Memorial Day Mattress Update
June 1, 2022
Slowing sales for mattress retailers ‘on par with Great Recession’ – Wedbush
Jun. 01, 2022 3:25 PM ETPurple Innovation, Inc. (PRPL), SNBR, TPXBy: Kevin P. Curran, SA News Editor7 Comments
Lagging sales for mattress retailers over the Memorial Day holiday point to a rough rest of the year, according to Wedbush analyst Seth Basham.
In a research note authored on Wednesday, the analyst reported that recent sales checks came back negative while demand generally continues to wane. Basham added that advertisement and promotional activity did not pay off as many of the retailers had hoped.
“Our analysis found incremental promotional intensity with outsized discounting on the low-end and in the Direct-to-Consumer Bed-In-Box (BiB) channel while Tempur-Pedic (TPX-O) increased its promotional intensity on lower-end mattress and base bundles,” he wrote in a research note on Wednesday. “As sales trends for this key period often set the tone for the entire summer season, the soft performance over the Memorial Weekend suggests continued sharp [mid-single digit to high-single digit] unit declines through the summer in the absence of incremental discounting to spur demand—this level of unit decline is on par with the Great Recession.”
On top of that bearish comparison, Basham noted that increased commodity costs and supply chain problems present only added issues for these retail chains as they are likely forced into further promotional activity and price cuts due to waning demand. In particular, his team expects increased clearance-type sales around the July 4 and Labor Day holidays.
“In sum, it appears to be too early for a turn in fundamentals or mattress industry stocks,” he concluded.