| BRIEFLY | |
| Select Comfort’s third quarter | |
| Net income | $23.6 million |
| Net sales | $323 million | Gross profit margin | 61.4% |
| EPS | $0.44 |
Airbed manufacturer and retailer Select Comfort Corp., owner of the Sleep Number brand, reported third-quarter net income of $23.55 million, a 7.3% increase compared with income of $20.26 million in the same quarter of 2013. Earnings per share increased 22%, to $0.44.
Net sales rose 23% to $323 million—a new record for the Minneapolis-based company—compared with $264 million in the prior-year period. Sales benefited from 13% growth in average revenue per unit and 10% growth in units, the company said.
Comparable-store sales increased 16%, and new stores added eight points of growth during the quarter.
“Third-quarter results reflect the strength of our consumer-focused innovation strategy and the progress we are making with our growth initiatives,” said Shelly Ibach, Select Comfort president and chief executive officer. “Connectivity through technology, like SleepIQ, is playing an increasingly important role in the consumer lifestyle brand we are building.”
Gross profit margin was 61.4%, a 2.7% decline compared with 63.1% in the prior-year quarter. The drop was a result of logistics costs due to an increased demand for new FlexFit adjustable bases, the company said.
Operating income rose 15% to $35 million, compared with $31 million in the prior year.
During the third quarter, the company repurchased 0.5 million shares of its common stock at a cost of $10 million. Select Comfort also announced an increase in share repurchases to $250 million.
“We are committed to delivering superior shareholder returns through execution of our strategy combined with increased share repurchases,” Ibach said. “We intend to increase share-repurchase activity by as much as 50% beginning in the fourth quarter.”
Year-to-date, cash flows from operating activities were $136 million, compared with $90 million for the same period last year. Capital expenditures for the first nine months came to $58 million, consistent with last year, and 2014 share repurchases total $30 million.
Select Comfort increased its outlook for 2014 EPS to $1.12, compared with its prior outlook of $1.07. The company expects to end the year with 463 stores, a net increase of 23 stores. It expects full-year capital expenditures of about $80 million, including $30 million related to an enterprise resource-planning software implementation.
