Somnigroup International Q2 Earnings Call Highlights

Somnigroup International NYSE: SGI reported record second-quarter adjusted earnings per share as the bedding company navigated a softer industry backdrop, commodity-cost pressure and uneven consumer demand across price points. For the second quarter of 2026, Somnigroup recorded net sales of $1.8 billion, adjusted EBITDA of $297 million and adjusted EPS of $0.58, up 9% from the prior year.

Chairman, President and CEO Scott Thompson said the results reflected the company’s brands, global diversification and execution in a bedding market that management believes declined by the mid- to high-single digits compared with the prior year.

Mattress Firm generated approximately $922 million in second-quarter net sales, while same-store sales grew slightly. Thompson said the retailer outperformed the broader U.S. market through its scale, marketing, product assortment and sleep-expert sales model. Mattress Firm adjusted gross margin declined 240 basis points to 33.3%, while adjusted operating margin fell 130 basis points to 6.5%. Chief Financial Officer Bhaskar Rao cited product mix, consumer financing costs, investments in stores and deleveraging as contributors.

Rao said a greater share of Tempur Sealy products at Mattress Firm lowered the retailer’s reported product gross-margin percentage because Somnigroup’s supply agreement provides some Mattress Firm economics through cooperative advertising credits. He said the mix change did not have a material impact on operating margin when viewed on a conforming basis. The company is continuing a Mattress Firm store-refresh initiative that is expected to be completed in 2027, while its brand-wall program is expected to conclude this year. Thompson also said Somnigroup plans to expand Kingsdown products to nearly 800 Mattress Firm stores over the next six months following a three-month pilot in 200 locations.

Tempur-Pedic Sealy North America sales were flat on a like-for-like basis, including flat like-for-like wholesale sales. Sales with third-party retailers declined 5% after normalizing for floor models, though management said that represented outperformance against the broader bedding industry. Like-for-like direct-channel sales declined 1%. North American adjusted gross margin increased 680 basis points to 61.8%, and adjusted operating margin rose 400 basis points to 26.7%. Rao attributed the gains to acquisition-related synergies, operational efficiencies and mix, partly offset by commodity-cost inflation before pricing actions.

Somnigroup realized $30 million in net sales and cost synergies during the quarter. Rao said the company achieved roughly $15 million of cost synergies and exceeded its expectations for sales synergies through a higher balance of Tempur Sealy brands and private-label products at Mattress Firm. Management said modest price increases implem...