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74 | <strong>BedTimes</strong> | May 2009<br />
IndustryNews<br />
Select Comfort posts<br />
4th-quarter drop<br />
Airbed maker and retailer Select Comfort posted a 31%<br />
decline in sales to $131.1 million in the fiscal fourth<br />
quarter of 2008, compared with the same quarter of 2007.<br />
The Minneapolis-based company reported a fourthquarter<br />
net loss of $57.4 million, or $1.30 per diluted share,<br />
compared to net income of $2.2 million, or $0.05 per<br />
diluted share, for the comparable period the previous year.<br />
Fourth-quarter results include $58.9 million in charges,<br />
including $32.1 million in asset impairments for stores<br />
and information systems, and a $26.8 million charge for<br />
the establishment of a deferred tax valuation allowance.<br />
Excluding these charges, the company would have reported<br />
a net loss of $11.4 million or $0.26 per diluted share.<br />
“2008 was a difficult year for the entire bedding<br />
industry, and consumer sentiment weakened further in<br />
the fourth quarter,” said Bill McLaughlin, Select Comfort<br />
president and chief executive officer. “Despite this, we<br />
achieved positive operating cash flow for the year as a<br />
result of proactive and aggressive cost-reduction actions.<br />
We implemented a series of initiatives to reduce fixed and<br />
variable costs, maintain margins and improve sales consistency.<br />
These are expected to deliver approximately $80<br />
million in cost savings in 2009.”<br />
Additional cost-cutting measures for 2009 include closing<br />
55 or more retail stores, reducing advertising spending<br />
and a greater concentration on cost-efficient direct<br />
marketing tactics.<br />
Sales in every channel were down for the fourth<br />
quarter. Retail sales dropped 25%, with a 29% decline in<br />
same-store sales. The company reduced its corporate work<br />
force by 22% and shuttered five retail locations during the<br />
same time period. Online and direct marketing revenues<br />
declined 41% and 37%, respectively. Wholesale sales were<br />
down 61% in the period.<br />
Total net sales for 2008 were $608.5 million, a 24%<br />
decrease compared to $799.2 million in 2007. The company<br />
reported a 2008 net loss of $70.2 million, or $1.59<br />
per diluted share, compared to net income of $27.6<br />
million or $0.57 per diluted share, in 2007. Excluding a<br />
number of charges related to asset impairments and a<br />
halted information systems installation, the company<br />
would have reported a net loss of $22.6 million or $0.51<br />
per diluted share.<br />
Select Comfort delayed the reporting of its fourthquarter<br />
and year-end results, not issuing them till<br />
March 19. Previously the company announced it had<br />
obtained temporary waivers to comply with certain<br />
ongoing bank covenants and was pursuing a range of<br />
strategic and financing alternatives to enhance its shortterm<br />
and long-term financial flexibility.<br />
www.sleepproducts.org/bedtimes
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