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From Home Furnishing Business

Select Comfort Swings to Q2 Loss Following Inventory Hiccup

Select ComfortSelect Comfort (NASDAQ: SCSS), maker of the Sleep Number airbed, swung to a net loss in the second quarter after an inventory shortage forced the company to delay some deliveries until after the quarter ended.

The loss in the quarter ended July 1 totaled $778,000 or 2 cents per share. Sales were up 28% to $284.7 million.

In last year’s second quarter, the company recorded a profit of $1.42 million or 3 cents per share.

Select Comfort CEO Shelly Ibach said the inventory shortage – caused by one of its newer suppliers – forced the company to shift about a week’s worth of deliveries into the third quarter. That cost the company an estimated $25 million in second-quarter sales and about 12 cents per share in earnings, she explained.

“We are pleased with traffic and sales in the second quarter, including strong demand for our revolutionary new innovation, the Sleep Number 360 smart bed,” said Ibach. “Our underlying demand trends in the second quarter exceeded our expectations.”

The mattress producer gets more than 90% of its sales from company-owned retail stores, and said comparable-store sales were down 6% in the quarter.

Select Comfort opened eight stores and closed five during the quarter, ending the period with 549 locations. The company said 97% of its stores have sales of more than $1 million annually, and 58% are above $2 million.

For the six months ended July 1, sales rose 7.7% to $678.6 million and profits shot up nearly 65% to $23.7 million or 55 cents per share.

The company reaffirmed an earlier earnings projection of $1.25 to $1.50 per share for the full year. The figure includes costs of 15 cents to 22 cents per share for the launch of the smart bed line.

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