Mattress Firm Conference Call Highlights

reported its third quarter earnings on Monday. Shares of the company are down 8 percent. Below are some key highlights from its conference call.

• To begin, we are very encouraged by the continued growth the business produced during the third quarter, evidenced by both our strong same-store and overall sales growth. • We are also impressed by the continued earnings growth that we have been able to achieve even while our recent acquisitions are in the early stages of our ownership. • We attribute our third quarter success to enhance selling techniques focused on higher-end bedding, a positive impact from the new products that have been on the floor for the last two quarters. • Our growth during the third quarter was highlighted by: a strong net sales increase of over 42%; robust same-store sales growth of 8.5%. • Our fifth consecutive quarter of positive same-store sales growth; • The completion of three acquisitions during the quarter that added 460 stores and allowed us to gain a major foothold in key strategic markets on the West Coast and in Chicago while also increasing our relative market share position in Pittsburgh; • Opening 54 organic stores, driving our company operated store base to 1,986 units. • Let me now provide some additional color on our third quarter results. Both our core business and legacy acquisitions experienced strong same-store salesgrowth. • The success of our sales initiatives and the continued benefit of having the new models on the floor drove our 8.5% increase in same-store sales growth, consisting of a 2.7% same-store unit gain in the quarter and a 5.6% AUP increase. • Our sales growth was relatively consistent through the quarter and then moderated as expected in November as we began to lap the selling initiatives put in place a year ago. • We are encouraged that despite some pretty significant drag effects from our recent acquisitions, most notably an approximate $0.03 drag after adjustments. • As acquisitions progressed through the store conversion and ramp-up phase, we were still able to grow adjusted operating income by over 33% as compared with prior year. • Now let me give you an update on the one strategic pending acquisition that we announced today and the three acquisitions we completed during the third quarter. • Today we announced our agreement to acquire substantially all of the assets and operations of Sleep America, which operates approximately 47 stores in and around the Phoenix and Tucson markets. • This acquisition will increase our relative market share in the Phoenix and Tucson markets to levels near our most penetrated and profitable markets, building upon the BedMart acquisition we completed in June of 2014. • In October of 2014 we completed the acquisition of Sleep Train, an achievement that has meaningfully transformed Mattress Firm's position within the retail bedding industry. • The acquisition helps further establish us as a border-to-border, coast-to-coast national bedding retailer.

• During the third quarter, we reported adjusted EPS of $0.70. • Net sales in the third quarter were $464.3 million, an increase of $138.1 million or 42.3% over the same period of the prior year. • The improvement in sales during the third quarter included comparable store sales growth of 8.5%, adding $27.2 million in sales. • Stores we opened and acquired added incremental net sales of $115.2 million and stores we closed reduced net sales by $4.3 million during the quarter. • Sales of specialty mattress products comprised 45.6% of our net sales compared with 44.3% during the prior year quarter. • While sales of conventional mattresses comprised 44.9% of our net sales compared with 46.5% during the prior year quarter. • Sales and marketing expense was $109.6 million for the quarter compared to $74.6 million in the prior year quarter. • Sales and marketing expense as a percentage of net sales was 23.6% for the current quarter compared to 22.9% during the prior year period.