Somnigroup International Inc

Consolidated Q2 2026 sales were $1.8 billion, adjusted EBITDA was $297 million, and adjusted EPS was $0.58, up 9% year over year. Mattress Firm net sales were approximately $922 million, with same-store sales growing slightly; Mattress Firm adjusted gross margin declined 240 bps to 33.3% and adjusted operating margin fell 130 bps to 6.5%. Tempur-Pedic Sealy North America sales were flat on a like-for-like basis, with like-for-like wholesale net sales flat, third-party retailer sales down 5% after normalizing for floor models, and direct-channel sales down 1%. North America adjusted gross margin increased 680 bps to 61.8% and operating margin improved 400 bps to 26.7%; international net sales grew 2% reported and 1% constant currency, with gross margin down 80 bps to 47.4% and operating margin down 120 bps to 12.4%. For the full year, management guided to adjusted EPS of $2.85 to $3.15, sales of about $7.6 billion at the midpoint after intercompany eliminations, reported gross margin slightly above 45%, adjusted EBITDA of about $1.39 billion at the midpoint, CapEx of about $225 million, D&A of about $310 million, interest expense of about $230 million, a 25% tax rate, and diluted shares of 213 million. Management also said the pricing actions are intended to offset about a $10 million one-time Q2 commodity headwind, with those impacts expected to reverse in the second half.

Scott Thompson framed the quarter as evidence of a resilient, vertically integrated model, emphasizing brand strength, disciplined execution, and the benefits of operating across retail, wholesale, and international channels. He highlighted three strategic priorities: improving Mattress Firm merchandising and store experience, accelerating international growth, and launching refreshed premium products like Stearns & Foster to strengthen pricing and average selling price. He sounded constructive on the long term, but candid that U.S. demand, the UK market, and the weak July 4th period made the near-term environment choppier than expected.

Bhaskar Rao focused on the mechanics behind the quarter: a $0.58 adjusted EPS result, $236 million of operating cash flow, $182 million of free cash flow, and leverage of 2.99x with consolidated debt less cash of $4.3 billion. He said North America gross margin benefited from synergies, efficiencies, and mix, with $30 million of net sales and cost synergies in the quarter and roughly $10 million of temporary profit headwind from input-cost timing before pricing took effect. He also pointed to a strengthened capital structure after refinancing and upsizing the credit facility to 2031, and said the company returned more than $160 million to shareholders over the trailing 12 months.

Analysts pressed on why guidance was reduced, and management said the biggest negatives were weaker-than-expected industry trends, rougher execution at Dreams tied to the UK market and ERP transition, and some uncertainty from renewed Middle East activity. Questions about margin strength in North America brought out management’s view that synergies, better balance of share at Mattress Firm, and productivity are driving expansion, while back-half pricing should offset commodity inflation. Several analysts asked about the July 4th slowdown, and management said it was a weak holiday period but not a structural change, with demand stabilizing afterward; they also described a clear K-shaped market, with entry-level bedding weak and luxury holding up better.