Select Comfort proud of profit, and product
By Larry Thomas, Bedding editor -- Furniture Today, November 4, 2001
The Securities and Exchange Commission requires publicly traded companies to release an earnings statement within 45 days of the end of a quarter, and bedding firms often use up nearly all the allotted time.
But airbed manufacturer and retailer Select Comfort adopted a much different strategy when its third quarter ended Sept. 29. Fifteen days later, its quarterly statement hit the street.
Why the rush?
The company, whose financial woes have been well documented on these pages, had recorded its first quarterly profit since the second quarter of 1999. And that was really, really big news.
"I'm really proud of our team here," said Bill McLaughlin, the company's president and chief executive officer since March 2000. "I think you will start to see some continuity now … as we keep moving forward."
And while the amount of the profit — $227,000, or 1 cent per share — represented a mere four-tenths of 1% of sales, McLaughlin pointed out that it wasn't the result of accounting gimmicks, asset sales or other one-time income boosters.
Instead, Select Comfort turned a profit the old fashioned way — with techniques such as aggressive cost cutting, a refined marketing message, and significant operational improvements.
McLaughlin realizes that one profitable quarter isn't the end of the company's financial challenges — auditors attached a "going concern" qualification to second-quarter results — but he believes the most recent results, coupled with new financing put in place this summer, have put the airbed giant on more solid footing.
"We're not only profitable, but profitable and growing again," he said. "We're well-positioned for the future."
In the 18 months since McLaughlin joined the company, Select Comfort has reduced its overhead about 25% by, among other things, closing a manufacturing plant, trimming sales and marketing expenses, shuttering unprofitable retail stores and cutting its product defect rate by almost half.
Plus, the company has overhauled its information systems, instituted a new marketing effort dubbed "Sleep Number" and streamlined its selling process, for those working in the 326 company-owned retail locations as well as in the direct marketing and e-commerce distribution channels.
"Nobody is going to sell our product who doesn't sleep on it and believe in it," said McLaughlin.
Last year, the company also placed its product for the first time in a traditional furniture store — Top 100 retailer Gabberts, which has stores in Dallas and near Select Comfort's headquarters in Minneapolis. Another Top 100 retailer, Kansas City's Benchmark, was added earlier this year and McLaughlin hopes to selectively add furniture store distribution in the coming months.
"We're looking for unique wholesale partnerships with people who share our passion for this product," he said.
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