Sales up 6% in 8 weeks through Thanksgiving, but same-store sales drop 9%


MINNEAPOLIS — Slower-than-expected sales have led Select Comfort to reduce its full-year earnings estimate to 80 to 87 cents per share, down from the previous forecast of 95 to 97 cents.

The airbed specialty manufacturer and retailer said sales in the first eight weeks of the fourth quarter, ending with the Thanksgiving weekend, were up 6% from the comparable period a year earlier, but same-store sales declined 9%. Total unit volume increased 8% from a year ago.

Comparisons during the holiday weekend were especially difficult because of a price increase on Nov. 29, 2012, which led to a spike in sales a year ago, the company said.

“This quarter’s sales have been disappointing, as we’ve noted a closer correlation in our business with housing industry trends. Our sales programs and promotional offers have been consistent with prior years, and we are protecting product margins,” said Chairman and CEO Bill McLaughlin.
 
But he said the company is “looking internally for answers, not pointing to external factors. We have moved quickly to revamp our December sales and marketing programs to drive traffic, increase referrals from our existing bed owners and enhance consumer interest through financing and other purchase incentives.”

He added the company is working on initiatives to contribute to its growth in 2014 and future years.

“These include work with our new creative partner, McKinney, on first-quarter advertising programs, accelerating product innovation in beds and accessories, continued quality and cost initiatives, and implementation of a fully integrated SAP ERP solution that we expect to launch by early 2015,” said McLaughlin.

“Although these initiatives will require at least a quarter or two to take effect, we remain committed to long-term sales growth targets of between 15% and 20% and earnings growth of between 20% and 25%,” he said.

He also said the company remains committed to its stock buyback program, and has invested $65.1 million this year to repurchase 3.1 million shares, including $15.6 million in the fourth quarter through Nov. 24.