Markets
DHC

Tempur Sealy (TPX) Crashing After Ending Contracts with Mattress Firm

A generic image of a person on their laptop
Credit: Shutterstock photo

On Monday, shares of Tempur Sealy International TPX are crashing-and frankly, burning-after it announced it ended all contracts with Mattress Firm, one of the company's key customers. In mid-morning trading, TPX stock was already down over 27% to $45.72 per share.

If Tempur Sealy stock stays on this course today, it stands to suffer its biggest one-day drop since March 12, 2008, when it tumbled about 38%. In the past one year, TPX has actually gained 4.72% but year-to-date, the stock is down 7.45%.

As of January 27, contracts were terminated due to disagreements over changes and many failed attempts to enter into a "mutually agreeable supply deal," said Tempur Sealy. The company expects to completely stop doing business with Mattress Firm during the first quarter of 2017.

Mattress Firm is Tempur Sealy's biggest and most profitable customer, and because of this, estimates of future periods will have to be lowered, ROE Equity Research analyst Laura Champine told Reuters . Tempur Sealy said that during fiscal 2016, sales to Mattress Firm represented 21% of its total worldwide sales, falling 11% from the year-ago period.

Mattress Firm is owned by South African retailer Steinhoff International SNH , which bought the mattress company last year for $3.8 billion.

Tempur Sealy is expected to report its fourth-quarter fiscal 2016 financial results on February 16 before the bell. Zacks estimates earnings of $1.04 per share and revenue of $744 million for the company.

Stocks that Aren't in the News…Yet

You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015, with a stellar average gain of +26% per year. See these high-potential stocks now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Tempur Sealy International, Inc. (TPX): Free Stock Analysis Report

Senior Housing Properties Trust (SNH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

DHC TPX

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More