Mattress Firm Holding Corp. announced its financial results for the third fiscal quarter ended Oct. 29 . In a release on Dec. 4 , the Company said that net sales for the third fiscal quarter increased 17.7 percent to $326.2 million , reflecting comparable-store sales growth of 2.9 percent and incremental sales from new and acquired stores. The Company reported third fiscal quarter earnings per diluted share on a generally accepted accounting principles basis of $0.53 , and EPS on a non- GAAP adjusted basis, excluding ERP system implementation costs, of $0.55 . "As a result of initiatives we recently put in place combined with the early benefits we are experiencing from a renewed commitment of manufacturer advertising spend, we successfully drove traffic and comparable store sales growth in our third fiscal quarter," said Steve Stagner , Mattress Firm's president and chief executive officer. "We implemented a number of sales initiatives during the quarter that encouraged our sales associates to improve their productivity and capture a higher percentage of sales from customers. While these initiatives resulted in an anticipated reduction in margins, we experienced a positive momentum shift in comparable store sales toward the end of the quarter that has continued into our fourth quarter. Furthermore, our strong pace of organic growth continued as we added 40 new stores to our base this quarter. We remain focused on our strategy of driving continued sales growth and building relative market share." Third Quarter Financial Summary -Net sales for the third fiscal quarter increased 17.7 percent to $326.2 million , reflecting comparable-store sales growth of 2.9 percent and incremental sales from new and acquired stores. -Opened 40 new stores and closed six stores bringing the total number of Company-operated stores to 1,155 as of the end of the fiscal quarter. -Income from operations was $31.8 million . Excluding $1.0 million of ERP system implementation costs, Adjusted income from operations was $32.8 million , representing an increase of $4.8 million , or 17.1 percent, over Adjusted income from operations for the comparable prior year period. -Adjusted operating margin was 10.0 percent of net sales as compared to 10.1 percent in the same quarter of fiscal 2012, and consisted of a 150 basis-point improvement in sales and marketing expense leverage, offset by a 130 basis-point decline in gross margin and a 30 basis-point decrease from general and administrative expense deleverage. -Net income was $18.1 million and GAAP EPS was $0.53 . Excluding $0.6 million , net of income taxes, of ERP system implementation costs, Adjusted net income was $18.7 million and Adjusted EPS was $0.55 , an increase of 18.1 percent over Adjusted EPS for the comparable prior year period. For the full fiscal year-to-date: -Net sales increased $155.6 million , or 20.8 percent, to $904.7 million , for the three fiscal quarters (39 weeks) ended Oct. 29 , from $749.1 million in the comparable prior year period, reflecting incremental sales from new and acquired stores, offset by a comparable-store sales decline of 0.5 percent. -The Company opened 121 new stores while closing 23 stores during the first three fiscal quarters of fiscal 2013, adding 98 net store units. -Net income was $44.3 million for the three fiscal quarters ended Oct. 29 , and GAAP EPS was $1.30 . Excluding $2.0 million , net of income taxes, of acquisition-related and ERP system implementation costs, adjusted net income was $46.3 million for the three fiscal quarters and Adjusted EPS was $1.36 . Acquisitions Following the completion of the third fiscal quarter, on Nov. 13 , the Company completed the acquisition of a small mattress retailer operating under the name Mattress People. The acquired business consists of five mattress specialty stores located in Nebraska and Iowa for a total cash purchase price of approximately $1.8 million , subject to customary post-close adjustments. The Company intends to rebrand the acquired stores as Mattress Firm . Additionally, on Nov. 26 , the Company entered into an agreement to acquire the assets and operations of Perfect Mattress of Wisconsin , a Mattress Firm franchisee, including 39 mattress specialty stores located in Wisconsin and Illinois , for approximately $6.3 million , subject to customary adjustments. The closing of the acquisition, which is conditioned on the prior satisfaction of customary closing conditions, is expected to occur by the end of the fourth fiscal quarter of 2013 and will be funded by cash reserves and a $2.0 million seller note that is payable in quarterly installments over one year. Liquidity and Capital Resources The Company had cash and cash equivalents of $15.2 million at the end of the third fiscal quarter on Oct. 29 . Net cash provided by operating activities was $30.3 million for the third fiscal quarter. As of Oct. 29 , there were no borrowings outstanding under the revolving portion of the 2012 Senior Credit Facility (as defined in the Company's filings with the Securities and Exchange Commission ) and approximately $1.4 million in outstanding letters of credit, with additional borrowing capacity of $98.6 million . Financial Guidance The Company is updating its guidance relating to net sales and store growth for the fiscal year (52 weeks) ending Jan. 28, 2014 ("fiscal year 2013") and reaffirming the Adjusted EPS guidance for fiscal year 2013. ((Comments on this story may be sent to firstname.lastname@example.org ))
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