Market Overview

Tempur-Pedic Shares Rise on First Retail Store Opening

Tempur-Pedic Shares Rise on First Retail Store Opening

Following the likes of Apple (NASDAQ: AAPL), Tempur-Pedic International (NYSE: TPX) announced Tuesday that it opened its first retail store. Shares of the mattress producer rose markedly after the announcement.

The new store is intended to engage consumers, according to Tempur-Pedic.

"We're excited to bring our products to life in a retail environment designed to provide product education, build consumer awareness and enhance brand loyalty," said Patrice Varni, Vice President of direct-to-consumer sales and marketing in a statement.

The 3,500 square-foot Massachusetts store opening will be the first of many over the next year, announced Tempur-Pedic. The company said it will open a second store later this year in Ohio.

Tempur-Pedic's venture into retail may be its latest effort to fight falling revenues and margins from the most recently reported quarter. Last week, the company unveiled TEMPUR-Weightless and TEMPUR-Breeze mattresses to provide improved responsiveness and climate control, respectively.

"The specialty mattress market in the U.S. has experienced ongoing and dramatic change in recent months, characterized by a crowded, complicated and competitive retail environment," wrote Oppenheimer in an August 1 research note.

Tuesday's news comes in the wake of a more than 35 percent year-to-date decline in Tempur-Pedic shares. Much of this decline occurred in early June, when the company released full-year earnings per share and revenue projections below Wall Street analysts' expectations.

Late July, however, the company reported second-quarter earnings that exceeded analysts' lowered expectations by a margin of more than 15 percent.

Competitor Sealy Corporation (NYSE: ZZ) traded around 5.8 percent higher year-to-date. The company beat or met analyst earnings per share estimates for the first two quarters of 2012, following a notable earnings miss in fourth-quarter 2011.

Tempur-Pedic was trading approximately 5.2 percent higher for the day while Sealy Corporation traded higher by around 0.6 percent.

Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.

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