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Terminated contract hits Tempur Sealy stock hard

You may not think that the mattress industry could cause such newsworthy stories, it did just that. Tempur Sealy, the easily-recognized mattress brand known for the Sealy Posturepedic, announced at the end of January that it would be cutting ties with Mattress Firm, a retailing giant in the mattress industry. The two parties were locked in a dispute over how to extend the contracts they had together. Unable to reach agreement, the parties announced they will be terminating those contracts.

The news sent Tempur Sealy's stock tumbling to lows that hadn't been seen in four years, and it marked a one-day drop in the stock price that hadn't been seen since 2008. When the dust settled, Tempur Sealy was looking at a 28 percent decline in its value.

We chose to write about this story for two reasons. The first is that a contract dispute doesn't necessarily mean that the two parties end up warring in court warring over the contract's terms. The parties may disagree over the current terms of the contract and want to restructure or negotiate. Or, as in this case, they may want to end, or terminate, the contract. Any of these circumstances necessitates planning and legal help.

The other lesson here is the real-world consequences and fallout of contract disputes. Businesses can see their stock prices tumble and they need to be prepared for what comes after a contract dispute.

Source: MarketWatch, "Tempur Sealy's stock rocked after Mattress Firm contracts are terminated," Tomi Kilgore, Jan. 31, 2017

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