Snoring is one of the two biggest issues stopping people from getting a good night sleep, according to Tempur Sealy International Inc.
Chief Executive Scott Thompson, and the mattress maker has moved to tackle the “damn serious” problem.
The company has tackled the other issue, “sleeping hot,” with cooling technology that’s built into some of its mattresses.
Snoring was addressed with the fourth-quarter launch of the TEMPUR-Ergo Smart Base powered by Sleeptracker-AI, a system equipped with sensors that can track things like heart and breathing rate and responds by adjusting the sleeper’s position. Sleep data and tips are also sent to the owner’s smartphone.
The mattress category has benefited from the consumer shift to spending for the home during COVID-19. Tempur Sealy reported better-than-expected fourth-quarter earnings, gave strong full-year 2021 guidance and increased its share buyback program on Thursday.
Tempur Sealy shares have rallied 13.2% this week.
According to Thompson, who spoke with MarketWatch after the earnings call, Tempur Sealy had seen its sales rise even before COVID-19.
During the pandemic, not only have people been replacing their old mattresses, younger consumers have been moving out of apartments and into more permanent homes they’ve purchased, which has prompted increased spending on higher-quality furniture and home goods. Read more about the ‘Great Reshuffling’ taking hold among millennials.
Thompson says consumers have been looking to replace “some entry-level imports, disposable beds, [that] don’t have the durability of ‘traditional’ beds.”
“I do think there’s more churn because those beds aren’t holding up.”
To be sure, a bed like the TEMPUR-Ergo Smart Base powered by Sleeptracker-AI is an investment. That base can cost more than $3,000 depending on the size. Purchasing a mattress can cost that much or more.
But consumers are concerned with health and wellness, and Tempur Sealy puts sleep in that category.
And though the sound of someone snoring like a buzz saw may be the butt of many jokes, if you live in a house, or worse, sleep in the same room, with someone who snores, Thompson said the problem can be “damn serious.”
Its newest product drove average selling price (ASP) growth in the fourth quarter, Thompson said.
“The strong broad-based sales growth highlights the strength of Tempur Sealy’s portfolio of brands, its expanding omnichannel distribution model, as well as the benefit the entire U.S. bedding/furniture industry is seeing from a shift in consumer spending and a strong U.S. housing environment,” wrote Raymond James analysts in a note.
Raymond James rates Tempur Sealy stock strong buy with a $42 price target, up from $32.
“We think strong new and existing home sales can spur higher mattress purchases, and less competition from China and Asia benefits Tempur Sealy with U.S. anti-dumping duties in place,” wrote CFRA.
CFRA rates Tempur Sealy shares strong buy and raised its price target $12 to $41.
“Tempur Sealy is not only benefiting from industry tailwinds, but is also likely taking meaningful market share with its industry-leading brands, superior supply chain capabilities and amplified advertising,” wrote Wedbush analysts in a note.
Wedbush rates Tempur Sealy shares outperform with a $36 price target, up from $32.
Tempur Sealy stock closed Thursday at $32.18. It’s up 36% over the past year, outpacing the benchmark S&P 500 index
which is up nearly 16% for the period.
Thompson said on the call that the feedback the company has gotten so far on the latest product has been positive. For anyone who snores, and for those who listen to it, that could be good news.
“[Snoring] results in people sleeping in separate bedrooms. It results in a lot of kicking of partners,” he told MarketWatch.