During 2009, airbed maker of the Sleep Number bed Select Comfort restructured its balance sheet, eliminated debt and returned to a positive cash position, the Minneapolis–based company said.
Select Comfort reported net sales of $136.5 million for the fourth quarter of 2009, an increase of 4% over 2008. The company reported fourth–quarter net income of $35.3 million, or $0.69 per diluted share, compared to a net loss of $57.4 million, or $1.30 per diluted share, during the same period in 2008. (In 2008, Select Comfort’s fourth quarter was a 14–week selling period; in 2009 it was 13 weeks.)
Gross profit margins increased 700 basis points, from 55.9% of net sales in the prior–year period to 62.9% in fourth–quarter 2009. The increase reflects an improved product mix and cost restructuring initiatives completed during the year, Select Comfort said.
During the fourth quarter, net sales increased by 4% over 2008 and were up 9% when adjusted for the additional week in 2008. The increase in sales was driven by a 23% gain in same–store sales—offset by the closure of 72 stores since the start of 2009 and the termination of retail partnerships totaling about 700 doors at the end of third–quarter 2009.
Cash flow for 2009 was $66.6 million, which includes $26.1 million in tax refunds associated with prior–year losses. This compares to $3 million for 2008. The company reduced 2009 capital expenditures to $2.5 million, compared with $32.2 million in 2008. As of year–end 2009, Select Comfort’s cash and cash equivalents totaled $17.7 million and it had no borrowings under its revolving credit agreement. At the end of 2008, the company had outstanding debt of $79.2 million. The company is in compliance with all bank covenants.
Net sales for 2009 totaled $544.2 million, a decrease of 11% as compared to $608.5 million in 2008. The company reported a net profit of $35.6 million, or $0.77 per diluted share in 2009, compared to a net loss of $70.2 million, or $1.59 per diluted share in 2008.
“Our fourth–quarter and full–year performance reflects strong execution against a set of initiatives that focused on controlling costs, building our brand for improved sales and preserving cash. The result is significantly improved profitability, with the company experiencing two consecutive quarters of same–store sales growth,” said Bill McLaughlin, Select Comfort president and chief executive officer.
