Despite a 49.2% net sales gain from new and acquired stores Mattress Firm Holding Corp., reported a loss from operations of $167.7 million for the first fiscal quarter of 2016. The company’s adjusted operating income margin was 1.6% of net sales as compared to 5.2% in the first fiscal quarter of 2015 and included a 280 basis-point decline in gross margin, an 80 basis-point decrease from sales and marketing expense deleverage, and 20 basis-points of combined operating margin declines from franchise fees and losses on store closings, partially offset by a 20 basis-point improvement in general and administrative expense leverage.

“We are disappointed in our first quarter results, as we experienced unrelated challenges in three primary areas,” said Steve Stagner, executive chairman and chairman of the board. “These issues have been resolved and are largely behind us, however, there was clearly an impact to sales in Q1 that continued early into Q2. Due to our results to date, we are revising our guidance for the full year.”

The company also announced plans to consolidate all stores under the Mattress Firm banner nationwide over the next 12 to 18 months. Matt Firm acquired 1,065 stores, opened 85 new stores and closed 37 stores, bringing the total number of company-operated stores to 3,472 as of the end of the fiscal quarter.

The company reported net loss attributable to Mattress Firm Holding Corp. was $119.2 million and GAAP EPS was $(3.22). Excluding $112.7 million, net of income taxes, of intangible asset impairment charges, acquisition-related costs, fixed asset impairment costs and severance charges, adjusted net loss was $6.5 million, and adjusted EPS was $(0.17).

As a result of the impact of incorporating the Sleepy’s business into the company’s consolidated results, the company plans to provide quarterly earnings guidance in connection with its regular earnings announcements throughout fiscal 2016 to provide additional insight. The company anticipates returning to its historical practice of only providing annual guidance in fiscal 2017. For the second quarter, the company anticipates GAAP EPS of $0.27 to $0.32 and adjusted EPS before tradename amortization of $0.62 to $0.69.

(Source: Furniture Today)