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Tuesday, February 7, 2006

Tempur-Pedic Postponed

By Richard Metcalf
Journal Staff Writer
    Tempur-Pedic International Inc. has postponed the opening of its West Side manufacturing plant by six months, or until the end of the year.
    Construction of the 750,000-square-foot mattress plant is nearly finished and the installation of equipment has begun, but the company will delay the hiring of about 60 startup employees, said Matt Clift, executive vice president of operations.
    The postponement was mentioned recently during a conference call announcing Tempur-Pedic's fiscal year results.
    Tempur-Pedic's net sales of $836.7 million in 2005 met the low end of the company's earnings guidance from a year ago, but earnings slowed toward the end of the year because of competition, higher material prices and transportation costs.
    "We expect continued gross margin erosion," chief financial officer Dale E. Williams said during the conference call.
    "We have thoroughly analyzed our (business) models and made the decision to slow down the completion of the Albuquerque facility," he said. "(We) will delay its opening by six months to the end of 2006."
    The plant on Paseo del Volcan, north of Interstate 40, had originally been scheduled to open around June. Currently, Tempur-Pedic has about six employees who will continue to install and test production-line equipment.
    The idea is to have the plant ready to start production as soon as market conditions improve, Clift said. When in full production, the plant will employ about 300 people.
    In its forecast for 2006, Kentucky-based Tempur-Pedic expects net sales to increase between 12 percent and 16 percent to as high as $970 million. The company plans to increase its sales staff, investment in research and development, and prices of certain products.
    In addition, its capital costs will decrease over the coming year as the Albuquerque plant is completed.
    Construction on the plant began in September 2004.In trading on the New York Stock Exchange on Monday, shares of Tempur-Pedic closed at $12.13.