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Springs Global sees Brazil market grow, North American sales decline

Sao Paulo, Brazil - Springs Global suffered sales declines in most of its segments, particularly in bath and utility bedding, at the hands of the poor performance of its U.S. business during the company's third quarter.

Total company gross profit increased 15.9% in the quarter to $58.2 million (R$100.5 million) from $50.2 million (R$86.7 million), and increased by 18.1% for the first nine months to $173.0 million (R$298.7 million) from $146.4 million (R$252.9 million).

Fashion bedding showed the strongest results with a net sales increase of 0.7% to $125.5 million (converted from R$216.6) from the year-ago period's $124.5 million (R$215.0 million). This reflects a 7.1% increase in the average price, partially offset by a 5.9% decrease in sales volume in tons.

The company warned, however, that "even though there was an increase in fashion bedding sales in Brazil, it was not enough to offset the reduction in sales in the North American market."

Such was the case with its other categories. In the bath segment, "the decrease in sales volume in tons in the third quarter of 2010 is primarily due to the sales decrease in the North American market," Springs Global said, only to later add that the decrease in utility bedding sales volume in tons also "is primarily due to the sales reduction in the North American market."

The bath segment's net sales decreased 12.8% to $65 million (R$112.2 million) from $74.6 million (R$128.7 million) in the third quarter of 2009, reflecting a 14.4% decrease in sales volume in tons, partially offset by a 1.9% increase in the average price. And in the first nine months, category net sales dipped 7.3% to $210.7 million (R$363.6 million) from $227.2 million (R$392.1 million) a year ago, reflecting a 1.6% increase in sales volume in tons and an 8.7% decrease in the average price.

"The increase in the average price in the third quarter of 2010 is primarily due to the higher percentage of sales in Brazil in the total sales of the company, despite the 6.0% appreciation of the Brazilian Real against the U.S. Dollar," Springs Global noted. "The decrease in the average price in the first nine months of 2010 is primarily due to a 14.1% appreciation of the Brazilian Real against the U.S. Dollar."

Utility bedding took the hardest hit - a 28.5% drop - to $38.0 million (R$65.6 million) in the third quarter from $53.1 million (R$91.7 million), reflecting a 23.7% decrease in sales volume in tons and a 6.3% decrease in the average price.

Year to date, the segment's net sales declines were deeper, down 29.9%, to $116.9 million (R$201.7 million) from $166.7 million (R$287.7 million) in 2009, reflecting a 17.7% decrease in sales volume in tons and a 14.8% decrease in the average price. Again, the company attributed this decrease in average price in the quarter and first nine months primarily to the appreciation of the Brazilian Real.

The best performer during the was the intermediate products segment, where sales increased 21.1% to (R$85.5 million) from (R$70.6 million), reflecting a 1.5% increase in sales volume in tons and a 19.3% increase in the average price. Year-to-date sales jumped 38.4% to $148.1 million (R$255.6 million) from $107.01 million (R$184.7 million) in 2009, reflecting a 17.2% increase in sales volume in tons and a 18.1% increase in the average price.

"The increase in sales volume in tons and the average price is primarily due to the strong sales growth in the domestic market and a higher proportion of fabric in the mix of intermediate products sales," the company said.

Compared to the quarter, year-to-date results were less bright for fashion bedding, with a net sales decline of 9.7% to $396.3 million (R$684 million) versus last year's $438.9 million (R$757.7 million), reflecting a 9.0% decrease in sales volume in tons and a 0.8% decrease in the average price.

"Sales in Brazil have continued to present strong growth," the company added, citing consolidated gross sales of $401.9 (R$693.8 million) in the third quarter of 2010," which was slightly lower - down 0.7% -- than consolidated gross sales in the same period last year.

Brazilian market share of Springs Global's consolidated sales increased significantly, to 47.0% from 37.1% last third quarter, and for the first nine months to 43.8% from 31.0%. The company does not break out North American sales volumes.

Total company sales fell 3.4%, reflecting a 10.0% decrease in sales volume in tons and a 7.2% increase in the average price in the quarter. Year to date, gross sales decreased 0.9% to $1,221.6 million (R$2,109.8 million) compared with $1,232.1 million (R$2,127.8 million), and net sales declined 4.2% to $1,034.0 million (R$1,785.8 million) from $1,079.8 million (R$1,864.8 million), reflecting a 2.7% decrease in sales volume.

 

 

 

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