights to sell and market Baili furniture in the United States).
All Catawissa/Baili furniture is handcrafted by Baili’s Chinese artisans from top quality, 100 percent Appalachian hardwood components manufactured by Catawissa in America. All joints are articulated and joined through wood and adhesives alone and the look of the furniture is accentuated by all-natural finishes that bring out the wood’s one-of-a-kind beauty. Since every piece is handmade, Catawissa/Baili prides itself on the limited availability of its products. No piece or collection will ever be mass-manufactured, with only 100 to 200 pieces per style produced at once. Because of this exclusivity, price points range from $400 to $6,500 per piece.
When Catawissa/Baili debuted last year, its catalog offered twelve individual accent pieces from its Japanese Shinto and American Mission design collections. This spring, Catawissa/Baili will introduce three complete collections, Japanese Shinto, American Mission and Chinese Ming, at the April 2006 International Home Furnishings Market in High Point. Each collection will offer a complete range of dining room, living room and occasional furnishings at Suites At Market Square Space 1-906.
April 28th, 2006
Thomas Russell
AT THE MARKET – Brazil-based International Furniture’s showroom for the April market here will feature three Brazilian manufacturers of youth furniture and other goods.
The company has shown some Brazilian-made product here, but mainly offered Chinese-made bedroom, living room and dining room furniture under the name Mobilia S.A.
Now, the 3,000-square-foot showroom, space 210 in the CenterPoint building at 401 S. Hamilton St., will display all Brazilian-made furniture, and feature Brazilian coffee and artifacts, with walls and flooring made from Brazilian logs.
“We want people to feel like they made a voyage to our country, and not only see but experience what we are all about,” said International Furniture President Eduardo Herscovitz.
Most Brazilian-made youth and kitchen items heretofore have had a rustic look, but this market will feature more sophisticated finishes and designs, Herscovitz said.
The company will show three collections of juvenile furniture and a line of upscale bunk beds. It also will have entertainment armoires and some kitchen furniture such as solid-pine cupboards and corner nooks.
The juvenile furniture mixes solid pine and medium-density fiberboard, Herscovitz said, and will be available in multiple finishes by Glascor, a Brazilian-based finishing company, including lacquered surfaces.
He didn’t name the manufacturers, but said they are all in the Sao Bento do Sul region of Brazil. A typical captain’s bed would retail between $399 and $699, while bunk beds will retail between $199 and $499.
International Furniture has an alliance with New Jersey-based Select Sales, which will have representatives on hand to market the goods to mail-order catalogs and Internet companies. Select Sales CEO Ken Debiak said he was impressed with the products.
“I am very excited about what Eduardo and the Brazilian factories have done with this particular product,” he said. “They have gone out and researched designs and finishes that I think are very exciting. It adds another dimension to Brazilian products.”
Debiak believes the product has a lot of potential with mass merchants and specialty stores.
April 28th, 2006
Thomas Russell –
Targets European market
HIGH POINT – For years, high-end case goods and accent manufacturer Maitland-Smith has targeted an audience with highly traditional tastes.
That isn’t changing, but the company has diversified its design portfolio with a contemporary collection called Evolu-Zione, introduced at the Cebu furniture market in the Philippines in February.
Products range from accent and occasional tables to sofas, armchairs and lighting, with mainly clean lines and lower profiles than Maitland-Smith’s traditional line. But as with the traditional product, mixed-media elements and exotic veneers are the norm.
The target audience for EvoluZione is mostly the European market, which typically attends shows like Cebu for products with mixed-media and other unique design elements. Designs could appeal to the Asian market as well.
EvoluZione has about 200 pieces, but could grow over the next six months.
The existing items represent a modern interpretation of some classic forms. EvoluZione also has some Art Deco and Retro influences from the 1940s, ’50s and early ’60s, with some modern art influences thrown in as well.
A sofa in the collection has a frame with rosewood veneers and sits on cast aluminum feet. Nesting tables have beaten brass tops with silver plating and veneers designed to look like fabric.
Dining chairs have been painted in bright greens and blues. Cocktail tables have chrome legs and satinwood and crotch mahogany veneers.
The project was launched while Seamus Bateson was company president. He left the company last week to become president, CEO and board chairman of contract furniture supplier Commercial Furniture Group.
“We wanted to do a high-end execution of styles that would approach that marketplace in a better way,” he said in a March interview, noting that international sales represent about 10% of Maitland-Smith’s business.
“We took this very eclectic approach and applied it to these modern style interpretations. We wanted to do something very different to attract a whole new customer.”
The company, which is part of Furniture Brands International, will launch some lighting and accessory pieces from the collection at the market here, Bateson said.
But to avoid confusing the majority of its customers with strictly traditional tastes, it will not have any furniture on display this market. Instead, it will show slides of furniture items to interested retailers.
Working with those customers, the company will help launch the group in select metro markets, Bateson said.
The company will use feedback from the High Point market to make some changes for the U.S. market, but the overall contemporary design approach likely will be the same.
By October, a larger introduction tailored to the tastes and needs of U.S. buyers may be offered. This may take place in the company’s current showroom or an off-site location.
The show here at 227 Russell Ave.
April 28th, 2006
Thomas Russell
Will debut in High Point
HIGH POINT – Designers & Makers, a Vietnamese manufacturer of high-end furniture, is making its debut in High Point this week.
The three-year-old company has shown at furniture markets in Singapore and Vietnam, and currently sells to customers in Russia, Australia, the Middle East, Greece, Canada and the Caribbean.
D&M also has designed product for high-end companies such as Maitland-Smith and Sarreid, said Marketing Manager Jacqueline Robinson.
It now wants to sell some of its own designs in the U.S. market, and thought High Point would be a good place to start.
Its 550-square-foot showroom, in space 2547 of Showplace, features about 100 items, Robinson said.
Pieces include a broad mix of eclectic accent and occasional furniture, ranging from office desks and bookcases to leather club chairs and chests. The goods are made from a variety of materials such as walnut veneers and solids, distressed and hand-painted leather and engraved bronze and marble.
Price points are at the upper end, with bookcases retailing from $1,600 to $2,400 and wine cabinets from $1,200 to $2,000. Wood armoires start at $3,200 retail and leather club chairs begin at $1,500.
President Charles Robinson is optimistic about the company’s prospects in High Point.
“We truly believe our exquisite, high-quality, functional furniture is something U.S. buyers are seeking,” he said. “Now is the time to share our vision of bringing world-class fine furniture and accessories at competitive prices to the U.S. market.”
Jacqueline Robinson said D&M thought about showing in High Point last year, but it wasn’t feasible. She said the timing is right now because the company has just hired a distributor for the U.S. market.
With such high-end exhibitors as Maitland-Smith, Theodore Alexander, Sarreid, Hekman and others, she also believes High Point will prove a good fit for the company.
“We definitely want to give it a chance,” she said. “I think it’s going to be right up our alley.”
April 28th, 2006
Gary Evans
Will show high-end contemporary
HIGH POINT — A number of furniture makers from Brazil will exhibit at the April market here, showing U.S. retailers a selection of high-end contemporary furniture available for export.
The exhibitors are part of ABIMAD, the three-year-old Brazilian High-End Furniture Manufacturers Assn., which represents 200 factories. Participating members will have two spaces in the International Home Furnishing Center, H-165 in the Interhall and G-867.
ABIMAD sponsors a furniture show each year in Sao Paulo, Brazil’s largest city, and hosts a trade mission of international buyers, including a number from the United States, who attend the show at the association’s expense. Association members at the market here will begin selecting participants and seeking input from American retailers who want to attend ABIMAD 2007.
This year’s show in February exceeded expectations, according to ABIMAD, drawing 9,285 retailers, interior designers, architects and professionals to see new collections, innovations and design trends presented by 167 exhibitors.
ABIMAD said it sponsored 650 Brazilian retailers, paying full travel expenses. In addition, the association sponsored 87 foreign buyers from 40 other countries that attended the show and the International Buyer’s Project, a two-day event of business meetings among international buyers and exhibitors.
Including those who traveled on their own, buyers came to the show from 56 nations, the association said. It said its members are starting to increase exports to various markets, especially the Middle East.
According to ABIMAD, the U.S. market has remained a challenge for its members, who believe U.S. retailers look first to Italy and China.
The association said its members have the capability to adjust production to U.S. specification and requirements. The group noted that Brazilian factories have a specialized labor force, state-of-the-art machinery, an abundant variety of woods and veneers, and good leather.
What’s missing, according to a statement from manufacturers, is “more integration between them and the U.S. retailers in order to cooperate with each other aiming for one common goal: to reach the right product in quality and finishing for a fair price.”
Brazil’s currency, which has grown stronger against the dollar, also has been a problem.
Some ABIMAD members are exhibiting at international shows, such as High Point and soon in Las Vegas, as part of the Brazilian furniture program supported by APEX-Brazil, the Trade and Investment Promotion Agency.
The association also is promoting the development of export consortiums, a purchasing department for raw materials and the Hall ABIMAD magazine.
A key component is the Quality for Export program, launched last year and considered by ABIMAD as the most important project for 2006-2007. It aims to improve the image of ABIMAD members abroad.
Members interested in obtaining the ABIMAD Export Seal get help from an expert in furniture exports to analyze and certify qualified companies for the international market.
Certification requires attention to product and factory selection, product specifications and engineering, sample inspection, quality assurance, packaging, product flow, problem solutions and sales and after-sales services.
The association said it has a long-term commitment to the international market, and that the programs stem from the focus of manufacturers on demonstrating integrity with foreign retailers.
For additional information on ABIMAD, contact Rafael Molon, director of international relations, at 55-48-3033-1770 or by e-mail at Rafael@abimad.com.br.
April 28th, 2006
Jeff Linville
Retail test exceeds expectations
AT THE MARKET — High-end furniture maker Harden is showcasing a new gallery program this market after a successful trial at three stores.
The full-line manufacturer, based in McConnellsville, N.Y., held a ribbon-cutting Wednesday morning in its showroom for the Harden Home Studio program, its first in-store concept. The company has invited executives from the three test stores to its space at 200 N. Hamilton St. to tell about their results, which Harden said exceeded expectations in sales, profitability, reception by store staff and consumer response.
Harden will hold a breakfast seminar here at 8 a.m. Friday led by Martin Roberts, president of Grid2 International, which designed the gallery prototype, and Al Wight, president of Strategic Decisions, who conducted consumer research for Harden. The company shows at 200 N. Hamilton, space
S-110.
Speaking at the seminars about the gallery tests are Leigh Capshaw, Gallahan’s Furniture, Fredericksburg, Va.; Brian Staub, The Woods, Colts Neck, N.J.; and Todd Lehman, Interiors, Lancaster, Pa.
Harden expects to open some 50 Home Studio galleries this year. They require only 1,000 square feet of space and come with signage, lighted kiosks, catalogs and customization options.
The company offers 850 fabrics, 31 standard wood finishes and 35 styles of hardware. Delivery is in six to eight weeks.
The high-end, full-line manufacturer showed an early version of the concept — then called Harden Expo — to retailers at the October market, and in November installed it in Gallahan’s, Interiors and The Woods — stores of varying sizes. It made some adjustments based partly on the in-store experience, said Doug Cleveland, the company’s national sales manager.
“It really emphasizes the features and benefits of the Harden brand,” said Cleveland. That information is given more emphasis than in the first version of the display, which had more of a focus on the fact that the line is one of a dwindling number that is still primarily U.S.-made.
“The competition in our business is so brutal now that it is not enough to just stand there and say that we make it in America,” said Cleveland. “We have to show what’s in it for the consumers.”
The presentation also points out the company’s ability to customize pieces, with the goal of generating a higher volume of big-ticket special orders. The test stores reported significant Harden sales gains, Cleveland said.
April 28th, 2006
— Casual Living,
Acquisition part of strategic expansion
Robb & Stucky has purchased The Home of Fine Decorators, a super-luxury design firm, located on the East Coast of Florida and Las Vegas, with a portfolio of both commercial and multi-million dollar residential projects.
The Home of Fine Decorators adds more than 30 years of residential and commercial design expertise to the 90-year history of Robb & Stucky. The design firm is renowned for sophisticated installations which showcase the company’s authority in residential and high-rise style including public space and sales center design and has created award-winning projects throughout the country.
“The Robb & Stucky corporate acquisition of Fine Decorators is an exciting growth opportunity for both companies,” said Clive Lubner, chief executive officer for Robb & Stucky. “Robb & Stucky benefits by acquiring the design talent and national clientele of The Home of Fine Decorators,and they in turn gain the tremendous economies of scale of the country’s premier furnishings and interior design brand.”
Steven Zelman, the current owner, will remain president of The Home of Fine Decorators directing the company and its team of talented designers.
Both organizations’ business philosophies complement one another, emphasizing the finest quality products and unparalleled customer service. The acquisition is part of the strategic expansion of Robb & Stucky and increasing its ability to capture the luxury lifestyle market.
April 28th, 2006
By: Furniture World Magazine
Tempur-Pedic International Inc., a leading manufacturer, marketer and distributor of viscoelastic and premium mattresses and pillows worldwide, announced net sales and earnings for the first quarter ended March 31, 2006.
First Quarter 2006 Financial Summary
- Net sales rose 3% to $228.6 million from $222.4 million in the first quarter of 2005. Retail channel sales worldwide increased 8%. Sales in the U.S. retail channel grew 7%. Sales in the U.S. furniture retail channel grew 14%. Sales in the international retail channel increased 12%.
The U.S. dollar strengthened compared to first quarter 2005, which resulted in a negative foreign exchange rate impact of $7.0 million on total net sales in the first quarter of 2006, or approximately 3% of total net sales and approximately 9% of international sales.
- Pro forma earnings per share (EPS) rose 11% to $0.30 per diluted share in the first quarter of 2006 from $0.27 per diluted share in the first quarter of 2005. EPS under Generally Accepted Accounting Principles (GAAP) rose 12% to $0.29 per diluted share in the first quarter of 2006 from $0.26 per diluted share in the first quarter of 2005.
- Cash flow provided by operations increased to $51.6 million in the first quarter of 2006 from $34.1 million in the first quarter of 2005. The increase was principally driven by improved working capital.
- The Company made a voluntary prepayment of $21.8 million on its European term loan, in excess of its scheduled principal payment of $5.8 million for a total principal reduction of $27.6 million.
- During the first quarter, the Company purchased 8.0 million shares of its common stock at a total cost of $98.2 million.
For the first quarter of 2006, the Company reported net income under GAAP of $26.9 million as compared to $26.8 million in the first quarter of 2005. The Company reported pro forma net income of $27.5 million, the same level as reported for first quarter 2005. Changes in foreign exchange rates reduced GAAP and pro forma net income by approximately $1.0 million compared to first quarter of 2005. Effective January 1, 2006 the Company began recording expense associated with employee stock options in accordance with the Statement of Financial Accounting Standards No. 123R and GAAP results for the first quarter of 2006 include a $0.01 charge for FAS 123R stock option expense and certain other non-cash stock-based compensation expense. Share repurchases in first quarter 2006 contributed approximately $0.01 to first quarter 2006 fully diluted EPS.
For a complete discussion of pro forma adjustments, see the Supplemental Information included later in this press release.
Chief Executive Officer Robert B. Trussell, Jr. commented, “After a challenging period in the second half of 2005, Tempur-Pedic International turned in a solid quarter of net sales and earnings in spite of a significant foreign exchange impact. We are pleased to report a new record for both net sales and net mattress units. The viscoelastic category we created continues to expand at a fast rate and Tempur-Pedic remains the market and innovation leader.”
President and CEO-elect H. Thomas Bryant noted, “During the first quarter, Tempur-Pedic generated growth and delivered our best quarter ever in terms of net sales. The first quarter comparison was especially difficult given the impact of our February 1st 2005 price increase. As previously noted, we believe this action caused buy ahead and increased net sales in the first quarter of 2005 by approximately $12 million. While our international results in local currencies met our expectations, the strong U.S. dollar reduced reported revenues by $7 million.
“In the first quarter, we continued our efforts to improve the overall financial strength of the business. Strong performance throughout our operations generated significantly improved working capital. Operating cash flows for the quarter increased as we continued to reduce our levels of inventory. In addition, due to strong performance from our international operations, we made a voluntary prepayment of nearly $22 million on our European term loan. Reflecting our overall confidence and the strong cash flow dynamics of the business, the Company purchased more than $98 million of common stock during the quarter.
“Last quarter, we discussed several initiatives to accelerate U.S. sales growth. Since the beginning of the year, we have increased the size of our sales force and we have already seen a notable impact as our sales team spent more time at the store level working with accounts to improve sales productivity. We have selectively added high quality retail partner stores.
“We have expanded distribution within our existing accounts and we will build on that momentum in the second quarter. During the second quarter, we will begin shipping our two new high-end mattresses in the U.S., ‘The GrandBed by Tempur-Pedic(TM)’ and ‘The RhapsodyBed by Tempur-Pedic(TM),’ as well as the newly redesigned Classic model. We have begun taking orders and have been pleased with the level of retailer acceptance. We believe these new mattress models will allow Tempur-Pedic to expand floor space within our accounts.
“Internationally, we continue to experience tremendous mattress unit growth across our retail markets. We are expanding distribution and in the first quarter we launched ‘The CelebrityBed by Tempur-Pedic(TM)’ in the United Kingdom. Our premium products are enjoyed by consumers throughout the world, and, in fact, we believe our Company has the most substantial company-owned foreign operations among all U.S. bedding manufacturers.
“We have continued to be impacted by elevated prices for certain raw materials, which add significant cost to our operation. However, our initiatives to generate productivity improvements and cost reductions throughout our manufacturing and supply chain operations have yielded significant benefits. As a result of these initiatives, first quarter gross margin is slightly better than we anticipated. We currently expect our gross and operating margins to improve over the course of the year.
“While we are focused on controlling costs, we also increased our advertising investment around the world as we continue to build brand awareness. We are pleased to report that our marketing investments have seen quantifiable results. A third party independent research firm recently completed a survey finding that Tempur-Pedic U.S. total brand awareness increased significantly to 78% from 60% just two years ago.”
Mr. Trussell concluded: “After managing through an exceptionally challenging quarterly comparison, we are currently on track to report the best year in Company history. We are very confident in the Company’s future based on our superior products and market leadership in the viscoelastic and specialty categories. As we have previously disclosed, Tom will be taking on the role of Chief Executive Officer at the end of next week. The transition has been remarkably smooth and I leave the Company in the best possible hands. Having founded the U.S. business 15 years ago, I can say Tempur-Pedic is positioned better than ever to capitalize on the rapidly growing premium mattress segment around the world.”
Share Repurchase Program
During the first quarter of 2006, the Company purchased 8.0 million shares of its common stock for a total cost of $98.2 million. From the commencement of the repurchase program on October 20, 2005 through the end of the first quarter of 2006, the Company has purchased 14.9 million shares of its common stock for a total cost of $174.2 million. As of the end of the first quarter of 2006, the Company had $5.8 million remaining under its existing share repurchase authorization. Common shares outstanding at March 31, 2006 were 84.5 million compared to 92.4 million at the end of 2005 and 98.2 million at the end of 2004.
2006 Guidance
The Company re-iterated guidance for net sales and increased guidance for GAAP diluted earnings per share for full year 2006. The Company continues to expect full year 2006 net sales to range from $940.0 million to $970.0 million, an increase of 12% to 16% over 2005. The Company increased its full year 2006 guidance for GAAP diluted earnings per share to only reflect shares repurchased during the first quarter of 2006 and interest expense on associated borrowings. Compared to the Company’s previous GAAP guidance of $1.18 to $1.23, the Company currently expects GAAP diluted earnings per share for 2006 to range from $1.24 to $1.29, which includes a full year GAAP charge of approximately $0.02 for stock option expense. The Company notes that its guidance for diluted earnings per share does not assume any benefit from a potential reduction in shares outstanding related to future share repurchases. The Company also notes that its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company’s control. The Company also notes that as discussed in Supplemental Information below the Company is providing certain pro forma information with respect to pro forma earnings per share to provide investors with useful information during this transitional period when many companies are adopting the provisions of FAS 123R, but going forward the Company does not intend to provide any pro forma information or pro forma guidance to reflect the effects of FAS 123R or other non-cash stock-based compensation expense.
About the Company
Tempur-Pedic International Inc. (NYSE:TPX) manufactures and distributes Swedish Mattresses and Neck Pillows(TM) made from its TEMPUR(R) pressure- relieving material: a proprietary material that conforms to the body to provide support and help alleviate pressure points. Products are currently sold in 60 countries under the TEMPUR(R) and Tempur-Pedic(R) brand names. World headquarters for Tempur-Pedic International is in Lexington, KY.
April 28th, 2006
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