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Select Comfort implements workforce reductions

17
Dec '08
Select Comfort Corporation announced a series of cost reduction initiatives in response to a further slowing of sales after Thanksgiving and in anticipation of continued macro-economic challenges in 2009.

Actions being taken include a workforce reduction of approximately 120 positions within headquarters, or approximately 22 percent of the corporate workforce, which includes general and administrative and customer service positions. In addition, the company will immediately cease all activities associated with the implementation of SAP-based IT applications.

The cumulative benefit from these initiatives, as well as additional actions currently being explored, is expected to be approximately $15 million on an annualized basis, beginning in the first quarter of 2009. The company expects to incur a charge of approximately $35 million in the fourth quarter of 2008, which is primarily asset impairments with approximately $4.0 million of severance and other cash costs.

"During the course of the year, we've navigated through an extremely difficult macro-economic environment by focusing on reducing our cost structure and improving product margins," explained Bill McLaughlin, president and CEO, Select Comfort Corporation. "We expect these macro-economic challenges to continue and possibly worsen in 2009. Therefore, we've taken additional actions to better align our cost and cash structure with our 2009 outlook for the economy."

As communicated during the third quarter earnings announcement, the company is on track to close approximately 20 stores during the first quarter of 2009. The company will continue to examine its store base and expects to close additional stores throughout 2009; and the company is assessing supplemental opportunities across all functions to reduce overall cost structure.

Select Comfort Corporation


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