Mattress sales are on fire: Tempur Sealy CEO

A whole bunch of consumers are probably getting a better night's sleep judging by the latest earnings out of mattress giant Tempur Sealy.

Tempur Sealy's first quarter sales surged 26.9% from a year ago, leading to an 88.2% spike in adjusted earnings despite the company dealing with supply chain constraints related to an innerspring shortage. Sales in Tempur's North America and International segments rose 27.6% and 23.4%, respectively.

Tempur Sealy Chairman and CEO Scott Thompson said on Yahoo Finance Live the results reflect two powerful trends.

First, U.S. consumers in the market for entry-level mattresses used their new stimulus checks to buy a new bed. Meanwhile, the gaining momentum in the world economy as the pandemic rounds the corner is giving those with more money to spend on a mattress greater confidence to upgrade.

"When we look around the world, we see a really robust retail market. Obviously there is a lot of liquidity in the system, interest rates are low and consumer confidence coming out of the virus [COVID] is very strong," Thompson explained.

Here is how Tempur Sealy performed compared to Wall Street estimates in the first quarter:

• Net Sales: $1.04 billion vs. $1.0 billion

• Adjusted EPS: $0.64 vs. $0.51

Tempur Sealy lifted its full-year guidance in the wake of its strong start to the year.

The company sees full-year earnings of $2.50 to $2.70 a share, up from $2.30 to $2.50 previously. Tempur Sealy shares have surged 45% year-to-date, outperforming a 40% gain in Casper and 3% rise in Purple.

Thomson said the guidance hike is warranted based on what he sees amongst consumers.

"Stimulus checks will eventually dry up, I am not sure exactly when, but they will dry up. But at the same time, the overall economy should be recovering with an improvement in unemployment. If you look at just the wealth that has been created whether it's in the stock market or housing, it's certainly going to support some additional retail sales. Also a lot of the stimulus checks have got saved. If you look at the savings rate, that money hasn't been spent. We think 2021 to us looks very robust and 2022 looks very good to us," Thompson said.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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