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Investment group urges change at Select Comfort

Clinton Group acquires 5.1% of bedding major

Larry Thomas -- Furniture Today, March 11, 2008

MINNEAPOLIS — An investment group has acquired a 5.1% stake in bedding major Select Comfort and has sent a letter to the board of directors demanding sweeping changes in the company’s marketing programs and cost structure.

The investment group, Clinton Group Inc., said in a filing with the Securities and Exchange Commission that the company’s poor financial performance in the past two years cannot be blamed entirely on the economy.

“Even in a difficult market, we believe that the company should be able to capture market share if it effectively communicates the value of its mattress products with respect to comfort, sleep quality and price,” the Clinton Group said in the letter, which was included in the SEC filing.

In the letter, the group urged Select Comfort to, among other things, redirect its advertising dollars into infomercials and related direct marketing efforts.

It also urged the airbed manufacturer and retailer to close poorly performing retail stores, immediately halt all store openings, freeze spending on a new computer system, move out of its new corporate headquarters, and outsource its call center operations.

Select Comfort gets the bulk of its sales through a network of about 475 company-owned retail stores, but the company has suffered through five consecutive quarters of declines in same-store sales.

Its stock, which topped $19 per share last year, hit a new 52-week low of $3.39 per share on Monday.

In the regulatory filing, Clinton Group said it had acquired 2.26 million shares in recent weeks.

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