Mattress malaise? Softer demand continues through the second quarter for bedding vendors

HIGH POINT — Stagnant. Depressed. Sluggish.

Those are just a few words bedding executives are using to describe the mattress business in the second quarter. By all accounts, the category has settled back into its traditional ebb and flow driven primarily by key sales holiday promotions, and the second quarter delivered a sales bump from Memorial Day activity.

The overriding consensus is that the malaise will continue at least through November after this year’s elections and possibly beyond the new year.

According to the latest forecast from the International Sleep Products Assn., sales of mattress units are expected to drop 4% for the total year, and the industry will see a 2% decline in dollars for the year when compared with 2023. Keep in mind that last year wasn’t filled with a lot of sunshine.

In comparison, 2023 posted an 8% drop in the number of mattresses and stationary foundations sold and a 6.8% slide in the value of shipments sold in the U.S. Compound last year with data from 2022, and the category has undergone consistent contraction. For reference, 2022 delivered a 14.7% drop in numbers sold and a 10.7% drop in dollars.

ISPA’s report attributes much of the slump to “softer demand based on the lingering impact of higher interest rates” on the housing market coupled with the “consumption of durable goods.”

Investment bank Piper Sandler issued survey results following the Memorial Day weekend — traditionally a boost for the mattress business — that offered a bright spot. The report said “sales continue to trend toward ‘less negative.’”

The report continued to say that “the second quarter appears to be tracking better than the first quarter.”

By the numbers

Publicly traded companies in the bedding space shared consensus that the quarter and the balance of the year will prove challenging.

During its quarterly earnings call, Sleep Number looked forward to improved sales through the balance of the year within the low single digits, with most of that coming in the second half of the year. The vertically integrated retailer moved late last year to reduce its operating expenses by $50 million with a round of layoffs and store closures.

“The mattress industry remains in a historic recession,” said Shelly Ibach, chair, president and CEO of Sleep Number, adding, “While consumer sentiment is showing signs of improvement, the consumers’ purchasing power is limited due to elevated interest rates and record high credit card debt. As a result, consumers continue to scrutinize their spending and make near-term decisions based primarily on need, price and perceived value, and they are deferring higher ticket durable purchases.”

Like many in the category, Tempur Sealy International is looking for the second half of this year to flip the script and start churning sales.

The company’s forecast calls for “a robust 15% growth rate year-over-year in a challenged market.”

Tempur-Sealy’s guidance is based on sales increasing low- to mid-single digits compared with last year, said Scott Thompson, CEO. He also recognized that the U.S. industry unit volumes are flat to slightly compared with last year, giving the industry some headwinds in the first half. Thompson said the company has been successful in lining up new distribution in the U.S., and its recent product introductions have been successful.

“We’ve been bouncing around the bottom for a long time, and it just seems very reasonable that we should begin to normalize into what I’d call relatively minor growth from an industry standpoint,” Thompson said. “And then quite frankly, even if the industry doesn’t deliver that growth, as you know, we’ve been a fairly robust market share gainer over a number of quarters. And we don’t see any reason why that won’t continue going into the back half of the year.”

Shave costs, shore up efficiencies

Two key suppliers in the category — Culp Inc. and Leggett & Platt — have outlined restructuring plans to shave costs and shore up efficiencies to counteract declining mattress sales. The moves are a sign that sales in the category are down significantly.

Leggett & Platt is in the midst of closing between 15 and 20 facilities throughout its network. The company said the move is expected to generate between $40 million and $50 million in earnings before interest and taxes on an annualized basis.

“I want to reiterate that we are proactively making changes where needed to strengthen our business and better position us to capture long-term opportunities,” said Benjamin Burns, executive vice president and chief financial officer of Leggett.

For its part, Culp is closing two facilities — one in Canada and one in Haiti — in a move to shave more than $10 million in costs.

Both companies said the bulk of the restructuring would impact their bedding operations.

 See also:

The post Mattress malaise? Softer demand continues through the second quarter for bedding vendors appeared first on Furniture Today.