Big Drawback To Popular New Mattresses
Big Drawback To Popular New Mattresses, Memory foam may give you a great night’s rest, but it falls short in one major area.Something surprising is going on in the American bedroom. In droves, people are outfitting their beds with a plush, squishy, and decidedly controversial type of mattress. While these products support the body just-so during sleep, they distress some people during S-EX-. The complaint is lack of “traction,” if you get the drift. “It’s like trying to do it in quicksand,” one owner writes on an Internet message board. New York S-EX- therapist Sari Eckler Cooper couldn’t be clearer: “There’s a lack of resistance for the knees and feet. And whoever is on the bottom is sinking into the bed.”
These are memory-foam mattresses, and they are far and away the fastest-growing segment of the $4.6 billion wholesale market for U.S. mat-tresses. Memory foam’s market share has shot up from 14% to nearly 20% in just the past eight years. In other words, mattress shoppers are weighing the risk — bad S-EX- — against the promise — good sleep — and are voting with their eyelids: They choose to snooze.
It’s no secret that people are stressed out and exhausted in these hurried times. Baby boomers, the chief buyers of memory-foam mattresses, have the additional problem of creaky bones. Everyone could use a deep, soothing sleep. But at the possible expense of S-EX-?
The idea of S-EX- versus sleep has sparked some spirited marketing in the mattress industry. Sealy (ZZ), the largest maker of traditional mattresses, launched a S-EX-y new ad campaign during last year’s Super Bowl. The 30-second spot features a series of couples between the sheets with satiated looks on their glowing faces. And lest you miss the point, the lyrics, “Just a little lovin’, early in the morning,” play in the background. The commercial, which has garnered more than two million views on YouTube, closes with the slogan, “Whatever you do in bed, Sealy supports it.”
The clear target of the ads is Tempur-Pedic (TPX), which makes the majority of memory-foam mattresses. Since issuing shares to the public in 2003, Tempur-Pedic’s stock price has soared 274%. Sales have risen to $1.4 billion, topping all other mattress makers. But Tempur-Pedic’s rise has gotten bumpier in recent years as traditional-mattress makers have begun offering memory foam.
From January of this year through mid-April, this seeming cult stock rocketed 66%, to an all-time high of $87. Then the company reported first-quarter results, suggesting that a competitor (Serta’s iComfort line) was making inroads in the memory-foam market, and the stock plunged 21% in a day. It continued its descent, closing Friday at $52.30.
The 14*n*lysts who cover Tempur-Pedic have an average price target of $78.75 on the shares, according to FactSet Research. That may be a tempting bet for traders. But the company’s market-share growth could be coming to an end. Brad Thomas, an*n*lyst at KeyBanc Capital Markets, notes that Tempur-Pedic’s domestic revenue grew 17% in the quarter, compared with 19% growth for the industry. Given the slipping metrics and the stock’s extreme volatility, long-term investors might do better hiding their money under the mattress.