Select Comfort second-quarter net income drops, sales surge

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Select Comfort Corp., manufacturer and retailer of the Sleep Number bed, reported second-quarter 2014 net income of $8.5 million, a 14% decline as compared with net income in the second quarter of 2013. The Minneapolis-based company’s net sales beat analysts’ estimates, jumping 13% to a record $235 million, as compared with the prior-year quarter. The increase included a 7% increase in company-controlled comparable sales.

BRIEFLY
Select Comfort’s second quarter
Net income $8.5 million
Net sales $235 million
Operating income $12.7 million
Total store count 451
Earnings per share $0.16

Operating income was $12.7 million in Select Comfort’s second quarter, a 16% year-over-year decrease. Second-quarter earnings per diluted share exceeded analysts’ expectations at $0.16 per share, but reflected a 33% decrease as compared with the prior-year quarter.

The company attributed the surge in gross profits during the second quarter to consumer interest in its recently introduced SleepIQ smart-bed technology, which tracks and monitors each individual’s sleep.

“Our second-quarter results reflect the important role of product innovation in our strategy,” said Shelly Ibach, Select Comfort president and chief executive officer. “Customers responded positively to our introductions, including our breakthrough SleepIQ technology. We remain dedicated to our customer as we continue to transition the business through our growth initiatives. We know that when we focus on our customer, we deliver value for them and for our shareholders.”

As of the end of the quarter, cash, cash equivalents and marketable-debt securities totaled $121 million, inventories totaled $43 million and the company had no borrowings under its revolving credit facility, Select Comfort said.

The company restated its 2014 earnings outlook of $1.07 per diluted share. Select Comfort also plans to open 20 to 30 new stores, net, during 2014. It ended the second quarter with 451 retail stores.

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