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Tempur-Pedic (NYSE:TPX) Acquires Tempur Canada


Monday, April 5th, 2010

Similar to their softdrink counterparts, Coca-Cola (NYSE:KO) and Pepsico (NYSE:PEP), Tempur-Pedic (NYSE:TPX) has decided to acquire one of its key distributors to build it business foundation in Canada, with the goal of increasing market share in the country.

Tempur-Pedic CEO Mark Sarvary said about the purchase, "We are committed to growing Canadian market share, and so we will increase our investments in advertising and sales initiatives which over time we believe will drive significant sales and earnings growth."

Talking about Tempur Canada being operated through an independent distributor Sarvary added, "Prior to the acquisition, Canada was the largest bedding market where we were represented by a third-party distributor, but the Canadian market is large and our share is relatively low."

The acquisition won't make a huge difference in earnings for they year, although a small increase should result from the purchase.

Tempur-Pedic is also looking to expand it international sales, as there is a lot of room for growth there, with global sales accounting for only 37 percent of revenue in 2009, or $307.5 million. That's from the $831.2 million in revenue generated for the entire year.

In 2008 the company fared better, with worldwide sales accounting for 39 percent of overall sales, generating $361.5 million of the $927.8 million in revenue for the year.

This is actually a good sign for the company if they can gain a significant amount of global sales, as there is a huge opportunity from  under-performance there which could drive up the stock price if they can increase market share successfully implement at strong sales strategy they are able to implement successfully.



Article by Gary B

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: coca cola , pepsico , tempur canada , tempur-pedic