Somnigroup's sales rise 11% as its older businesses shrink
The Leggett & Platt acquisition lifted reported sales. A comparison of the older divisions and the revised earnings forecast shows a tougher picture.
Somnigroup's latest sales record comes with a less comfortable detail: the businesses it already owned sold less. The newly acquired Leggett & Platt more than accounts for the mattress group's 11% increase in reported quarterly revenue.
The owner of Tempur-Pedic, Sealy and Mattress Firm completed the acquisition on August 26. Its September-quarter results include just over a month of Leggett sales, enough to lift the group total to $2.35 billion.
What the acquisition adds to the headline
Research by Ticker Byline shows that reported sales outside Leggett fell about 6.8%. Subtracting Leggett's $372.6 million contribution leaves $1.98 billion, compared with $2.12 billion for Somnigroup a year earlier.
Each of the three older divisions reported lower external sales. Mattress Firm and Tempur Sealy North America both fell 5.8%; Tempur Sealy International fell 12.3%.
The causes differed. Mattress Firm cited softer online sales, while its same-store sales were down only slightly. North America's manufacturing business pointed to market conditions. In Britain, retailer Dreams lost 34.7% of sales after a new business-management system disrupted operations.
International sales outside Dreams grew by a high single-digit percentage, according to management. That leaves a specific operational problem alongside the broader pressure on U.S. bedding demand.
A lower earnings midpoint, with Leggett included
The sales increase did not bring a higher annual earnings target. Somnigroup now expects adjusted earnings of $2.85 to $2.95 per share for 2026, compared with $2.85 to $3.15 in August. The midpoint has fallen to $2.90 from $3.00.
The new midpoint includes about 10 cents from Leggett's partial-year contribution. The acquisition adds earnings, but the combined company's forecast still sits below the earlier range's midpoint.
Adjusted quarterly EPS rose 9.5% to $1.04. Reported EPS fell 10.8% to 74 cents. The adjusted measure removes transaction costs, acquisition-accounting charges, debt-extinguishment costs and other selected items, with associated tax effects.
Cash generation and cost savings
The acquisition gives Somnigroup a major supplier of bedding components and materials. Management says bringing the businesses together should improve its supply chain and product development.
Cash generation was strong: operating cash flow reached $349 million in the third quarter. North America's adjusted gross margin also improved, helped by tariff refunds and savings from the earlier Mattress Firm acquisition.
The next test is how the older businesses perform as Leggett contributes for longer. A larger acquired sales base can keep lifting the reported total while leaving demand at the established businesses unresolved. Our Somnigroup company profile tracks those sales, the revised forecast and the debt behind the enlarged group.