Shares of bedding maker Mattress Firm (MFRM) plummeted after reporting quarterly financial results after the close on Thursday.
WHAT'S NEW: Mattress Firm reported first quarter profit and revenue that were below analysts' estimates, with Q1 comparative sales down 1.1%. Mattress Firm guided for Q2 EPS in the range of 62c-69c before trade name amortization, while analysts were expecting 92c. The bedding maker also lowered its yearly view, saying it sees earnings per share for 2016 to be $2.25 to $2.35, excluding trade name amortization, compared to its prior view of $2.50-$2.60. Additionally, the company lowered its yearly revenue view.
WHAT'S NOTABLE: With its quarterly earnings, the company announced plans to consolidate all stores under the Mattress Firm banner nationwide. The company decided in late April to rebrand all of its stores operating under different brand names to the Mattress Firm brand name over the next approximately 12 to 18 months. The company expects to largely complete this rebranding by Q1 of 2017. In connection with this decision, the company revalued certain of the tradename intangible assets held by the company and recorded the corresponding non-cash impairment charge of $138.7M in Q1 to write down these intangible assets to fair value. The remaining value of the trade name intangible assets will be amortized over the period of the transition to one nationwide banner.
PRICE ACTION: Mattress Firm is down almost 12% in after-hours trading, to below $30 per share.
OTHERS TO WATCH: Peers of Mattress Firm include Tempur Sealy International (TPX), which is down 2.3% in after-hours trading, and Select Comfort Corporation (SCSS), which is down fractionally.
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