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Select Comfort delivers record sales in Q2

19
Jul '12
Select Comfort Corporation reported second-quarter results for the period ended June 30, 2012. Net sales for the quarter increased 27 percent to a second-quarter record of $205 million, compared to $161 million in the second quarter of 2011. Results were driven by company-controlled comparable sales growth of 25 percent. The company reported second-quarter earnings per diluted share of $0.30, a 50 percent increase versus $0.20 per diluted share in the second quarter of 2011.

“Delivering record sales, record operating margin and record earnings per share in a more challenged consumer environment is the direct result of our customer-centric strategies and unique business model,” said Shelly Ibach, president and CEO, Select Comfort. “Specifically, we executed well against our integrated growth formula designed to increase brand awareness, grow exclusive distribution, and advance proprietary product offerings that provide meaningful benefits for our customers.”

Ibach continued, “Going forward, we will continue to innovate across our end-to-end customer experience to further differentiate the Sleep Number brand as we advance towards our goal of exceeding $1.5 billion in revenue and 15 percent operating margin by 2015.”

Second-quarter Summary

In the second quarter, net sales increased by 27 percent as compared to the prior-year period. The increase was driven by company-controlled comparable sales growth of 25 percent, with average retail sales-per-comparable-store during the past 12 months exceeding $2.0 million for the first time in company history.

Operating income for the second quarter was $25.9 million, and operating margin during the quarter was 12.6 percent of net sales, a 170 basis-point improvement from 10.9 percent in 2011. Operating income and operating margin were both second-quarter records for the company. The 170 basis-point operating margin growth was driven by a 70 basis-point improvement in sales and marketing expenses, a 60 basis-point increase in gross-profit margin, and a 40 basis-point improvement in general and administrative costs plus research and development expenses.

Gross-profit margin in the second quarter of 2012 was 64.1 percent of net sales, an increase of 60 basis points versus 63.5 percent in the prior-year period. The year-over-year increase was primarily driven by a variety of pricing increases executed over the past 12 months.

Sales and marketing costs were $88.2 million in the second quarter, or 43.0 percent of net sales. This compares to $70.5 million, or 43.7 percent of net sales in the prior-year period, reflecting continued leverage from the company’s sales growth. Media spending during the quarter was $27 million, a 37 percent increase versus the prior-year period.

General and administrative expenses were $16.2 million in the second quarter, or 7.9 percent of net sales. This compares to $13.1 million, or 8.1 percent of net sales, during the same period last year, again reflecting continued leverage of the company’s fixed-cost base.


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