Select Comfort Corp., manufacturer and retailer of the Sleep Number bed brand, reported operating income (earnings before interest and taxes) rose slightly—by 2%—to $76.7 million in 2016, compared with full-year 2015.
Select Comfort Sleep Number adjustable bed
Using generally accepted accounting principles, net income from operations was relatively flat at $51.4 million, compared with $50.5 million in 2015.
Earnings per diluted share increased 13% to $1.10 over the prior full-year period, the Minneapolis-based company said.
Net sales in 2016 grew by 8%, compared with the prior year, and set a new company record at $1.3 billion.
Select Comfort also generated record cash from operations of $152 million, a 40% increase compared with 2015.
In 2016, capital expenditures of $58 million were 32% less than in 2015 and brought total investments in the business over the past five years to $427 million. The company increased its spending on share repurchases 27% to $125 million in 2016, with $245 million remaining under the current share repurchase authorization.
During the year, Select Comfort opened 72 new stores and closed 20, bringing its total store count to 540.
During the fourth quarter of 2016, the company’s net income was $11.3 million, compared with a loss of $21.2 million in the same period a year ago. Net sales were 46% higher than the fourth quarter of 2015 at $313.4 million.
Fourth-quarter EPS were $0.05 below Select Comfort’s guidance range at $0.25, and $0.07 below what analysts polled by Thomson Reuters were expecting.
“While our fourth-quarter sales and earnings were below our expectations, we begin 2017 well-positioned to accelerate earnings growth, cash generation and returns to shareholders,” said Shelly Ibach, Select Comfort president and chief executive officer. “Thus far in 2017, traffic and sales are on target, which we attribute to a steadier consumer environment and improved marketing effectiveness. All of the investments we have made over the past five years are coming together with the rollout of our revolutionary new Sleep Number 360 smart beds, which will enable both continued market-share growth and greater business leverage.”
The company expects to generate full-year 2017 EPS of $1.20 to $1.40, including $0.15 to $0.22 of incremental costs related to the launch of the Sleep Number 360 smart bed and the redesign of the company’s logistics network. The outlook assumes mid- to high-single digit sales growth for the full year and a 3% to 4% increase in store count in 2017, building on an 11% store count growth in 2016.
Sleep Number 360 earned the Best of Innovation award in the Home Appliances category at the high-profile International Consumer Electronics Show in January in Las Vegas. The bed also received accolades in both the Smart Home and Embedded Technologies categories.
