(Reuters) - Tempur-Pedic International Inc (TPX.N) lost more than 40 percent of its value after the mattress maker was caught napping by fast-moving rivals in the specialty market it once dominated, forcing it to slash its full-year forecast.
An “unprecedented” number of rival products, supported by aggressive marketing and promotion, have hit sales in North America, CEO Mark Sarvary said in a statement.
Tempur-Pedic, which sells higher-priced, foam-based and other specialty mattresses, now expects to earn $2.70 per share, down from its previous forecast of $3.80 to $3.95.
“Right now, you have everybody in the industry going after the specialty space,” Sarvary said on a call with analysts.
“We did not expect the competitive environment to change this fast.”
The company had seen explosive growth over the past few years, taking market share from privately held Serta Inc and Simmons Bedding Co, as well as long-term market leader Sealy Corp ZZ.N, all of which get a majority of their sales from the more traditional beds containing coil springs.
However, Simmons and Serta have both recently launched successful specialty mattress products, while Sealy has increased its presence in that market.
Tempur-Pedic is also cutting advertising and other costs following the weak forecast, CEO Sarvary said.
The company now expects fiscal 2012 sales of about $1.43 billion, down from its previous forecast of $1.6 billion to $1.65 billion.
Analysts on average were expecting full-year earnings of $3.93 per share on revenue of $1.64 billion, according to Thomson Reuters I/B/E/S.
Tempur-Pedic shares fell to a more than two-year low of $24.62 in early trading on the New York Stock Exchange.
Shares of fellow specialty mattress maker Select Comfort Corp SCSS.O tumbled 22 percent to $20.19.
Reporting by Mihir Dalal and Juhi Arora in Bangalore; Editing by Maju Samuel