The shares of Tempur-Pedic International (TPX: sentiment, chart, options) have taken a sharp tumble today after the company warned that its first-quarter sales to date are "significantly below" expectations. Tempur-Pedic stated that the weak economy has caused consumer spending to slow down, and total net sales for the first quarter are now expected to decline in the high single digits on a year-over-year basis. Additionally, first-quarter earnings per share are expected to total about half of the 34 cents reported a year ago, compared to analysts' expectations for a profit of 44 cents per share.

As a result of the firm's warning, Raymond James cut its rating on the stock from "outperform" to "market perform." During a conference 2 weeks ago, TPX management offered no clue that first-quarter earnings and sales were in jeopardy. "Given that the size of the miss is so large, we doubt that it was all developed in the last 13 days, damaging management credibility," said Raymond James.

Stifel Nicolaus also piled on, lowering its price target from $34 to $20 and calling the report "extremely disappointing." However, the broker tempered its pessimism by noting, "We believe this could mark the low point on the stock in this cycle."

At last check, TPX is down more than 34% and has pegged a new 52-week low of $9.51. Option activity has been fast and furious at the stock's deep-in-the-money March 30 put, which has traded volume of 16,960 on open interest of 17,057 at midday.