Select Comfort achieves comparable sales growth of 26%
Select Comfort Corporation reported third-quarter results for the period ended Oct. 1, 2011. Net sales for the quarter increased 25 percent to $200 million, compared to $160 million in the third quarter of 2010, driven by company-controlled comparable sales growth of 26 percent and retail comparable sales growth of 29 percent. The company reported net income of $17.2 million, a 64 percent increase versus $10.5 million in the third quarter of 2010. Earnings per diluted share for the quarter increased 63 percent to $0.31, compared to $0.19 per diluted share in the third quarter of 2010.
"Our outstanding performance in the third quarter further demonstrates the strength of our unique product, our advantaged business model, and the success our strategic initiatives are having in driving profitable growth and increased share," said Bill McLaughlin, president and CEO, Select Comfort Corporation. "We're especially pleased with the quality and sustainability of our earnings, driven by continued double-digit revenue growth and record operating margins."
McLaughlin added, "Given our low brand awareness and underpenetrated distribution in major markets, we believe we are still early in our growth curve. Our plan calls for continued share and earnings growth, fueled by sustained focus on executing our proven, consumer-driven product, marketing and distribution initiatives."
In the third quarter, net sales increased by 25 percent as compared to the prior-year period. The increase in sales was driven by company-controlled comparable sales growth of 26 percent, with average retail sales-per-store during the past 12 months reaching a record $1.6 million, a 29 percent improvement over the prior-year period.
Gross-profit margin in the third quarter of 2011 increased 50 basis points to 63.0 percent of net sales, compared with 62.5 percent in the prior-year period. The increase reflects manufacturing efficiencies and pricing actions, partially offset by $1.6 million of additional customer-service reserves during the quarter.
Sales and marketing costs in the third quarter of 2011 increased by 23 percent to $83.9 million, representing 42.1 percent of net sales. This compares to $68.3 million, or 42.6 percent of net sales in the prior-year period, reflecting continued leverage of sales and marketing. Media investments in the third quarter totaled $24 million, 38 percent higher than a year ago.
General and administrative expenses were $14.3 million in the third quarter, or 7.2 percent of net sales. This compares to $14.3 million, or 8.9 percent of net sales during the same period last year, again reflecting continued leverage of the company's fixed-cost base.
Operating income of $26.5 million and operating margin of 13.3 percent each represented the best third-quarter performance in company history. This record operating performance resulted in earnings per diluted share of $0.31, a63 percent improvement versus prior-year.