Weak Consumer Spending Deflates Select Comfort’s Sales
Sales, Earnings Decline at Select Comfort, Nation’s Largest Mattress Seller
February 2008
Select Comfort, Minneapolis, which operates 470 stores selling its Sleep Number Beds, said net sales declined 4 percent in the company’s fourth quarter to $190.7 million and net income totaled $2.2 million, which was down 80 percent from $10.8 million during the same period of 2007.
The company said same-store sales dropped 13 percent during the quarter, but the impact was partially offset by a 4 percent increase in e-commerce sales and a 6 percent increase in the company’s wholesale unit.
For the year, net sales dropped 1 percent to $799.2 million, and net income of $27.6 million was down from $47.2 million the year before. The company, which has seen earnings decline in four previous quarters, had reacted to the downturn by cutting 20 corporate jobs and freezing headcount at current levels, which will save it $4 million per year.
“Weaker-than-expected consumer spending following the Thanksgiving holiday offset positive sales trends during the first two months of the fourth quarter,” said Bill McLaughlin, chairman and CEO, Select Comfort. “Given the outlook for economic softness in 2008, we are focused primarily on reducing costs and improving operational efficiencies, while continuing to execute our long-term strategies for profitable growth.”
During the fourth quarter, he said the company moved to counteract softening sales by opening seven new stores and completing three high-return store remodels. Select Comfort also raised prices on certain products in January to reflect the impact of higher raw-material costs.
The company declined to provide specific guidance for 2008, but said it expects net income to be lower than 2007 on flat to lower year-over-year sales. It expects to open 30 stores (and close 15) and remodel 50 locations.
The company said same-store sales dropped 13 percent during the quarter, but the impact was partially offset by a 4 percent increase in e-commerce sales and a 6 percent increase in the company’s wholesale unit.
For the year, net sales dropped 1 percent to $799.2 million, and net income of $27.6 million was down from $47.2 million the year before. The company, which has seen earnings decline in four previous quarters, had reacted to the downturn by cutting 20 corporate jobs and freezing headcount at current levels, which will save it $4 million per year.
“Weaker-than-expected consumer spending following the Thanksgiving holiday offset positive sales trends during the first two months of the fourth quarter,” said Bill McLaughlin, chairman and CEO, Select Comfort. “Given the outlook for economic softness in 2008, we are focused primarily on reducing costs and improving operational efficiencies, while continuing to execute our long-term strategies for profitable growth.”
During the fourth quarter, he said the company moved to counteract softening sales by opening seven new stores and completing three high-return store remodels. Select Comfort also raised prices on certain products in January to reflect the impact of higher raw-material costs.
The company declined to provide specific guidance for 2008, but said it expects net income to be lower than 2007 on flat to lower year-over-year sales. It expects to open 30 stores (and close 15) and remodel 50 locations.
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