No cannibalization for Tempur Sealy in Mattress Firm roll-out

March 4, 2020

NEW YORK – Tempur Sealy International has not seen any cannibalization of its business as it rolls out its sleep products in Mattress Firm stores, an analyst says. In a recent report on Tempur Sealy’s growth prospects, Piper Sandler said the TSI roll-out at Mattress Firm is going well.

“While Tempur Sealy factored in some cannibalization into the $400 million sales lift from adding Mattress Firm and Big Lots as customers, it is not yet noticing any cannibalization with the Mattress Firm roll-out,” Piper Sandler said. “Direct sales growth has held steady, and Tempur Sealy’s largest customers haven’t noticed any impact.”

The firm said the key to driving increased demand for TSI products will be a large step-up in ad spending in 2020.

“Tempur Sealy plans to spend a record amount, which implies an $80 million increase (or up 30%) from 2019 ad spend of $280 million,” Piper Sandler said. “Importantly, Tempur Sealy noted that much of the increase is related to co-op ad spend (based on contracts), which won’t be paid out if the sales growth isn’t there to support it.”

It will be very interesting to see how this pans out. It sounds good on the surface, but I'm not sure leaving Serta for Sealy will be a good move for Mattress Firm.

Time will tell and I'll be watching.

Warren

No cannibalization for Tempur Sealy in Mattress Firm roll-out

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