Select Comfort achieves solid sales growth in H1
Select Comfort Corporation reported first-quarter results for the period ended April 2, 2011. Net sales for the quarter totaled $193 million, compared to $158 million in the first quarter of 2010, a year-over-year increase of 22 percent on company-owned comparable sales growth of 26 percent.
The company reported first-quarter net income of $16.6 million, or $0.30 per diluted share, compared to net income of $7.8 million, or $0.14 per diluted share, in the prior-year period - representing a 114 percent year-over-year improvement in earnings per diluted share.
"Our first quarter performance demonstrates the earnings potential of our business when we achieve solid sales growth and increased market share," said Bill McLaughlin, president and CEO, Select Comfort Corporation. "During the quarter, we remained focused on leveraging our core business, executing against our growth-driving programs and controlling costs, making solid progress against our goals of profitable growth and margin expansion."
McLaughlin continued, "The momentum of the first quarter allowed us to advance initiatives designed to continue to broaden awareness and consideration for the Sleep Number brand and enhance customers' store experience in order to drive long-term growth. We expect our efforts to generate strong earnings growth over the balance of the year as well as provide for continued investment in growth opportunities."
First Quarter Summary
During the first quarter, net sales increased by 22 percent as compared to the year-ago period. The increase in sales was driven by a company-owned comparable sales growth of 26 percent, with the average sales-per-store over the past 12 months reaching $1.4 million, a 26 percent improvement over the prior-year period. Operating income improved by 86 percent to $26.4 million and operating margin improved 469 basis points to 13.7 percent.
Gross profit margins increased 166 basis points from 62.1 percent in the prior-year period to 63.8 percent in the first quarter of 2011. The increase reflects strong product mix offset somewhat by modest commodity-cost increases.
Sales and marketing costs in the first quarter of 2011 increased by 15 percent to $80.3 million, representing 41.6 percent of net sales. This compares to $70.1 million, or 44.4 percent of net sales in the prior-year period. Media investments in the first quarter totaled $23.7 million, 30 percent higher than a year ago.
General and administrative (G&A) expenses were $15.6 million in the first quarter, or 8.1 percent of net sales. This compares to $13.1 million, or 8.3 percent of net sales, in the year-ago period. In the quarter, G&A expenses included incentive compensation related to strong quarterly earnings performance.
Cash flows from operating activities were $32.2 million in the first quarter as compared to $30.4 million during the same period last year. Capital expenditures increased to $2.7 million, compared to $1.0 million in the year-ago period. As of the end of the quarter, cash and cash equivalents totaled $102 million and the company had no borrowings under its revolving credit agreement.