Jan. 30 (UPI) -- Tempur Sealy International, the maker of Tempur-Pedic mattresses, announced Monday it terminated its contract with retailer Mattress Firm because there weren't "significant economic concessions."
The company, which issued the formal termination notice last week, anticipates it will cease doing business with Mattress Firm during the first quarter of this year.
"Over the course of the week, we conducted discussions with representatives of Mattress Firm and Steinhoff, and we considered their request for a significant change in economic terms," said Tempur Sealy CEO Scott Thompson. "Ultimately, we concluded that it was in the long-term interest of all of our stakeholders to terminate our contracts with Mattress Firm. This enables us to immediately reorient our employees and resources to support retail partners that exhibit a long-term commitment to Tempur Sealy's brands."
The mattress maker said net sales to Mattress Firm were approximately 21 percent of its business.
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The company announced it expects to report record financial results for the fourth quarter of 2016 of approximately $770 million, a slight increase versus the prior year. Its net income will be $61 million to $63 million.
Tempur Sealy, based in Lexington, Ky., is the world's largest bedding provider with brands that also include Sealy, Optimum and Stearns & Foster.
Tempur Sealy was downgraded by Raymond James to "underperform" from "outperform."
Shares of Tempur Sealy fell 28 percent to 45.43 in the first 1 1/2 hours of trading on the New York stock Exchange
Last year, South African retailer Steinhoff International bought Houston-based Mattress Firm for $2.24 billion, creating the world's largest mattress retail distribution company. It has 3,500 retail outlets in 48 states.
In 2015, Mattress Firm purchased rival Sleepy's for $780 million
