Mattress maker Tempur-Pedic International Inc forecast 50 percent lower second-quarter earnings due to increasing competition in North America, sending its shares down more than 37 percent in premarket trading.
The company, which had been banking on its new products to gain market share, forecast a 3 percent to 5 percent fall in sales on an expected 8 percent fall in its North American sales.
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Tempur-Pedic earned 76 cents per share in the second quarter last year.
The company, which competes with Sealy Corp and Select Comfort Corp, said introduction of new products by competitors, supported by aggressive marketing, has led to disappointing sales.
The tepid sales trend has prompted the company to lower its full-year earnings outlook to $2.70 per share from $3.80 to $3.95 per share forecast earlier.
Sales for the year are expected to be about $1.43 billion.
Analysts on average were expecting full-year earnings of $3.93 per share on revenue of $1.64 billion, according to Thomson Reuters I/B/E/S.
Tempur-Pedic shares were down at $27.50 before the bell. They closed at $43.67 on Tuesday on the New York Stock Exchange.