Select Comfort Posts Loss on Deflated Sales
Select Comfort, Which Sells Sleep Number Beds in 480 Stores, Cuts Costs to Save an Estimated $45 Million a Year
April 2008
Select Comfort, which sells its Sleep Number bed in 480-company owned stores, said it has accelerated efforts to cut costs as it reported a 22 percent drop in sales and a net loss of $7.1 million in the Minneapolis-based company’s first quarter.
Sales totaled $168.2 million in the quarter, and the loss represented a major decline from the $10.7 million in net income the company reported in the same period a year ago.
CEO Bill McLaughlin said the economy weighed down results at a time when the company reduced ad spending as it looked ahead to a new marketing campaign.
“To mitigate the impact of lower volume, we are taking decisive action to reduce costs and preserve cash, while at the same time selectively investing in initiatives to stabilize our business and better leverage our model going forward,” McLaughlin said.
Since late in 2007, the company has made substantial cuts, including 170 jobs, across the business to save more than $30 million this year and $45 million on an annualized basis. Among the actions is a reduction in promotional discounts that is expected to save $12 million this year. The company also will cut new store openings to 24 (from 30), shut 15 stores and will continue to monitor store performance to determine if additional actions are needed. The company also will restore media spending to 2007 levels and introduce products at new price points.
In an announcement Wednesday, the company said it expects net losses to continue in the second quarter, but earnings will improve in the second half as a result of cost reductions and increases in media spending.
Sales totaled $168.2 million in the quarter, and the loss represented a major decline from the $10.7 million in net income the company reported in the same period a year ago.
CEO Bill McLaughlin said the economy weighed down results at a time when the company reduced ad spending as it looked ahead to a new marketing campaign.
“To mitigate the impact of lower volume, we are taking decisive action to reduce costs and preserve cash, while at the same time selectively investing in initiatives to stabilize our business and better leverage our model going forward,” McLaughlin said.
Since late in 2007, the company has made substantial cuts, including 170 jobs, across the business to save more than $30 million this year and $45 million on an annualized basis. Among the actions is a reduction in promotional discounts that is expected to save $12 million this year. The company also will cut new store openings to 24 (from 30), shut 15 stores and will continue to monitor store performance to determine if additional actions are needed. The company also will restore media spending to 2007 levels and introduce products at new price points.
In an announcement Wednesday, the company said it expects net losses to continue in the second quarter, but earnings will improve in the second half as a result of cost reductions and increases in media spending.
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