Select Comfort reports double-digit growth

Select Comfort’s first quarter
Net sales $262 million
Net income $34.3 million
Gross profit margin 62.6%

Minneapolis-based airbed manufacturer and retailer Select Comfort–maker of the Sleep Number Bed–reported net sales for the first quarter of fiscal 2012 were $262 million, a record-setting 34% increase over the $193 million in net sales recorded in the first quarter of 2011.

First-quarter earnings per share were $0.39 and $0.45 per share on an adjusted basis—a 50% increase over the first quarter of 2011, the company said.

“We’re extremely pleased with our first-quarter performance because it demonstrates the continued success of our strategy as we build on strong results from the prior year,” said Bill McLaughlin, Select Comfort president and chief executive officer. “And the critical elements are in place for future success, including a proven growth formula, resources for sustained investment and an experienced, talented leadership team that will enable the company to achieve its full potential.”

The company achieved its 13th consecutive quarter of double-digit, year-over-year growth in operating income. Operating income for the first quarter of 2012 was $34.3 million. Excluding a $5.6 million nonrecurring charge associated with the June 1 transition to new CEO Shelly Ibach, adjusted operating income was $39.9 million and adjusted operating margin during the quarter improved 150 basis points, from 13.7% in 2011 to 15.2% in 2012.

Operating margin growth on an adjusted basis was driven by a 280 basis-point improvement in selling expenses and a 160 basis-point improvement in general and administrative expenses, partially offset by planned deleverage of marketing expenses of 170 basis points and a 120 basis-point decrease in gross profit margin, the company said.

Gross profit margin in the first quarter of 2012 was 62.6% of net sales, compared with 63.8% in the prior-year period. The decrease reflects the strength of consumer response during key promotional events and changes in product mix, partially offset by pricing increases taken during the past year, the company said.

“Our record comparable-sales increase in the quarter reflects the strength of our customer-focused growth strategy,” said Ibach, who previously served as Select Comfort’s chief operating officer. “We continue to invest in broadening awareness for the differentiated Sleep Number brand and leveraging our position as a national retailer with exclusive, company-controlled distribution. As we look ahead, we are confident in our ability to continue generating earnings-per-share growth of at least 20% per year for the foreseeable future.”

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