Airbed manufacturer and retailer Select Comfort, with headquarters in Minneapolis, reported net sales of $148.7 million for the fourth quarter of 2010, an increase of 9% over the same quarter in 2009. The increase was driven by a 12% increase in same–store sales, offset by the impact of the closure of 24 stores in 2010.
Net income for the quarter was $7.1 million, or $0.13 per diluted share, compared to net income of $35.3 million, or $0.69 per diluted share, in the prior–year period.
Operating income increased by 53% to $11.5 million. Operating margin rose 220 basis points to 7.7%.
Gross profit margins increased 10 basis points, from 62.9% in the prior–year period to 63% in fourth–quarter 2010. The company said the increase reflects a relatively stable cost structure and channel mix when compared to 2009.
Sales and marketing costs in the fourth quarter increased 6% to $68.6 million, representing 46.1% of net sales. This compares to $64.8 million, or 47.5% of net sales in the prior–year period.
Net sales for all of 2010 totaled $606 million, an increase of 11% over 2009. Net income for 2010 was $31.6 million, or $0.57 per diluted share, compared to net income of $35.6 million, or $0.77 per diluted share in 2009.
Cash flow from operating activities was $71 million for 2010. This compares to $67 million, including a $26 million tax refund, for full–year 2009. At year–end, cash and cash equivalents totaled $81 million as compared to $18 million at 2009 year–end. During the year, the company had no borrowings under its revolving credit agreement.
“Our fourth–quarter and full–year performance demonstrate consistent execution against a focused set of priorities, as well as solid progress against our profit and sales growth goals,” said Bill McLaughlin, Select Comfort president and chief executive officer. “We are particularly pleased we have continued to increase profit margins and grow faster than the industry as we lapped tougher year–over–year comparisons. As we move into 2011, we’re confident we’ve built a solid financial and operational platform from which to accelerate growth and improve market share.”
