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Somnigroup reported Q2 FY2026 revenue of $1.8 billion, below the consensus of $1.9 billion. Adjusted earnings per share of $0.58 matched the consensus.
Revenue declined from $1.9 billion a year earlier. The filing attributed the decline at Mattress Firm primarily to store closures, although same-store sales increased slightly. Tempur Sealy North America sales also fell, primarily because of market conditions, while Tempur Sealy International sales rose.
The company reported diluted EPS of $0.52, up from $0.47 a year earlier. Gross margin improved to 44.8% from 44.0%, and the filing attributed much of the North American margin improvement to acquisition synergies and operational efficiencies. Somnigroup reported operating margin of 11.1%, up from 9.57%.
Free cash flow rose to $181.6 million from $149.4 million. The filing showed total debt declining from $4,717.3 million at the end of 2025 to $4,436.3 million at June 30, 2026.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.8 billion | $1.9 billion | −3.05% |
| Diluted EPS | $0.52 | $0.47 | 10.6% |
| Gross margin | 44.8% | 44.0% | 0.8 percentage points |
| Operating margin | 11.1% | 9.57% | 1.5 percentage points |
| Free cash flow | $181.6 million | $149.4 million | 21.6% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.58 | $0.58 | In line |
| Revenue | $1.8 billion | $1.9 billion | Missed by 3.50% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
Asked about the quarter’s unexpected pressures, CEO Scott Thompson said U.S. industry trends were below expectations. He also said Dreams’ new system was rougher to implement than anticipated and that “the U.K. market was a little more competitive.”
Thompson said the U.S. July 4 promotional period was weaker than expected, but Mattress Firm same-store sales returned to roughly flat after the holiday. He described those sales as a useful market indicator because they remove inventory fluctuations and order timing from the Tempur-Sealy view.
On pricing, Somnigroup executives said input and freight costs rose before price increases took effect after the July 4 promotion, creating a temporary second-quarter profit headwind. They said the pricing actions were intended to offset that impact in the second half. The company also said acquisition synergies and operational efficiencies helped North American gross margin, partly offset by commodity inflation.
Thompson said entry-level bedding had been hit hardest, while luxury bedding had held up. He also said the company’s Tempur stores posted comparable sales growth in the quarter, while its online business improved from the first quarter but remained slightly negative.
On investment, Thompson said the Mattress Firm store refresh was on track for completion in 2027 and the brand wall program was expected to finish in 2026. He said the Stearns & Foster launch would begin at the end of the third quarter, with most of its expected financial benefit arriving in 2027 and beyond.
Asked about the multiyear outlook, Thompson said the company was not ready to update it. He said its industry growth assumptions could be lowered when it does so, while its margin assumptions could improve, and that the company looked forward to an update with year-end results.
Guidance
Somnigroup lowered its FY2026 revenue midpoint to $7.6 billion from its previous outlook and reduced its planned advertising investment to $690.0 million. The company now expects the global bedding industry to decline by mid-single digits, compared with its earlier expectation of flat to slightly down.
Somnigroup expects Tempur-Sealy North America like-for-like sales to grow in the low single digits, rather than the mid-single digits previously expected.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| EPS, non-GAAP | FY2026 | $2.85–$3.15 | — | New |
| EPS, non-GAAP | Q3 FY2026 | Somnigroup expects EPS growth in Q3 FY2026, with more growth in Q4. | — | — |
| Tax rate | FY2026 | 25.0% | 25.0% | Held |
| Share repurchases, Dividends and Share Repurchases Combined As Percent of Free Cash Flow | FY2026 | Somnigroup expects to allocate at least 50% of FY2026 free cash flow to dividends and share repurchases combined. | — | New |
| Capex, Mattress Firm Store Refreshes and Brand Wall | FY2026 | $75.0 million | $75.0 million | Held |
| Capex | FY2026 | $225.0 million | $225.0 million | Held |
| EBITDA, non-GAAP | FY2026 | $1.4 billion | $1.5 million | Raised |
| Operating expenses, Advertising | FY2026 | $690.0 million | $700.0 million | Cut |
| EBITDA, Non Gaap Mattress Firm Sales Mix Incremental Benefit | FY2026 | $65.0 million | — | New |
| Revenue, Mattress Firm Tempur Sealy Brands and Private Labels Sales Mix | FY2026 | Somnigroup expects Tempur-Sealy brands and private labels to account for a mid-60s percentage of Mattress Firm sales in FY2026. | — | — |
| Gross margin | FY2026 | 45.0% | 45.0% | Held |
| Market size, Global Bedding Industry | FY2026 | Somnigroup expects the global bedding industry to decline by mid-single digits in FY2026. | — | — |
| Revenue, Tempur Sealy North America Like for Like | FY2026 | Somnigroup expects Tempur-Sealy North America like-for-like sales to grow in the low single digits in FY2026. | Somnigroup expects Tempur Sealy North America like-for-like sales to grow mid-single digits in FY2026. | — |
| Revenue | FY2026 | $7.6 billion | $7.8 billion | Cut |
| Net margin, Margin Expansion | FY2026 | 1.00% | — | New |
| Market size, Global Bedding | FY2026 | Somnigroup expects the global bedding industry to be flat to slightly down in FY2026. | — | — |