Select Comfort’s sales tumble 22.3% in first quarter
Cost-cutting measures being implemented
By Furniture Today Staff -- Furniture Today, April 24, 2008
MINNEAPOLIS – Bedding manufacturer and retailer Select Comfort reported a net loss of $7.1 million in the first quarter as sales tumbled 22.3%.
The company, which generates the bulk of its sales from 481 company-owned retail stores, said same-store sales were off 25% as consumers reduced discretionary spending in a weakening economy.
As a result, the company said it is implementing several cost-cutting measures, including the elimination of 170 positions, slashing capital expenditures, and reducing the number of store openings and store remodeling projects.
“We have made the difficult decisions required to drive improved performance as the year progresses,” said Bill McLaughlin, CEO. “We expect operating cash flows to be positive while judiciously investing in high-return initiatives.”
Sales for the quarter ended March 29 were $168.2 million, down from $216.5 million in last year’s first quarter.
The most recent quarterly loss, which equals 16 cents per share, compares with net income of $10.7 million, or 21 cents per share, in the first quarter of last year.
Select Comfort’s gross margin also shrank from 62% in the first quarter of last year to 57.6% in the most recent quarter.
Sales and marketing expenses totaled $90.6 million, or 53.9% of sales, in the most recent quarter.
McLaughlin said most of the jobs being eliminated are at the company’s corporate headquarters, and represent about 17% of the corporate staff.
In addition, the company has reduced new-store openings from 30 to 24 and reduced the number of remodeling projects from 50 to 20.
Capital expenditures, which totaled about $44 million in 2007, will be cut to about $27 million this year, he said.
A new brand marketing and advertising campaign will be launched later this year as scheduled, and several new products will be introduced, McLaughlin added.
He said the company will likely report a net loss for the second quarter, but should be profitable in the second half of the year.
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