Select Comfort 2006 sales increase 16.9%
By Larry Thomas -- Furniture Today, February 11, 2007
Minneapolis — Despite a difficult fourth quarter that saw comparable-store sales from its company-owned stores fall 9%, airbed specialist Select Comfort recorded sales and earnings increases for 2006.
The company said last year's sales totaled $806 million, up 16.9% from 2005. Net income, meanwhile, was 7.8% above 2005 at $47.2 million or 85 cents per share.
Fourth-quarter sales were up 5.6% from the same period in 2005, as sales from stores open less than a year more than offset the comparable-store sales drop. The company ended 2006 with 442 stores, compared with 396 at the end of 2005.
Fourth-quarter net income declined more than 30% from a year earlier, largely due to increased research and development expenses and a one-time charge of $4.2 million for a new computer system.
During a conference call with securities analysts, Chairman and CEO Bill McLaughlin said Select Comfort will debut a new national advertising campaign in April, and is pursuing quality control and cost-cutting initiatives.
The ad campaign will move away from the emotional appeals of the past and focus on explaining how its Sleep Number bed works and why it delivers a good night's sleep, he said.
McLaughlin said the company was not satisfied with its incremental growth in existing markets last year. As a result, it will put more emphasis on its company-owned stores this year while slowing the expansion of its product placements in traditional furniture and bedding stores.
He said those moves include pulling the Sleep Number bed out of some 140 Sleepy's stores in the New York area and aggressively expanding its own store network in that market.
"We're not seeing as much incremental growth in that market as we think there can be," he told analysts.
| Select Comfort | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/30 | 2006 | 2005 | Change |
| (a) Includes pretax charges for asset impairment of $4.2 million in the 2006 quarter, $6 million in the 2006 year and $162,000 in the 2005 year. | |||
| Sales | $198,013,000 | $187,497,000 | 5.6% |
| Operating income | 22,134,000 | 25,159,000 | (12.0%) |
| Net income (a) | 10,767,000 | 15,817,000 | (31.9%) |
| Earnings per share | 0.20 | 0.28 | (28.6%) |
| Year ended 12/30 | 2006 | 2005 | Change |
| Sales | $806,038,000 | $689,548,000 | 16.9% |
| Operating income | 83,477,000 | 70,970,000 | 17.6% |
| Net income (a) | 47,183,000 | 43,767,000 | 7.8% |
| Earnings per share | 0.85 | 0.76 | 11.8% |
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