Investor Group Restless Over Select Comfort Direction
Select Comfort is Under Heavy Criticism from a Major Shareholder, Clinton Group
June 2008
An investor group is calling on Minneapolis-based Select Comfort to make major changes—including ousting its CEO—after a sharp sales slowdown.
Clinton Group, an equity firm that owns a 7.5 percent share of the mattress maker with 470 stores, stated in a filing with the Securities and Exchange Commission Monday that it had sent a letter to Select Comfort’s board stating that Bill McLaughlin—Select Comfort’s CEO since 2000—should be replaced and the company should revise its “Sleep Number” marketing by focusing on direct marketing. It also argued that store openings should be halted until sales rise.
Clinton Group also expressed disappointment that Select Comfort did not agree to put two Clinton nominees on its board of directors.
In April, Select Comfort reported a net loss of $7.1 million (versus a $10.7 million profit a year earlier). The formerly fast-growing company saw its first-quarter revenue drop 22 percent to $168.2 million—far short of analyst expectations. The company said it had launched a cost-cutting initiative to save $30 million annually with moves that included eliminating 170 jobs, including 17 percent of headquarters positions, and trimming store openings.
Clinton Group, an equity firm that owns a 7.5 percent share of the mattress maker with 470 stores, stated in a filing with the Securities and Exchange Commission Monday that it had sent a letter to Select Comfort’s board stating that Bill McLaughlin—Select Comfort’s CEO since 2000—should be replaced and the company should revise its “Sleep Number” marketing by focusing on direct marketing. It also argued that store openings should be halted until sales rise.
Clinton Group also expressed disappointment that Select Comfort did not agree to put two Clinton nominees on its board of directors.
In April, Select Comfort reported a net loss of $7.1 million (versus a $10.7 million profit a year earlier). The formerly fast-growing company saw its first-quarter revenue drop 22 percent to $168.2 million—far short of analyst expectations. The company said it had launched a cost-cutting initiative to save $30 million annually with moves that included eliminating 170 jobs, including 17 percent of headquarters positions, and trimming store openings.
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