Third-quarter Financial Summary
- Net sales increased 7% to $264 million, compared to $247 million in the third quarter of 2012.
- Company-controlled comparable sales declined 1% year-over-year.
- Operating income was $30.7 million, compared with $40.2 million in the third quarter of 2012. As a percentage of net sales, operating income was 11.6% compared to 16.3% in the third quarter of 2012.
- Earnings per diluted share were $0.36, compared to $0.46 in the third quarter of 2012.
- In the quarter, the company opened 16 stores and closed six, ending the quarter with 423 stores.
“The consumer responded positively to our product innovations and exclusive retail experience as evidenced by market-share gains along with favorable operational and customer-focused metrics,” said Shelly Ibach, president and CEO, Select Comfort. “However, our execution was muted by a progressively more challenged macro-economic environment, resulting in performance below expectations.”
Ibach continued, “Given the ongoing economic uncertainty, we are actively managing costs across the company, while continuing to support priorities important to long-term growth and profitability.”
Cash flows from operating activities were $90 million for the first nine months of 2013, compared with $98 million in the prior year. Capital expenditures for the first nine months of 2013 increased to $57.8 million as compared to $36.8 million in 2012, driven by increased investment in stores, technology and product innovation.
During the third quarter, the company repurchased 0.4 million shares of its common stock for a total cost of $10 million. As of the end of the quarter, cash, cash equivalents and marketable-debt securities totaled $164 million, and the company had no borrowings under its revolving credit facility.
The company is updating its outlook for full-year 2013 GAAP earnings per diluted share from between $1.30 and $1.45 to between $1.14 and $1.22. This updated guidance includes fourth-quarter earnings per diluted share of $0.18 to $0.26, compared to $0.22 in the fourth quarter of 2012. The midpoint of the fourth-quarter outlook assumes low double-digit growth in total net sales and a net increase in store count from 410 at year-end 2012 to between 435 and 445 by year-end 2013.
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