Select Comfort 4Q profit falls 79.9%
By Furniture Today Staff -- Furniture Today, February 10, 2008
Minneapolis — Airbed manufacturer and retailer Select Comfort's earnings deflated in the fourth quarter, falling 79.9% from the same period a year earlier to $2.2 million as sales declined 3.7% to $190.7 million.
"Weaker-than-expected consumer spending following the Thanksgiving holiday offset positive sales trends during the first two months of the quarter," said Bill McLaughlin, chairman and CEO. "Given the outlook for economic softness in 2008, we are focusing primarily on reducing costs and improving operational efficiencies, while continuing to execute our long-term strategies for profitable growth."
In response to the fourth-quarter sales slide, the company said it has expanded its distribution by opening a net seven new stores, and also remodeled three stores. It also raised prices on some products in January to reflect higher raw materials costs and axed about 20 corporate positions while freezing its headcount at the current level, which it said would save about $4 million a year.
Same-store sales in the fourth quarter were down 13%. But sales benefited from a net 36 company-owned stores that opened in the past 12 months. In addition, e-commerce revenue grew 4% and wholesale sales were up 6% from the same period a year ago.
For the full year, Select Comfort's sales were down 0.8% to $799.2 million and earnings of $27.6 million were down 41.5% from 2006.
For 2008, McLaughlin said the company plans to slow the openings of new stores while investing in "high-return store remodels."
"Moreover, we have focused our regional partner program on fewer mattress retailers, eliminating five partners and 140 doors during the first quarter. We also will introduce two new products to the line, beginning with a mid-range price point introduction in late February. Also, in March, we'll launch a new marketing campaign to help increase consideration and purchase of Sleep Number products," he said.
The company said it would not provide specific sales and earnings guidance for 2008, although it expects net income will be lower than in 2007 on flat to slightly lower sales. It expects to open 30 stores and close at least 15.
| Select Comfort | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 12/29 | 2007 | 2006 | Change |
| (a) Includes pretax asset impairment charges of $211,000 in the 2007 quarter, $4.2 million in the 2006 quarter, $409,000 in the 2007 year and $6 million in the 2006 year. (b) Based on average shares outstanding of 45.3 million in the 2007 quarter, 54.2 million in the 2006 quarter, 48.3 million in the 2007 year and 55.6 million in the 2006 year. |
|||
| Sales | $190,672,000 | $198,013,000 | (3.7%) |
| Operating income | 4,461,000 | 22,134,000 | (79.8%) |
| Net income (a) | 2,168,000 | 10,767,000 | (79.9%) |
| Earnings per share (b) | 0.05 | 0.20 | (75.0%) |
| Year ended 12/29 | 2007 | 2006 | Change |
| Sales | $799,242,000 | $806,038,000 | (0.8%) |
| Operating income | 49,597,000 | 83,477,000 | (40.6%) |
| Net income (a) | 27,620,000 | 47,183,000 | (41.5%) |
| Earnings per share (b) | 0.57 | 0.85 | (32.9%) |
