Select Comfort Board Authorizes Stock Repurchase

May 14, 2006  by in UnCategorized   

By Home Furnishings Business in Bedding on May 2006 The board of directors of Select Comfort Corp. has authorized the company to repurchase up to an additional $150 million of its outstanding stock through 2008.

Over the last seven quarters, the specialty bedding retailer has spent about $90 million of internally generated cash from operations to repurchase about 4.1 million shares of its common stock, representing 10 percent of outstanding shares. The average repurchase price per share is $21.77, more than a 40 percent discount to the company’s stock price.

“Our share repurchase program, which has been accretive to earnings per share, has historically been opportunistic in nature,” said Bill McLaughlin, chairman and chief executive officer. “Based on a detailed analysis undertaken by the company over the past several months, we concluded that a prudent, consistent and systematic share repurchase program should serve as a core element in our philosophy to provide superior investment returns to our shareholders.”

In addition, the board approved a 3-for-2 stock split of its outstanding shares of common stock effective June 8.

The stock split is a first for the company. Stockholders of record on May 25 will receive one additional share of Select Comfort common stock for every two shares of common stock owned at the close of the financial markets on that day. The additional shares will be distributed through Wells Fargo Shareholder Services, the company’s transfer agent, beginning June 8.

As a result of the stock split, the number of outstanding shares of Select Comfort common stock will increase to about 54 million from about 36 million. After adjusting for the split, the company’s earnings per share guidance for 2006 is between $0.91 and $0.95, compared to previously stated full-year guidance of between $1.37 and $1.42 per diluted share.

The company reaffirmed its long-term growth targets, which includes revenue growth of between 15 percent and 20 percent, same-store sales growth of between 7 percent and 12 percent, and earnings growth of between 20 percent and 25 percent. Over the past three years, revenues have increased at a compound annual growth rate of 27 percent, with operating earnings increasing at a compound annual growth rate of 48 percent.

Select Comfort operates more than 400 company-owned retail stores nationwide.