Select Comfort Foresees Second-Half Profit
Sleep Number Bed Maker Select Comfort Says Cost-Cutting Efforts Will Help Position It for Profitable Second Half
July 2008
Select Comfort, which has endured criticism from an investor group over its stock slide, announced Wednesday that it is positioned for profitability in the second half of the year.
The company, which operates 470 stores, said second-quarter revenues decreased 15 percent to $152.1 million, leading to a net loss of $6.6 million, which compares to a loss of $2.9 million a year earlier.
Officials said same-store sales were down 20 percent, which was partially offset by the opening of 18 new stores over the past year.
A month ago, The Clinton Group, which owned an 8 percent share of the bedding maker and retailer, called for the ouster of Select Comfort CEO Bill McLaughlin, saying the company needed to do more to improve performance as its stock price reached a six-year low.
On Wednesday, McLaughlin said, “We made important progress in the second quarter in reducing costs, stabilizing sales and laying the groundwork for a return to profitability in the second half of the year, even with growing inflationary pressures and weak macro-economic conditions. ... We were encouraged by stabilizing sales trends and improved bottom-line performance compared with the first quarter, despite the fact that second quarter is historically our seasonal low point. Our priorities continue to be reducing costs, protecting margins and preserving cash to selectively invest in initiatives to improve the business.”
McLaughlin said the second half of the year represents the company’s best selling season. At the same time, it continues to reduce discretionary spending, which is expected to lead to $3 million in second-half savings. The company has also decided to close 10 additional stores, bringing the total number of planned closings to 25 for the year. Also, price increases enacted this month are expected to produce $3 million during 2008.
“Barring further deterioration of the macroeconomic environment, the continued execution of our plan, and benefits from higher seasonal demand, position us to return to profitability in the second half of 2008,” McLaughlin said.
The company, which operates 470 stores, said second-quarter revenues decreased 15 percent to $152.1 million, leading to a net loss of $6.6 million, which compares to a loss of $2.9 million a year earlier.
Officials said same-store sales were down 20 percent, which was partially offset by the opening of 18 new stores over the past year.
A month ago, The Clinton Group, which owned an 8 percent share of the bedding maker and retailer, called for the ouster of Select Comfort CEO Bill McLaughlin, saying the company needed to do more to improve performance as its stock price reached a six-year low.
On Wednesday, McLaughlin said, “We made important progress in the second quarter in reducing costs, stabilizing sales and laying the groundwork for a return to profitability in the second half of the year, even with growing inflationary pressures and weak macro-economic conditions. ... We were encouraged by stabilizing sales trends and improved bottom-line performance compared with the first quarter, despite the fact that second quarter is historically our seasonal low point. Our priorities continue to be reducing costs, protecting margins and preserving cash to selectively invest in initiatives to improve the business.”
McLaughlin said the second half of the year represents the company’s best selling season. At the same time, it continues to reduce discretionary spending, which is expected to lead to $3 million in second-half savings. The company has also decided to close 10 additional stores, bringing the total number of planned closings to 25 for the year. Also, price increases enacted this month are expected to produce $3 million during 2008.
“Barring further deterioration of the macroeconomic environment, the continued execution of our plan, and benefits from higher seasonal demand, position us to return to profitability in the second half of 2008,” McLaughlin said.
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