Select Comfort proves critics wrong
It looks like those obituaries for airbed producer and retailer Select Comfort were premature.
While the company still faces some challenges and is far removed from its high-flying glory days, it recently delivered some encouraging results. Net sales for the fourth quarter were up 4% on same-store growth of 23%. For the year, net sales were down 11% and the company reported a net profit of $35.6 million.
This year, Select Comfort says it expects to generate positive same-store sales throughout the year. Consolidation of planned store openings and store closings are expected to trim the number of stores from 403 at the end of last year to 380 to 390 this year.
Select Comfort CEO Bill McLaughlin said the company’s results in the fourth quarter and for the full year reflected “strong execution” against initiatives that focused on controlling costs, building the brand for improved sales, and preserving cash.
McLaughlin is a savvy operator and sharp marketer who delivered a strong leadership performance last year under some daunting circumstances. There is still some fresh air in the Select Comfort business model. And we know that many consumers remain big fans of airbeds. So now Select Comfort appears to be headed for some smoother sailing in the days to come.
BED HEAD FRED commented:
Airbeds will go the way of waterbeds. Once they reach their saturation point of first time buyers--its all downhill from there. The bottom line is it is not for everyone and thats a problem. The other problems is airbags leak. No way around it. Select has cut their prices to $799 or so? They are hanging on. But--the inevitable will come. And for Tempur, too, maybe just a few more years ahead. Neither are for everyone. Springs took a back seat---but they are tried and true and keep on working. How many old innersprings do you see by the side of the road? Think it will ever be the same for airbeds? Be careful about buying stocks in novelty product lines. When economics get tough the consumer returns to basics don't they?
SELECT REPORTING commented:
Perhaps a closer look by mr. Perry is warranted befor he recomends a "BUY". sales declined 11%, sames store growth only because of store closures...85% of the net profit stated due to year prior tax refund! Just like the product...when inspected closely...all hat, no cattle.
Fan commented:
Atta boy Select. In a time when the industry has gone commodity, they have stuck to a plan. Good strong leadership and well managed business units. Vertical integration, controlled distribution and managed consumer experience. The whole package. Not to many purveyors of fluffy sleeping rectangles have made this type of gain and impact! Kudos to Bill and the Select Comfort Team. The shareholders are happy, customers are happy, business is growing, that’s why we are all in the game.
carmi commented:
I think it is just a matter of time until airbeds go the way of the waterbeds.
Lisa Stansbury commented:
They are in some high rent places. I wish them the best.
Confused commented:
Someone please tell me why the same critics of waterbeds haven't attacked air beds? If you keep the air bladder fully inflated they are probably OK, however once you start de-flating, the support declines rapidly. This can't be good for proper alignment. Most chiropractors, orthopedic surgeons, and the like, do not recommend them. It seems that they are duping the public? Am I right? I'm looking for the truth.....
bittsypoo commented:
David, you seem to be a big fan of select Comfort. You should go work for them on the sales floor and see how much fun they are to work for! I did, and I can tell you what a mickey mouse -high pressure -intimidation tactic corporate company they are. While they enjoyed record sales and profits in 2003, they rewarded there sales people with about a 50% cut in there commissions! And at the same time there C.E.O. RECEIVED ABOUT 110 MILLION DOLLARS IN Salary, Bonuses and stock options! the corporate pressure they put on there sales people made selling an unenjoyable working experience. When they made salespeople wear pajamas to work on Saturdays,this was the ultimate insult and bye bye Select Comfort.
Tom commented:
Instead of a slash and burn strategy, Select Comfort looked at how they could improve their business while cutting costs, a hard combination. Same store growth of 23% indicates they did both. Looking at recent reports from La-Z-Boy and Flexsteel, as well as Select Comfort and Tempurpedic, show that well run companies can succeed in difficult circumstances. Congratulations to all.
