Select Comfort Corp., manufacturer and retailer of the Sleep Number bed, reported net sales of $277 million in its fiscal second quarter, a 1% increase compared with the second quarter of 2015.
Earnings per share were $0.03, compared with $0.21 in the prior-year quarter.
Earnings plunged 87% to $1.4 million for the quarter. Sales and earnings were impacted by residual effects from a new enterprise resource planning software implementation, as well as a challenging consumer-spending environment, the Minneapolis-based company said.
Gross profit of $171 million and gross margin of 61.9% were consistent with the prior-year quarter.
A 6% growth in sales from stores opened in the past 12 months was partially offset by a 6% comparable-stores sales decline.
As planned, Select Comfort concluded the quarter with $16 million in borrowings against a $150 million revolving credit facility.
Store count totaled 506, compared with 467 at the end of the prior-year quarter.
Select Comfort also announced it would increase its share repurchase authorization to $300 million, effective at the beginning of the fiscal third quarter. It expects to generate more than $750 million in cash from operations from 2016 through 2019, by executing its consumer innovation strategy.
In the past five years, the company has invested more than $400 million in capital spending and acquisitions, while returning nearly $300 million in cash to shareholders through share repurchases.
“Our second-quarter results were in line with our expectations and reflect the recovery from our ERP implementation,” said Shelly Ibach, president and chief executive officer of Select Comfort. “We were pleased with the improvement in our customer metrics and sales trends, despite the sluggish consumer environment. Our investments have strengthened our competitive position as we meet the expectations of a rapidly changing consumer. We are focused on leveraging these investments to deliver strong returns for our shareholders.”
The company reiterated its 2016 outlook for EPS of $1.25 to $1.45, compared with full-year 2015 earnings of $0.97. The outlook assumes low-teen sales growth for the full year. The outlook assumes a 10% increase in store count in 2016 and capital expenditures of approximately $65 million, compared with $86 million in 2015. The outlook does not contemplate a worsening consumer spending environment.