Select Comfort Corp. Sees Net Sales Rise 5% in 2015

Select Comfort Sees Net Sales Rise 5% in 2015Airbed manufacturer and retailer Select Comfort Corp., maker of the Sleep Number Bed, reported 2015 net sales of $1.21 billion, an increase of 5%—or 7% when excluding the extra week included in the fourth quarter of 2014.

Net income for full-year 2015 was $50.52 million, a 26% decline compared with the prior year. Operating income declined 26% to $75.1 million.

The Minneapolis-based company said an enterprise resource planning system implementation had severe impacts on its year-end results. 

“The transition from our 20-year-old legacy systems to a fully integrated ERP platform has been more challenging, with far greater customer and financial impacts than we anticipated,” said Shelly Ibach, Select Comfort president and chief executive officer. “Many of our customers endured delays and delivery reschedules as we ramped up the new system. These results are not acceptable to us.”

“We have made major progress resolving technical and operational issues,” Ibach continued. “Plants have increased production levels ahead of current demand, and operational and customer service levels have significantly improved. We expect to leverage this critical investment for improved profitability in the back-half of 2016 as planned. Our competitive advantages and strategic direction remain on track to achieve our commitment of earnings per share of $2.75 by 2019.”

During 2015, Select Comfort generated earnings before interest, taxes, depreciation and amortization of $133 million, invested $86 million in capital projects, spent $57 million to acquire BAM Labs and returned $98 million to shareholders through share repurchases, up from $45 million in 2014.

In the fourth fiscal quarter of 2015, net sales decreased 33% to $215 million, with comparable sales down 30%, reflecting approximately $84 million in sales disruption from the ERP system implementation, according to the company.

The company posted a net loss in the fourth quarter of $21.17 million, compared with prior-year net income of $18.95 million. It also posted an operating loss of $30.66 million, as compared with operating income of $27.89 million in the fourth quarter of 2014.

The company’s 2016 outlook assumes sales growth in the low teens for the full year, with low single-digit growth in the first half of the year, followed by stronger growth in the second half. Earnings per diluted share using generally accepted accounting principles are forecast to be between $1.25 and $1.45, a 29% to 49% increase versus full-year 2015 earnings per diluted share of $0.97. The outlook assumes a 10% increase in store count in 2016, compared with 5% growth in store count in 2015. The company anticipates 2016 capital expenditures will be approximately $70 million. The outlook does not contemplate a worsening of the consumer spending environment.

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