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Select Comfort loses $2.7M

By Larry Thomas -- Furniture Today, May 11, 2009

MINNEAPOLIS — Mattress manufacturer and retailer Select Comfort recorded a first-quarter net loss of $2.7 million as sales slid 17%.

The loss, which equals 6 cents per share, was less than half the net loss recorded in the first quarter of last year.

Select Comfort said it reduced its loss and preserved cash by, among other things, slashing marketing and capital expenditures, closing 30 retail stores, and restructuring its supply chain.

In addition, the company relaunched its Sleep Number mattress line, focusing on price points below $1,500 in queen.

“During the quarter, we achieved our goals of significantly improving operating performance and generating positive cash flow, despite continued difficult economic conditions and a weak sales environment,” said Bill McLaughlin, president and CEO.

Sales for the quarter ended April 4 totaled $149.6 million, down from $168.2 million in the same quarter in 2008.

The most recent quarter's net loss of $2.7 million compares with a loss of $7.1 million or 16 cents per share in last year's first quarter.

McLaughlin said about 25 additional Select Comfort retail stores will be closed by the end of the year, which will leave the company with 416 locations.

He said same-store sales were down 14% in the first quarter.

Jim Raabe, senior vice president and chief financial officer, said the company is likely to have negative cash flow during the second quarter — historically Select Comfort's weakest quarter. He also said the second quarter net loss is expected to be greater than the first quarter's.

In recent months, the company has received a series of waivers from complying with some of its loan covenants. The most recent waiver expires May 8, and Raabe said the company is still trying to work out a long-term solution to its financial woes.

Select Comfort
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.

Quarter ended 4/4	2009	2008	Change
(a) After pretax research and development expense of $486,000 in the 2009 quarter and $874,000 in the 2008 quarter, and pretax asset impairment charges of $378,000 in the 2009 quarter and $333,000 in the 2008 quarter.
Sales	$139,614,000	$168,165,000	(17.0%)
Operating income	1,126,000	(9,835,000)	—
Net income (a)	(2,695,000)	(7,133,000)	—
Earnings per share	(0.06)	(0.16)	—

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Select Comfort reports smaller loss in first quarter

Apr 30, 2009

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