| BRIEFLY | |
| Select Comfort’s second quarter | |
| Net sales | $205 million |
| Net income | $17 million |
| Operating income | $25.9 million |
| Operating margin | 12.6% |
| Gross profit | $131.6 million |
Minneapolis-based airbed manufacturer and retailer Select Comfort—maker of the Sleep Number bed—reported net sales of $205 million in the second quarter of fiscal 2012, a 27% increase over the prior-year quarter.
The increase was driven by company-controlled comparable sales growth of 25%, with average per-store sales during the past 12 months exceeding $2 million for the first time in company history, Select Comfort said.
“Delivering record sales, record operating margin and record earnings per share in a more challenged consumer environment is the direct result of our customer-centric strategies and unique business model,” said Shelly Ibach, Select Comfort president and chief executive officer. “Specifically, we executed well against our integrated growth formula that’s designed to increase brand awareness, grow exclusive distribution and advance proprietary product offerings that provide meaningful benefits for our customers.”
Net income was $17 million for the quarter, or $.030 per diluted share, as compared with net income of $11.3 million, or $0.20 per diluted share, in the second quarter of 2011—a 50% increase.
Operating income for the second quarter was $25.9 million, a 47% increase over the second quarter of 2011, marking the company’s 14th consecutive quarter of double-digit operating income growth. Operating margin during the quarter was 12.6% of net sales, a 170 basis-point improvement from 10.9% in 2011. Operating income and operating margin both marked second-quarter records for the company.
Operating margin growth was driven by a 70 basis-point improvement in sales and marketing expenses, a 60 basis-point increase in gross profit margin, and a 40 basis-point improvement in general and administrative costs, as well as research and development expenses, the company Comfort said.
Gross profit in the second quarter was $131.6 million. Gross profit margins increased 60 basis points to 64.1% of net sales, compared with 63.5% in the prior-year period.
Sales and marketing costs were $88.2 million in the second quarter, or 43% of net sales. This compares with $70.5 million, or 43.7% of net sales in the prior-year period. Media spending during the quarter was $27 million, a 37% increase versus the prior-year period.
The company reinitiated its share-repurchase program in April and during the second quarter purchased of 0.4 million shares of its common stock.
As of the end of its second fiscal quarter of 2012, cash, cash equivalents and marketable-debt securities totaled $155 million, and the company had no borrowings under its revolving credit agreement.
Select Comfort has raised its earnings-per-share guidance for 2012 to between $1.35 and $1.41 per share.
The company also has increased its estimate for a year-end 2012 store count from a previous range of between 400 and 410 stores to a new range of between 408 and 412 stores, a 7% to 8% increase from the 381 stores at year-end 2011.
“Going forward, we will continue to innovate across our end-to-end customer experience to further differentiate the Sleep Number brand as we advance toward our goal of exceeding $1.5 billion in revenue and 15% operating margin by 2015,” Ibach said.
