Select Comfort 3Q sales boosted by new stores; profits dip 14.9%
By Larry Thomas -- Furniture Today, November 11, 2007
Minneapolis — Airbed maker and retailer Select Comfort said sales in its third quarter rose 2.6%, but net income was 14.9% below the comparable period last year.
The company said sales were boosted by the opening of 46 company-owned stores in the past 12 months. Same-store sales declined 6%, and Select Comfort is projecting another, albeit smaller, same-store sales decline in the fourth quarter.
"While we have not yet regained the revenue strength we are capable of, we have made progress," said Chairman and CEO Bill McLaughlin. "Operationally, we continue to perform well, with profitability and strong cash flow allowing us to continue to invest in sales growth and cost savings improvements."
Sales in the quarter ended Sept. 29 totaled $213.1 million, compared with $207.7 million in last year's third quarter. Net income was $11.9 million, down from $13.9 million in 2006's comparable period.
Earnings per share in the most recent quarter came to 26 cents, 1 cent above last year's third quarter, because the company has about 9 million fewer shares outstanding now.
In the nine months, sales totaled $608.6 million, essentially even with last year. Nine-month net income fell more than 30% to $25.4 million, or 52 cents per share.
The vertically integrated company, which operates 470 stores, cut its sales and earnings estimates for the year. It now expects 2007 sales to be $820 million to $830 million, down from earlier estimates of $840 million to $860 million.
Earnings are now projected to be 75 cents to 81 cents per share, down from earlier estimates of 87 cents to 93 cents.
In 2006, Select Comfort had sales of $801.2 million and earnings of 73 cents per share.
In a conference call with analysts, McLaughlin said many difficulties stem from its marketing efforts, not the product line. He said the company plans to boost media spending by 15% in the fourth quarter, and said a new national advertising effort centered around testimonials from customers will debut in early 2008.
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