Airbed manufacturer and retailer Select Comfort reported net sales for its first quarter were $193 million, a 22% increase over the prior–year period.
The Minneapolis–based company reported net income for the quarter of $16.6 million, or $0.30 per diluted share, an increase of 114% compared to the first quarter of fiscal 2010.
“Our first–quarter performance demonstrates the earnings potential of our business when we achieve solid sales growth and increased market share,” said Bill McLaughlin, Select Comfort president and chief executive officer. “During the quarter, we remained focused on leveraging our core business, executing against our growth–driving programs and controlling costs.”
The company’s operating income increased by 86% to $26.4 million during the quarter. Operating margin rose 469 basis points to 13.7%.
Gross profit margins increased 166 basis points, from 62.1% in the prior–year period to 63.8% in the first quarter of 2011. Select Comfort attributed the increase to a stronger product mix offset by higher raw materials costs.
Sales and marketing costs in the first quarter increased 15% to $80.3 million, representing 41.6% of net sales. That compares to $70.1 million, or 44.4% of net sales in the prior–year period. The company said it had increased its advertising expenditures by 30% to $23.7 million in the first quarter.
Cash flow from operating activities was $32.2 million in the first quarter, compared to $30.4 million during the same period last year. Capital expenditures were $2.7 million, compared to $1 million in the first quarter of 2010. At of the end of the quarter, cash and cash equivalents totaled $102 million and the company had no borrowings under its revolving credit agreement.
“The momentum of the first quarter allowed us to advance initiatives designed to continue to broaden awareness and consideration for the Sleep Number brand and enhance customers’ store experience in order to drive long–term growth,” McLaughlin said. “We expect our efforts to generate strong earnings growth over the balance of the year.”
