Select Comfort sales inch up in second quarter

Second-quarter snapshot
Net sales $207 million
Operating income $15.1 million
Total store count 413

Select Comfort Corp., an airbed manufacturer and retailer based in Minneapolis, reports net sales increased 1% to $207 million in the second quarter of fiscal 2013, from $205 million in the prior-year period. Company-controlled comparable sales declined 6% year-over-year.

Operating income was $15.1 million for the period, compared with $25.9 million in the second quarter of 2012. As a percentage of net sales, operating income was 7.3%, compared with 12.6% in the second quarter of last year.

Earnings per diluted share were $0.18, compared with $0.30 in the second quarter of 2012. During the quarter, the company opened 17 stores and closed 15, ending the period with 413 stores.

“During the quarter, we experienced sequential monthly sales improvement and strengthened performance as we re-established our proven media-buying formula,” said Shelly Ibach, Select Comfort president and chief executive officer. “We also made progress on our top priorities, product innovation and local-market development, as we position the company for short- and long-term growth. Specifically in June, we launched the Sleep Number DualTemp layer, which solves temperature balancing—one of consumers’ most common sleep issues. This product can be used with any mattress brand, which is bringing new customers into our Sleep Number stores.”

Cash flow from operating activities was $36 million for the first six months of 2013, compared with $43 million in the prior-year period. Capital expenditures for the first half of the year increased to $37.1 million, compared with $22.5 million in 2012. The increase was driven by increased investment in stores, technology and product innovation, according to the company. During the second quarter, the company repurchased 0.5 million shares of its common stock for a total cost of $10 million. As of the end of the quarter, cash, cash equivalents and marketable-debt securities totaled $140 million. The company had no borrowings under its revolving credit facility.

Select Comfort is maintaining its outlook for full-year 2013 earnings per diluted share of between $1.30 and $1.45 (using generally accepted accounting principles). The outlook assumes growth in total net sales in the high teens for the remainder of the year, with a net increase in store count from 410 at year-end 2012 to between 435 and 445 by year-end 2013.

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