(Adds details, outlook, analyst quote; updates shares)
Jan 30 (Reuters) - Mattress maker Tempur Sealy International Inc said it terminated its contracts with U.S. mattress retailer Mattress Firm Holdings Corp, after disagreements over changes, which asked for "significant economic concessions."
Tempur Sealy's shares were down about 28 percent at $45.55 before the bell on Monday.
Shares are tanking because Mattress Firm is Tempur Sealy's largest and most profitable customer, so estimates for future periods must be lowered, ROE Equity Research analyst Laura Champine told Reuters.
The Lexington, Kentucky-based company said Mattress Firm's senior management and representatives of its parent Steinhoff International Holdings NV verbally notified Tempur Sealy, during the week of Jan. 23, of intentions to terminate contracts if they could not agree on the proposed changes.
After several failed attempts to enter into a mutually agreeable supply deal, the company terminated all contracts with Mattress Firm as of Jan. 27, Tempur Sealy said.
Tempur Sealy said it expects to cease doing business with Mattress Firm during the first quarter of 2017.
Mattress Firm accounted for about 21 percent of Tempur Sealy's worldwide sales in 2016.
Tempur Sealy said it now expects total sales to fall 1 percent to $3.13 billion in 2016. Analysts on average expect sales of $3.10 billion, according to according to Thomson Reuters I/B/E/S.
(Reporting by Jessica Kuruthukulangara in Bengaluru; Editing by Martina D'Couto)