Tempur-Pedic caught napping; shares hit floor

CNBC's Herb Greenberg says there is hope for Tempur-Pedic. "The company is telling you things really aren't that great with its second quarter and full year guidance cut," he tells CNBC's "Street Signs."

By Roland Jones

Sharesof Tempur-Pedic International (TPX) are flat on their back Wednesday, down 47 percent even as the broader market rallied after the mattress company revised its full year forecast.

The company has been caught napping by fast-moving rivals in the specialty market it once dominated, forcing it to slash its full-year forecast.

An "unprecedented" number of rival products, supported by aggressive marketing and promotion, have hit sales in North America, CEO Mark Sarvary said in a statement.

Tempur-Pedic, which sells higher-priced, foam-based and other specialty mattresses, now expects to earn $2.70 per share, down from its previous forecast of $3.80 to $3.95.

"Right now, you have everybody in the industry going after the specialty space," Sarvary said on a call with analysts.

"We did not expect the competitive environment to change this fast."

The company had seen explosive growth over the past few years, taking market share from privately held Serta Inc. and Simmons Bedding Co., as well as long-term market leader Sealy Corp., all of which get a majority of their sales from the more traditional beds containing coil springs.

However, Simmons and Serta have both recently launched successful specialty mattress products, while Sealy has increased its presence in that market.

Tempur-Pedic is also cutting advertising and other costs following the weak forecast, CEO Sarvary said.

Shares of Tempur-Pedic were lately down 47 percent at $23.

Reuters contributed to this report.

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