Airbed manufacturer and retailer Select Comfort, maker of the Sleep Number bed, reported net income for the first quarter of fiscal 2014 was $23.5 million, a 4.7% increase over the prior-year quarter. Net sales for its fiscal first quarter, however, decreased 2% to $258 million, compared with $262 million in the first quarter of 2012.
The Minneapolis-based company announced in March it would miss first-quarter sales projections because of lower sales and increased promotional expenses. The first quarter ended March 30.
| BRIEFLY | |
| Select Comfort’s first quarter | |
| Net sales | $258 million |
| Net income | $23.5 million |
| Operating income | $34.8 million |
“As reported in early March, changes to our media buying negatively impacted traffic and sales, resulting in first-quarter under performance,” said Shelly Ibach, Select Comfort president and chief executive officer. “We took decisive action to correct the issue and are making steady progress against a backdrop of soft industry performance. During the quarter, we progressed as planned in the other key areas of our customer-focused growth strategy, specifically exclusive distribution and product innovation.”
Operating income, adjusted both years for the noncash impact of the 2012 chief executive officer transition, decreased to $34.8 million, compared with $39.9 million in the first quarter of 2012. As a percentage of net sales, adjusted operating income was 13.5%, compared to 15.2% in the first quarter of 2012.
The 170 basis-point, year-over-year decrease in adjusted operating margin included a 200 basis-point increase in sales and marketing expenses and a 50 basis-point increase in research and development expenses, partially offset by a 70 basis-point improvement in gross margin and a 20 basis-point decrease in general and administrative expenses, the company reported.
Earnings per diluted share on a GAAP (generally accepted accounting principles) basis were $0.42, compared with $0.39 in the first quarter of 2012. Adjusted earnings per diluted share (excluding CEO transition charges) were $0.41 per share, a 9% decrease compared with $0.45 in the first quarter of 2012.
During the quarter, the company opened 10 stores and closed nine, ending the quarter with 411 stores.
Ibach added: “In the second quarter, we are introducing the first in a series of break-through sleep innovations that have been in development for the past 15 months. We are excited to expand our offering of individualized air products that provide meaningful benefits for our customers.”
