Somnigroup’s first quarter results reflected both the complexity of integrating its recent Mattress Firm acquisition and the ongoing pressures in the U.S. bedding market. Management pointed to continued strong performance in international markets and the success of new Tempur product collections as positive contributors. CEO Scott Thompson noted, “We reported continued strong performance in our international business,” emphasizing growth despite a weaker global backdrop. However, the quarter was marked by softness in the U.S. market, particularly during the President’s Day holiday period, and ongoing challenges related to consumer confidence.
Is now the time to buy SGI? Find out in our full research report (it’s free).
Somnigroup (SGI) Q1 CY2025 Highlights:
- Revenue: $1.6 billion vs analyst estimates of $1.63 billion (34.9% year-on-year growth, 1.8% miss)
- Adjusted EPS: $0.49 vs analyst estimates of $0.47 (5.1% beat)
- Adjusted EBITDA: $247.9 million vs analyst estimates of $255.6 million (15.4% margin, 3% miss)
- Management lowered its full-year Adjusted EPS guidance to $2.47 at the midpoint, a 11.6% decrease
- Operating Margin: 0.8%, down from 11.1% in the same quarter last year
- Market Capitalization: $13.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Somnigroup’s Q1 Earnings Call
- Susan Maklari (Goldman Sachs) asked about demand trends and the prospects for industry improvement in the second half of the year. CEO Scott Thompson noted that U.S. demand was "choppy" but has shown recent improvement, and that international markets continue to outperform the U.S.
- Bobby Griffin (Raymond James) inquired about the impact of removing restrictions on Tempur Sealy brands at Mattress Firm. Thompson and CFO Bhaskar Rao explained that allowing brands to compete more freely should boost share for Tempur Sealy products, especially as merchandising strategies broaden.
- Rafe Jadrosich (Bank of America) questioned the company’s confidence in achieving long-term synergy targets despite a lower current base. Rao attributed the short-term guidance reduction to consumer confidence but expressed no concerns about the structural outlook or ability to reach the $485 million synergy goal by 2028.
- Peter Keith (Piper Sandler) sought detail on commodity cost pressures and margin outlook. Thompson indicated that commodity costs remain similar to prior periods, while gross margins are expected to be slightly lower due to deleverage and tariff impacts, but should recover as pricing actions take effect.
- Dan Silverstein (UBS) asked about the sales growth needed for Mattress Firm to leverage its expense base and the profit impact of recent store divestitures. Management responded that incremental sales are highly accretive for Mattress Firm, and that the divested stores were largely breakeven or modestly profitable.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will monitor (1) the pace of synergy realization and effectiveness of advertising campaigns following the Mattress Firm acquisition, (2) the impact of tariff-related price increases on both sales volumes and margins in North America, and (3) continued growth and market share gains in international markets. We will also track the rollout and performance of new product launches as a key signal for demand recovery.
Somnigroup currently trades at $66.59, up from $60.62 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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