Select Comfort Corp., the Minneapolis-based manufacturer and retailer of the Sleep Number airbed brand, reported net sales of $368 million in the third quarter of 2016, reflecting a 1.6% decline compared with third-quarter 2015.
Net income dipped 19.2% to $25.7 million, and yielded earnings per share of $0.56. EPS in the prior-year quarter were $0.62.
Compared with third-quarter 2015, same-store sales declined 8%.
Select Comfort opened 24 Sleep Number stores and closed three in its third quarter, ending the period with a total store count of 527.
The company lowered its earnings outlook for 2016 to an EPS range of $1.15 to $1.25, from $1.25 to $1.45. Full-year 2015 EPS was $0.97. The new outlook assumes high single-digit sales growth for the full year and an 11% increase in store count, as well as capital expenditures of $65 million, compared with $86 million in 2015.
The outlook “does not contemplate a further deterioration of the consumer spending environment,” Select Comfort said.
During the third quarter, Select Comfort’s gross profit rate increased by 60 basis points to 63.1% of net sales. It closed the quarter with $51 million in cash and securities, and no borrowings under its revolving credit facility.
In the first nine months of 2016, the company generated a record $145 million in net cash from operating activities, compared with $132 million for the same period last year.
Also, during the first nine months of the year, Select Comfort invested $39 million in capital expenditures and returned $95 million to shareholders, compared with $61 million and $69 million, respectively, for the same period in 2015.
“We delivered record operating cash flows for the first nine months of the year as our operational improvements exceeded our expectations and offset the effects of a worsening consumer environment,” said Shelly Ibach, Select Comfort president and chief executive officer. “Our investments have strengthened our direct-to-consumer business model and we are making significant progress toward delivering a more convenient customer experience. We expect the digital capabilities we’re developing to succeed in the hyper-competitive digital marketplace.”