Sealy's profit falls on higher costs

(Reuters) - Sealy Corp (ZZ.N: Quote, Profile, Research), the world's largest mattress maker, posted a 25 percent fall in second-quarter profit as it spent more to launch a new bedding line and buy raw materials, and lost a few customer accounts.

The company, which rolled out its new Sealy Posturepedic innerspring line early this year, has been grappling with rising prices of steel and foam. It also lost two of its retailer customers, Wickes Furniture and Levitz Furniture, after they filed for Chapter 11 bankruptcy protection.

The bedding maker, whose brands include Sealy, Sealy Posturepedic, Stearns & Foster and Bassett, said net earnings fell to $12.0 million, or 13 cents a share, from $16.1 million, or 17 cents a share, a year earlier.

The second-quarter results included a gain of 5 cents a share related to the company's estimates for warrantable and other product return reserves.

Net sales for the quarter ended June 1 fell 6.6 percent to $375.4 million.

Analysts on average had expected the Trinity, North Carolina-based company to earn 4 cents a share, before special items, on revenue of $381.6 million, according to Reuters Estimates.

Total domestic net sales fell nearly 15 percent to $258.7 million.

Sealy, whose largest shareholder is buyout firm Kohlberg Kravis Roberts & Co, announced the abrupt departure of Chairman and Chief Executive David McIlquham early this year, and named Lawrence Rogers interim CEO.

The company, whose shares have fallen more than 58 percent in the last 12 months, is searching for a permanent replacement.