Minneapolis–based airbed maker Select Comfort reported improved performance during the first quarter of 2010. Net sales for the quarter totaled $158 million, an increase of 13% over the same period a year ago.
The increase in sales was driven by a 29% increase in same–store sales, offset by the impact of the closure of 76 stores since the beginning of 2009 and the termination of retail partner relationships at the end of the third–quarter 2009. The net decline in store count and retail partner terminations represented $12.8 million in sales in the first quarter of 2009. Direct marketing and Internet sales increased by a combined 16%, as compared to the year–ago period.
Net income for the quarter was $7.8 million, or $0.14 per diluted share, compared to a net loss of $2.7 million, or $0.06 per diluted share, in the first quarter of 2009.
Gross profit margins were 62.1% of net sales, in line with company targets and 350 basis points higher than the 58.6% gross profit rate in the first quarter of 2009.
Cash flows from operating activities were $29.5 million for first–quarter 2010 compared to $24.1 million, including a $23 million tax refund, in the year–ago period. Capital expenditures totaled $1 million, compared to $1.2 million in 2009. At the end of the quarter, cash and cash equivalents and restricted cash totaled $44 million and the company had no borrowings under its revolving credit agreement.
“During the quarter, our solid execution resulted in improved performance, demonstrated by sustained same–store growth and strong operating margins,” said Bill McLaughlin, Select Comfort president and chief executive officer. “We took advantage of an improving consumer environment and positive in–market testing to increase media investments behind our proven value messaging. The result was sales growth across all company–owned channels.”
McLaughlin continued, “While still cautious about macrotrends for the balance of the year, we anticipate an improved outlook for 2010 based on our continuing momentum and consequently are increasing our earnings guidance.”
