2Q profits plunge 72.8% at Select Comfort; sales slip 5%
Airbed maker/retailer cites better gross margin, recent sales uptick
By Furniture Today Staff -- Furniture Today, July 26, 2007
MINNEAPOLIS — Select Comfort’s net income plunged 72.8% in the second quarter as sales declined 5% from the comparable 2006 quarter, the airbed manufacturer and retailer reported Wednesday.
A same-store sales decline of 14% offset sales growth from a net 48 new company-owned stores added in the past 12 months.
Earnings of $2.9 million, or 6 cents per share, in the latest quarter were down from $10.7 million, or 19 cents per share, a year ago. Sales of $179 million were down from $188.1 million.
Chairman and CEO Bill McLaughlin said profits were in line with expectations the company outlined earlier. “And we continue to make productivity gains and leverage the cash advantages of our business model, which allow us to invest in growth initiatives,” he said.
Despite the sales declines, McLaughlin said the company “has experienced an improving trend in retail sales during the second quarter and into the third quarter as we implement the core elements of our 2007 plan.”
Select Comfort said its gross margin improved in the quarter, to 61.2% of sales from 60.4% in the same period a year ago. However, higher sales and marketing expenses because of the new stores — and a 12% hike in media spending to $25.1 million — sent the operating profit margin down to 2.7%, compared with 8.8% in last year’s second quarter.
The company said it also spent an additional $300,000 on research and development during the quarter, reflecting its commitment to accelerate the pace of innovation.
For the first six months, sales were down 1.2% to $395.5 million and earnings fell 39.5% to $13.6 million, or 27 cents per share, compared with $22.5 million, or 40 cents per share, in the 2006 first half.
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Select Comfort 2Q net income drops 72.8%
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