Why Tempur Sealy's international actions erupted Wednesday – The lousy fool

What happened

Bedding manufacturer's actions Tempur Sealy International (NYSE: TPX) jumped Wednesday with a rise of 13.7%. As of 12:14 pm EDT, the stock was up 11.1%.

The increase follows an announcement that Tempur Sealy's Mattress Firm competitor is preparing to go bankrupt.

Source of the image: Getty Images.

So what

"Mattress Firm Inc., America's largest mattress retailer, is preparing to file for bankruptcy protection this week," Reuters said this week, citing "people close to the case."

The parent company of Mattress Firm, Steinhoff International Holdings NV, is under pressure because of its debt. The move would help the company's financial situation, Reuters said.

Tempur Sealy, which makes Tempur-Pedic mattresses, stopped doing business with Mattress Firm in the last quarter of last year. In January 2017, Tempur Sealy announced the termination of its contracts with Mattress Firm.

Now what

The bankruptcy of Mattress Firm would probably mean that Tempur Sealy is facing less competition, since Tempur Sealy had withdrawn its Mattress Firm products last year.

Third-party retailers have lost importance for Tempur Sealy, the company's direct business, which includes sales of company-owned stores, e-commerce and call centers, grew at a rate supported. During the last quarter of the company, direct sales grew 22% over the previous year, while overall sales increased 1.6% over the previous year.

Of course, nothing is still official. Investors should monitor Mattress Firm or its parent company, Steinhoff International Holdings NV, for that they comment the problem.

Daniel Sparks has no position in the mentioned actions. The Motley Fool has no position in the mentioned actions. Motley Fool has a disclosure policy.