TPX - Earnings call transcript Q3 2019 | Tempur Sealy International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Tempur Sealy Third Quarter 2019 Earnings Conference Call. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Aubrey Moore with Investor Relations. Please go ahead, Ma’am.

Aubrey Moore

Operator. you, Thank and everyone, for in participating Good thank call. today's morning, you

Chief are our Rao, Chairman, and Q&A. prepared in call me open Scott we Executive Officer. will remarks, Lexington President Bhaskar Joining for and headquarters Thompson, the After CEO; President Vice Financial and

but the Litigation that income that net statements XXXX business. the earnings, These Reform the to factors sales, adjusted Forward-Looking XXXX. involve are in EBITDA Actual for cautioned to regarding expectations limited Act forward-looking during provisions could adversely annual the statements, discussed differ Risk are identified of company's and are company's of Form the company's quarterly The from those competitive, results “Special the today. made economic, this of not Forward-looking discussed Harbor call the in on these to, performance other factors including Factors”. cause anticipated make pursuant issued and a Form and/or SEC materially factors Regarding actual and uncertainties. include release affect and that reports Note differ XX-K regulatory, we operating could variety Safe Private also XX-Q press periods, heading reports subsequent under company's that due Securities and Statements the Investors results may to factors including, filings, on

made. it forward-looking forward-looking Company of statement. Any which date no is The as obligation statement speaks update only undertakes on to any the

directly currency press used regarding well information, otherwise methodology This information in release the non-GAAP The information contains GAAP press morning's the our reconciliations except financial most this will the financial as release constant information. in commentary of presentations. to discussed as non-GAAP include comparable

also press the the it with have filed have investor We and release on at SEC. company's investor.tempursealy.com website the posted

will release. the information press provided the comments in Our detailed supplement

that my over with And pleasure introduction, the Scott. turn now to call is it to

Scott Thompson

on review Bhaskar morning, with our joining Good in the then call. performance thank XXXX third financial you on and earnings us will I'll start our for quarter performance, comments you, Thank detail. Aubrey. operating quarter's

will long-term some with I allocation thoughts conclude Finally, overview initiatives of and corporate current on and an trends. capital our

quarter third three our across America, Europe of North regions. with outstanding, Asia-Pacific. all XXXX growth and The was of

the fact, company’s in this In quarter quarter the was best history.

We're to and last compared report grew as pleased to earnings year, double-digit. sales

leverage common stock the quarter. Our XX conversion of had one-time cash EBITDA. in we We no a and growth declined, there and million repurchased to were strong adjustments during

XX% for the adjusted sixth growth. around the of quarter. robust and to XX%. the Net very sales competitive based, and strength geographic broad adjusted the the This of perspective a reported demonstrating EPS marks channel increased with were positive EBITDA company's results world. adjusted Turning results increased the The position brand, EPS increased XX%, quarter consecutive

and quarters to Mattress America, demonstrate excited few North last our uncertainty The and economic navigate Lots to advantage our we are of regional bedding take new the changing with ability Big In relationship Firm. start market.

products to products we subsequent shipping of end of Mattress this we quarter Firm. and During the at the to Sealy Big the quarter, completed rollout began Lots

fourth our both in quarter, business new staffing quarter earnings, During expanded third for ramped we impact fact quality to and positively the XXXX. starting did our these as operations up our in X expected contribute of not control inefficiencies experienced of accounts and million accounts procedures, are to we new the

items quarter our from to results. third like highlight three I'd

expectations demand, net above global base for our increases quarter sales mentioned, for with in I and the the as First, Sealy all third Tempur-Pedic the both period prior around XX% versus world. broad grew

solid the the of choppy U.K. We which Kong, performance. basis. Despite issues, business delivered countries market in net a Looking on X% experienced created these uncertainty conditions. a and grew specific internationally, degree sales Hong currency France, constant a international China, team

North sales a growing with we Tempur-Pedic In both the robust grew quarter, Sealy XX% double-digits. in and America,

for in reminder, changes quarter brand. no no the and this a products significant new had As Tempur-Pedic distribution

Rollout distribution fourth product take note of Tempur-Pedic mix of in for the new shipping share to I Tempur-Pedic significant our gains price improved should market and high lines end believe the quarter the in start XXXX. Tempur-Pedic We quarter, our were momentum. continued we continues products band. premium the as complete gain second to that in also new product TEMPUR-Breeze

at we quarter. Sealy’s The combination also time expanded we very see outstanding growth to America, in pleased North in in while the continued sales resulted successfully are our performance to the distribution. Turning momentum, same sales

of quality products. the product on highest level internal and that our reason to existing focus retailers customer to be into of highest and reliability the the initiatives manufacturing portfolio Our deliver lean continues service

the believe also U.S. China duties manufacturing bedding all case recently manufacturers. benefited against enacted We anti-dumping

the late Our in of and and new operation are America team evaluated our & Sealy The term results which North long art in we plant with Sealy XXXX. of Foster. has near, Stearns Texas expect to one opportunities state open that

Although we upside the serve market, the term volume this will U.S. our believe, these and we support long capacity have of currently adequate we plant higher we units network. have brands, across to in expect

basis, almost from Sleep was Outfitters the e-commerce business over company grew direct with our growth owned and North America, the year-over-year quarter XX% International excluding doubled over channel. highlight In growth XX% channel a grew direct global on the direct second and XX% both the constant stores. in The our stores. currency in acquired

end open during handful quarter, year. we We a expect retail store the opened XXth by and our the more Tempur-Pedic of the to

said see very It's include our XX%. had opportunity. to previously, can year more sales growth sales open the we not we does Tempur-Pedic channel. a than same-store same XXX store at stores that noting store over strong retail the being worth stores e-commerce Stores over As long XXX term

business U.S. flow. disruptor It in clear direct-to-consumer significantly the more solid real, channel in Our outperforming in the sustainable profits cash and growth, direct-to-consumer and both had also average is online double-digit growth. that brand market, our sales is importantly

quarterly cumulative products growth channel, it margin The and million. & direct at for our due increases Stearns to unit higher highlight company's leverage. resulted gross mix volume of our and product quarter Tempur-Pedic premium from the success gross highest price, Foster history third in a The in $XXX reported the the the is profit

quarter's bedding greater and back profit retail doors, sales, Mattress This the were gross greater had we Firm. products are generated than higher third we XXXX, total gross in sold party reported profit is of when through number a including

healthy and few broad expansion our our past products, the diversified based margin to Over and sales gross in innovative growth. years, developed strategy, invested we've new go-to-market deliver all operations,

a stronger. agreement which with bedding to in entering and distribution U.S. will the we Our competitive benefit win-win Mattress been thrilled On position both top improved has North new our believe supply this as Firm, a have whole. wholesale by we recently into are never momentum, business of companies America,

over XXXX, transition I Anderson, our retirement. Resource. two Carmen want call the starting as in executive Before of towards America, be taking will roles Bhaskar, to that Rick EVP, turning members they reduced mention team in on and Human to North of President SVP new Dabiero,

of continued I executives team; years, them to is transitions their for been many Both in preparing We've in ensure performance. strong internal Sealy. very succession built years want thank Tempur leadership plan. to contribution to our confident have several and a for these an I'm place for

results you With that Bhaskar walk to financial I'll the over turn more through in detail. call to the

Bhaskar Rao

Scott. you, Thank

out Before few a to those going the quarter, mentioned. of highlights into I previously outside the details would call of like

of performance Adjusted margin gross quarter versus adjusted year, XX.X%. prior the the million, Adjusted XX% to operating XX.X%. points to and XXX to increase XX% basis margin increased compared basis versus share $X.XX EBITDA to an operating XXX was adjusted driven was earnings the from improved buybacks. year. increased This per As prior entirely $XXX share points for

to America, to discuss Turning would reclassification. reporting First financial North like I some

As have quarter. previously been American Sleep our third retailer. part Outfitters channel had acquired channel, our a they Outfitters, integrated Sleep the direct were into second announced, during party was of we wholesale North previously since fully which historically

growth increased our XX%. both sales channel American rates direct within basis, XX%. wholesale X% a Accordingly, increased net On this and increased channels. the North American North the reported channel impacts

increased growth and Sealy big the to outfitters, The several channel the in sleep our a contributed increased business XX% channel points the Excluding loss of sell XX%. in wholesale quarter. direct

prior pricing favorable temporary American by gross basis improved profit to XX.X% and points driven margin commodities. This mix, primarily improved, as the year. compared North merchandising benefit XXX to was

As the expected of the the took quality We quarter. steps from product to margin all, incremental volumes to profit gross highest ensure new during ahead our service higher was distribution. impacted and expected, the great customer

North in American XXX And operating million operating as as Scott an results. improved about mentioned, to and compared this year. prior resulted as in the adjusted adjustment third margin inefficiencies to not in reported to our margin the treated XX.X% points basis was of $X quarter,

gross margins partially offset primarily higher driven improved was variable This by compensation. by

slightly. The X%. basis. reported currency and sales channel robust sales the X% constant net increased a direct net increased a international, basis, to channel Turning wholesale increased On XX% international a increased on

As expect sales uncertainty earlier, decelerate degree we of in growth geographies experienced thus we fourth to Scott in quarter. noted the a market and specific

compared As and XX our prior to stable improved XX.X%. margin margin the XX.X% international basis at operating to points prior gross to year year, was

by distribution benefits, performance, global by million last higher partially as $XX bit million good operating we was and This a as up EBITDA $XXX was million The income pricing company's up was the adjusted driven to EBITDA increase primarily $XXX year. Turning and from was investments. the variable target, volume innovation offset are commodities. over new higher performing favorable ramp compensation inefficiencies and we in

with expectations third quarter. for costs Input line Regarding commodities. were the in

now the $XX and We now expense from year, incremental was However, a was fourth we tax down benefit down trends prior and XX% seen year. in improve million rate expect of stabilize. from the dollars The quarter. the have prior those also few interest million in XX%

resulted $X.XX this XX%. of in quarter up for the All adjusted EPS of

quarter. operating levels in the higher distribution. We XX $XXX quarter Now XXXX. This cash days launch cycle flows to with the items. third support the record of operations was flow was by from principally sheet inventory driven compared new and balance cash moving continuing our to by of third million generated to unfavorable Cash

credit extends spread our to America. into successful business highlight This in maturities facilities. completed the recent a recently strengthening our on our reflects that and history. position, competitive of the in like-for-like company's and interest market global gains success refinancing our our represents share basis North operating pleased transaction we debt expansion our rate direct-to-consumer This lowest in I'm the increases amendment flexibility,

net debt of a XXXX. the This strategy powerful the disciplined was and down second $X.X third from of reflection our quarter, omni-channel approach. of capital quarter allocation billion At our the end direct is

down under reported for ratio last of in at times new leverage our four quarter year. third came X.X facilities Our times the from

highlight to I'm a our good pleased financial we that buying also leverage while stock. that lowered bit,

favorable our EBITDA increase of This Turning to the more with the of raises North of This have We in compensation. our back now outlook during the be in estimate the performance third by guidance. million. we $XXX and will stock is over by $XX business $XXX increases Mattress million and midpoint between offset partially raised million. selling launch the XXXX This to the and American our Firm. timing quarter, variable by our guidance, adjusted midpoint driven be

with fourth business would quarter, our the of to initial launch look like initial of a related of sales to Firm quarter partly the volume mix. from we models. result is signs in product The and what In in anticipate the first is expected Mattress floor XXXX, expectations seeing state lift ahead and discounted steady

Lastly, a few purposes. for I would modeling to flag like items

For $XXX million and CapEx $XX includes Total investments which upgrades. to $XX expect between million. in currently ERP be to the we of $XXX full about million year CapEx be million, maintenance XXXX, D&A and

between a million, of XX% of $XX consider plan. share to tax Please rate above repurchase million share $XX and note, items be the XX% million. diluted to count our and impact the of announced XX expense a Interest

call Scott. I'll over that, the back With turn

Scott Thompson

Great you, job. Thank Bhaskar.

start we to optimizing new Now the turning Mattress with Big the term distribution initiatives. Firm. this customers where want announced and platform two wins powerful omni Earlier in a to I'll Lots to year, with material our be company's long distribution agreement, shop.

of fourth The to was in with of stores history, expansion launch which quarter company's largest during the we the single Firm. the Mattress top quarter quarter with the third a doors more expect in even

integration has coordination and organizations phenomenal. of both with been people these The

expect to $XX and to sales, generate continue of EBITDA. in expansions As incremental in distribution we to $XXX million look million in we in these forward, excess incremental $XXX million

continues to As complement channel to direct rapidly. our wins a in wholesale material our expand distribution, our

stores to our expansion continue growth, online sales and company-owned year-over-year robust growth same-store growth We through see of sales [ph]. sales

add We consumers Let more than a general. are digitally in marketplace about online ever. me the comments find savvy that few

complement stores our online retail our visit frequently reach and the product, to While feel ways majority shopping and start customers to our want the their of presence market. experience four in to store. made before online expanded adjustments entering touch in We've to they strategy a the

and side. a which is XXX%. own then segment fact support opportunity online to advertising. that we purchase over been this grew material identify XXXX, The profit sales incremental These Tempur-Pedic.com bit as and a a in driven for First, by willing sales of are We consumers have on our online positive Tempur-Pedic.com expanded this has business. strategic trend our more

focus our a party based on is Second, third retailers. Web

have We e-marketplace dedicated on who sales team, a sales focus growth.

stages, margins to very maintaining similar we've still experienced fleet growth stable While the while average. profit early in the significant

our traditional helping expand presence is Third, party their online. third retailers brand

retailers consistent Retail be to millions consumer passion dedicated insights of our program are are connect investments our with help been into to retail has hours successful. for partners. Our Edge research These key organization our initiative of the not from a for findings party and actionable sales insignificant third our

what shipped and shop, we to product needs. do point We that want channel or compressed not customer wants their have meets to consumers matter a a And direct expanded customer particular easily any no shop. offerings delivered finally to four, the be doors, wants be can towards to wherever customers price channel. that We our just

last Sleep I'm revitalizing to that Outfitters. are ahead significant relates My this year omni has was Sleep acquired channel earlier planned. made of report which approach to in and Outfitters, our on progress business, their comment pleased

direct our outperforming market. channel summary, In the is

initiative in next developed the quality bedding long product serve. markets our term we all highest Now the

America Our over through two products transformation years. the a premium last North in gone have

share significantly most & product segment our in breadth testing profitable worldwide our the and I'd like have Stearns the have of departments. in which We industry. the and and Tempur-Pedic brands, market new to highlight grown development lines depth our our of Foster quality research,

data insight Tempur department We've modern Sealy combined minds to that these consumer assets a the with at innovation. forefront keep of

focusing has to matters been on commitment most recognized. what the to Our relentless consumers

recognized. relentless to the what to consumers commitment most been Our on matters focusing has

the was customer products Mattress Satisfaction on our XXXX our yesterday, number and exceptional delivery retail Report one success disclosed Tempur-Pedic awarded mattress sleep. segment in evidencing As Power’s J.D. satisfaction, in of commitment of

brands We retailers to Turning worldwide new our third invested product with promote quarter our in supported we compelling as dollars our marketing next and portfolio. initiative, the our marketing. significant

advertising a dollar we increasing XXXX, anticipate on significantly In our basis.

efficiency of continue fact, advertising right on though they brands and in than we customers to strive amount in In expect a want media. Tempur-Pedic, to right I'm get spend message reaching and Foster Stearns important engage the way this. for XXXX. with in we record More time & spend the sure, total for the I'll the question at a

let address So now. and me go it ahead

extended one were we advantage promotions. years shopping a holiday weekend, purchase the the announced, Labor XXXX mattress of promotion take previously along extension was promotion, Day As to a targeted Day of the challenges largest those our nationally planning and but shoppers impacted preventing to mattress This our were who East at over Labor from week. portion significant successfully by all enabled benefiting from Coast by them weather and

extension a this happy during immaterial retailers promotional support hurricane period the we in circumstance, successfully to industry's this of result of were was largest business, unique the year. While the to our

term increased EBITDA. initiative long last is Our drive

we the believe Over of several deliver our the our areas years, seeing will by business, optimization, importantly past channel, market to including most these which above of marketing, of company resetting building product innovation, in We're efforts, in benefits our we've performance. investing investing and foundation direct the manufacturing team. been continue the many

on cash we with to capital of our return in while invested and businesses expect leverage capital our needs, allocation, to Currently, each approximately today's of return is Turning and X% on we shares remain the balancing to our ratio. a based excess in capital, investing highest price on the term, conditions stock our about to expect opportunities committed capitalization. that near million based we generate quarter market repurchase XX current on based thus

appropriate repurchase at topic we Capital at rapid a consistent but ability allocation future repurchase our currently is pace meeting. recognize, to measured stock have believe is board maintain optionality. We more every we pace, as the

our We future on during expect update calls. thinking you to

our the questions, trends with I'll fourth Lastly, brands the guidance line and current turn to grow expectation North with quarter. are current expected for significantly trends. during it’s in call before opening to both up America,

of sales Tempur-Pedic’s a in As strong half growth XXXX. reminder, U.S. had the back

comp, we in Tempur-Pedic and Sealy both a we to new So difficult distribution benefit have expect but from brands.

will of both selling the we're flooring the third started line today. which fourth has with We're than in robust process of and impact the back-stock less our although quarter quarter. in expectations, International quarter in the slightly reporting

for call questions. open please the operator, that up With

Operator

[Operator is Instructions] question Lasser first from from Michael Our UBS.

line now Your is open.

Unidentified Analyst

lot Good filling Lasser. for is taking [Indiscernible] for Michael morning. This Thanks questions. our a in

but million guidance you year in quarter, $X third million. the the So consensus by EBITDA full $XX raised by beat

it of a baked production favorable driven entirely the that guidance into the to assume Delta what's is and timing launch, launch, in guidance the earlier sense you with on by is guidance? expectations can the what baked Thank so the to fair versus is from baked What or was $XX you. So of now? the million into provide macros of the being

Scott Thompson

is Yes, Scott. this

direct. the in ahead growth in we we're has we've we're as business raise improvement majority start, a Let we're U.S. the Mattress your the well wholesale, doing expectations that to seen underlying base the launch raising thinking originally. of Firm And me business. a the in seeing in then answer little But pass to change to Bhaskar. in There double-digit our is in growth with in and do question, of to it double-digit no. And bit No. some primarily the timing we're The in the doing off Tempur, before, with The core first guidance Sealy. in that mentioned demand lot I'll the broad of the-- well we the do are got more and has

questions. other some had You

Bhaskar Rao

is Scott. Sure, it to about that's, that a think way fair that that's

of Just Yes, strong. four very reiterating Firm contemplated both originally models. Mattress Sealy business Tempur some those. had and underlying

Now happening those seeing. standpoint we do then a back headwind from then did fourth have a and compensation. bit the see quarter. And in or we And that, we fill out that the variable tailwinds are happening of so then channel is we're that stock call international, some

Operator

you. Thank

is Griffin next from from Raymond Our James. question Bobby

is Your line open. now

Bobby Griffin

I morning, third congrats my quarter. appreciate you and taking good questions, everybody. Good on

Scott Thompson

Thank you.

Bobby Griffin

maybe little margin you Can first in my especially around quarter America of drivers Lots how should the is unpack What quarter what pretty just gross frame just a So the fourth performance Big you your gross then in impressive we drove in Mattress the launch? North upside? about with the light versus question the more pretty, bit original and big And given of selling rollout. expectations? a surprised margin the some rollout

Scott Thompson

question. Great

deal came as if on in, from volumes standpoint Tempur initially So the with I our ahead and is, the third quarter of expectations. Sealy upside the both

we do get we when going costs fixed leverage through productive those we more So etcetera. more of do and get units plants, each our

So primary that driver. would be the

As expectations, mix that to service. ensure was we then investment commodities we we that were and offset by customer product favorability, our the to mentioned continue made good see is continue line see in that, with we pricing, to

I way those about fourth trends the continue. all is in third, saw we think the As they put should about quarter, together, it, if the I think I that it

were together, that, be all Bobby with the out see call quarter. in. good a as some bit, fact and Those Mattress have do But consistent a lower will also will we though we where put about, million you in is the out if big call is commodities we that that will favorability, which rate. thinking a margin. that the unpacking coming have have you'll will did few what a big third We Just previously lots discounted going four come at at versus Firm we models -- is were

Bhaskar Rao

how numbers for probably also, of this You and Firm, the system. It's on we mix that to exactly the gross through about Mattress product know yet many mix one works big moving probably parts with also talked of you've lot I is we earlier, have the toughest do got has quarters working because so a good estimate and to we're don't the because Bhaskar. that through still lots product margin

-- is a estimate, but well done. difficult it So it's

Operator

Thank you.

question America. from from next is Our of Bank William Reuter

Your open. line is now

William Reuter

I doing to are or your yourself. Hi. you I Outfitters, I the want it just around guess, to business plan sell had you question sounds like a continue turnaround the of it and that would there guess, so ultimately is do to better. do operate proceeds what that's Sleep with

Scott Thompson

Yes.

turnaround of at estimated. all Sleep better we First right. The Outfitters gone than a you're originally has

In fact, they are approximately breakeven in the quarter. third

has is to entity -- plan for particular was operations, not that it. long the around, the we what and it figure with We turn we're at then the company. strategy look out term which changed, Our may keep going

the great else it over You a it, know most but right we with the thing is doing to now important get around may team job. do and there something turned is

Operator

you. Thank

Our from next question Capital is Thomas KeyBanc Markets. from Brad

now is line Your open.

Brad Thomas

Thanks. Good morning.

more me about hoping XQ, add Mattress here for obviously be sales. to North the a the America my for on token well potential nice congratulations as I outlook significant – the the for two my we pieces by could North holds driver ask Firm wanted of pretty some into address trends. obviously Let same to a comparison squeeze Maybe question, America. outlook

these the then XXXX. if sort if North account think you of business your you just the So these big in partners some be some America Scott, of at new on outlook as thoughts could. XXXX, maybe about how you're we growing just what underlying for And industry about step the of the North ex latest America thinking and back, wins? trends should

Scott Thompson

I'll Bhaskar and that. I'll Yes. mess up. clean up, some I'm to it let try of it unpack sure, then

fundamentals the part I remarks. the to of it expect strong to fourth because the that's in think, strong, continue quarter, year. I'm business in are next first certainly I very say of The that I distribution not tried them know would to prepared think -- distribution them new X wins, and positive be new expect would and you we the The actually the be watching. to exclude all,

question. kind was your of And the first part I that think of

to we'll individual very a we're have out Mattress agree they on Firm, you, look individual revenue will by to than performance. for our relates their customers of guidance do comments lot customer and performance of to companies. going impact large, respect private it Other not As are

Right now, quarters, and products is the mix forum we'll what But focused next our on is we're right early over learn And volume in I in will XXX% the and the is, it blend stages. into quality product very mix just our just think service. team few providing right numbers. now,

whether As we good the performance today, it relates company's said we to it right know got on commodities, market momentum our interesting be whether with it what now. expect I've well. the just the financial lot is as new Quite be based and be direct. international before, frankly, of distribution, dealing we history. very XXXX, would today, everything a see some and We've be performance team have of it XXXX a We tailwinds, to our best lot whether doing clearly in of

Operator

you. Thank

Our next question Loop Capital. from comes from Laura Champine

now is line Your open.

Laura Champine

question. for my taking Thanks

driving How ahead which faster sounds than the we up you you transition, would that? faster expected. and it previously What's Firm like moving running in than business is are than, had you have On anticipated? Mattress that getting

Scott Thompson

team Mattress driving that. The is Firm

up frankly it actually the very obviously to resulted retailer. heavy quite the they've some. And the in products the Mattress exceeded product, when performing our the that's lift know Firm expectations. is who launching And team You Mattress comes product, got we've moving well. team -- has but And of make the timing is to

Operator

Thank you.

is next from Jefferies. Karru from Martinson question Our

Your line is open. now

Karru Martinson

high but that this imports affect prices what has in the on been on the you morning. China board? across I the end, the you really guys with rising doesn't seeing Good anti-dumping duties Are impact place. realize

Scott Thompson

Yes, affects it does us. it -- affect

to a it's profitability. driver Although major not

and us. entry like level up that and continues end, that beds, end, by growth at point band, distribution, Sealy. If if pricing pressure I exclude Sealy level, at -- low are the it's feeling a we was firming you That we were pricing -- thousand at feel before very then look which price the and a low If at we below is new are the dollars, for tariffs. the us products unpack to help up entry does the

gaining are we are we So volume. some

think have it prepared and to not manufacturers some. been I the benefited said that driver at fourth remarks, a tariffs. bedding as my in big it's point. And I profit down I price again, has with think U.S. do all But

Bhaskar Rao

other side of our is comes that that The subject of which do tariff. product in is to we overseas, some have from

tailwind a as So against below think income we it neutral. and I thousand, from that from a the you take the get about net that would headwind

Operator

Thank you. from from Instructions] America. of [Operator Our Curtis is next question Bank Nagle

Your now open. line is

Curtis Nagle

to that quick Thanks been morning. Good for what's guess on Breeze? feedback forward? active how question. stores has my And the to your on Maybe own I taking distributors a your going one expectation roll out other besides

Scott Thompson

in Obviously to good. acceptance it has the major future. Thank and we're been stores. now product got limited -- distributed Okay. only we of lines; that the and we'll product Look, sales in And continuing you. Breeze is passive more got two all then to customer our which the is out have an retailers. broadly been we've product The the we've got study rolling to outstanding, distribution active Breeze consider product

product everything we from now that right winning a kind it’s market. of in looks right But test like see now,

Operator

you. Thank

Our Peter is Piper Jaffray. next from question Keith from

open. is line Your now

BobbyFriedner

taking guys morning Bobby good its Thanks Friedner for on Hey Nice my Peter. for question. results.

about mix improve be higher from give balance that and with Tempur of Breeze more to the continues just versus color growth between has a actually sales? what's higher how related And business nicely, can transactions much terms of more As you accelerating stores in ASP direct new the online. seems then, little to come

Scott Thompson

Okay.

point excess the same-store in would, prepared on towards work I The mentioned think, which of is the themselves, I And Stores would opened if a some call, web me Sleep stores I year you correctly. some XX%, up double-digits. Let number of that. and than confirm think itself that continues as Outfitters, business an outstanding the remember grew concept more legs. I the that is in XX% to Without grew were first has we sales. performance I

focused and less business. in the the on the Sleep in based sales, on growth Outfitters, Outfitters So, Sleep broad profitability. the business, stores on driving we’re web sales, more On dollars direct actual its’

will as well, monitoring call the doing is stores we but the model, same XXX not on stores store very to XXX bullish to business those So be we businesses it on continue much very and ultimately. sales, want direct a

Operator

Thank you.

Baugh question is Stifel. from John next Our from

line Your now is open.

John Baugh

doing you congratulations. record marketing in terms light and as And gross? could curious marketing Is the in internationally & percentage were targeting spend if you comment advertising brands. of the I as as or weak just XXXX. well comment I'm of Tempur you. a the as think But Thank Stearns around well to spend with conditions? that may as you be Thanks Foster in what

Scott Thompson

It’s it to head, probably I definitely dollar a homework historically. be record Tempur dollars. some to But I conservative. the into be off days. top be more on heavily really by don't and we've the market. expect market. up & to like, basis, in to an support a we'll have know it Japan. basis, markets I'd by There'll on then where do Sealy the other be may because early will go varies some And some but than my And some primarily we’ve there that the gross that gross of international little brand really more and you're done Foster it brand, varies markets Stearns We significantly. do have into back percentages, be on going leaning a And

were on change bit little know the disruption point we to and with for & paused I with And the think Foster had through key the you Stearns markets. Sealy Tempur-Pedic throughout we bit little the a until Mattress on accelerator that the and we Firm conservative. that we're advertising is is share on as think in a that work voice – you the foot we the I expect today all back and increase message our

Operator

you. Thank

next Our JPMorgan. from is Casella question from Carla

Your line is now open.

Carla Casella

Hi, wondering over, all where either I'm wondering competitive transitions and I’m and discounting, at that of type crosses directly front most any is seeing just if online you change Casper, the on of you're with over And news Casper? where that competition the also or changing? given cross in line

Scott Thompson

me Yes. some And hear noise. pardon you if background

a there's here a little middle thunderstorm bit of the thunderstorm in of so kind coming Lexington, We’re through. of in

point down You at first customer quarter. when look know acquisition we all, our of cost customer costs, acquisition this out let again that went me

of less down. which online. is, but competitive costs saw that's again, sure not a or efficiency the either acquisition marketplace So our it advertising going I'm we

marketplace. big not really the very in is player Casper a

And online, feel him so really little a got relatively anywhere. to into but stores our Obviously, business. we them bit a they're bumped we've don't immaterial they've and few

everywhere competitor North primary is we And in Our see them Serta we America. go. Simmons

Operator

Thank you.

Bob is next Guggenheim. question Drbul Our from from

open. now is line Your

Bob Drbul

Hi guys. Good morning.

are an stores, stores you at us Could used give point, you given the wondering you? out of as for on versus update one profitability one how accounts it or a think like us wholesale give for metric Just and just roll I your that's productivity XX you year. you more trending to accounts wholesale

Bhaskar Rao

but run remembered number haven't top one I I to lately, the about head. Yes, XX of my off the

Scott Thompson

going We're to in be that range.

Bhaskar Rao

It’s probably now. that than better

Scott Thompson

have the were outperformed when steady kind time the way. stores it we that Because from of in

put better that cities, they marketplace, we or stores wholesalers and when watching least stores. what what whole not in we're fact More seeing importantly, is the marketplace the from individual as And economics, business closely the put to we're at taking our the were doing. we of a but in than doing before where couple are these opened are doing large store stores we well in doing the is we wholesalers, than store are

brand these marketplace. the raising in think marketing in the we're we're assets market, just we when putting somewhat stores a whole are of So really drive and the marketplace couple the and help

Operator

Thank you.

is from Judy Merrick SunTrust. question next Our from

is line open. Your now

Judy Merrick

is for This in Judy Hughes. Thanks. Keith

about going there. on Is kind of to the there else Is flattish anything all on margins there or on had different can anything that challenges talked top Just regions anything with going international, on environmental line margins? else the quickly you you add you that?

Scott Thompson

I any can’t the No, margins. think of

Bhaskar Rao

there specifically stable. remain time, Asia be but now from No certain our subsidiary Asian out from from standpoint Kong there what's relatively see standpoint? big international, there opportunity a or that happening own JV, an is working be whether challenged, some about The our in economies they're through country whether mix right that or when to you Hong you when Brexit about does Pacific is, is international a are do through margin it but they're think think broadly driver I speaking time

Operator

further turn closing showing questions. remarks. to no Thank back Scott you. time, to I I'm Thompson like this over for At would call the

Scott Thompson

XXXX of our the for ends over you. you today. thank the To its you thank To to representation leadership and partners, you you. board Sealy’s you This Thank do in day Tempur make the and team retail worldwide. for of call Thank employees our shareholders directors. successful. what for Thank every outstanding your company your for brands. lenders, confidence our To

Operator

this participating. concludes call. Ladies and today's you Thank gentlemen, conference for

disconnect. may You now

Tempur Sealy International (TPX) 31 Oct 192019 Q3 Earnings call transcript