Select Comfort reports more stabilized performance in Second Half

24 Jul '08

5 min read

Cash flows from operating activities totaled $10.4 million for the first six months, compared to $19.9 million for the same period last year. Capital expenditures totaled $20.9 million for the first six months of 2008, compared to $19.3 million in the first six months of 2007. As of June 28, 2008, cash and cash equivalents totaled $6.8 million and outstanding debt totaled $58.1 million. During the quarter, the company amended its credit facility to provide increased financial flexibility as it executes its operating plans.

Second Half 2008 Priorities and Outlook:
"We are looking forward to the coming months, which historically represent our strongest selling season," said McLaughlin. "Barring further deterioration of the macro-economic environment, the continued execution of our plan and benefits from higher seasonal demand position us to return to profitability in the second half of 2008."

The company continues to implement further cost-saving initiatives to help offset the impact of growing inflationary pressures. These include:

• Reductions to discretionary spending across all functions of the company, which are expected to achieve $3 million in savings during the second half of the year;

• The decision to close 10 additional stores before year-end, bringing the total number of anticipated store closings for the year to 25 stores; and

• Select price increases in July, which are expected to yield an incremental $3 million during 2008.

To support revenue and maintain market share, the company pursued several other initiatives to improve the top- and bottom-line results during the back half of the year. These include:

• Refinement of the new marketing campaign;

• Implementation of a more aggressive accessories program, which includes the introduction of the "Create Your Perfect Pillow" program, launching in August; and

• The planned launch of a new bed model in the third quarter.

The company expects operating cash flow for the remainder of the year to be positive. The company continues to forecast capital expenditures of $30 million in fiscal 2008 compared with $44 million in fiscal 2007. The company now expects to have approximately 477 retail locations at the end of fiscal 2008. Results for 2008 will benefit from a fifty-third week in the fourth quarter.

Select Comfort Corporation

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