Minneapolis–based airbed maker Select Comfort reported net sales increased 16% to $161 million in the second quarter of fiscal 2011, compared to $139 million in the second quarter of 2010. The increase was driven by company–controlled sales growth of 20% over the prior–year period.
Net income for the quarter was $11.3 million, or $0.20 per diluted share, as compared to net income of $6.2 million, or $0.11 per diluted share, in the second quarter of 2010—an 82% improvement.
Operating income of $17.6 million and an operating margin of 10.9% both represented
the best second–quarter performance in company history, according to Select Comfort.
“We’re pleased that focused execution against our strategic priorities is continuing to result in strong operational and financial performance, as demonstrated in our second–quarter results,” said Bill McLaughlin, Select Comfort president and chief executive officer. “Specifically, we sustained double–digit comparable sales growth and strong margins, which allowed us to report record–setting second–quarter operating income.”
Gross profit margins in the second quarter of 2011 increased 130 basis points to 63.5% of net sales, compared with 62.2% in the prior–year period.
The increase reflects a strong product mix, manufacturing efficiencies and pricing actions,
the company said.
Sales and marketing costs for the quarter increased by 12% to $70.5 million, representing 43.7% of net sales. This compares to $63 million, or 45.3% of net sales, in the prior–year period. Media investments in the second quarter totaled $20.1 million, 25% higher than a year ago.
Cash flows from operating activities were $34 million for the first six months of 2011, compared to $29 million in the prior–year period.
Driven by increased investment in stores and information systems, capital expenditures for the first six months of 2011 increased to $9.6 million, compared with $1.7 million during the same period last year. As of the end of the second quarter, cash, cash equivalents and marketable debt securities totaled $98 million and the company had no borrowings under its revolving credit agreement.
“During the second half of the year, we should continue to drive profitable growth as we
accelerate awareness and consideration of our brand,” McLaughlin said.
