MINNEAPOLIS–Mattress manufacturer/retailer Select Comfort has reported its first quarterly profit of 2008.
The company posted net income of $983,000, down from last year’s third-quarter net of $11.9 million but an improvement on the net losses of $7.1 million in the first quarter and $6.6 million in the second quarter.
In a conference call to financial analysts yesterday, Bill McLaughlin, chief executive officer, said, “Select Comfort did what we said we would do. We returned to profitability in the third quarter.” McLaughlin added that the company achieved this “significant goal” in spite of the tough sales environment in the mattress industry. Select Comfort’s third-quarter sales did drop 26 percent to $157.2 million as the company shared in the difficulties besetting the entire industry, and the economy as a whole.
The improved results stemmed primarily from improvements in both gross margin, which reached 62.2 percent as opposed to 61.6 percent in last year’s third quarter; and through significant cuts in expenses for sales and marketing, general and administrative items, and research and development.
McLaughlin cautioned the analysts that Select Comfort expects the fourth quarter to be more challenging for the industry than the third quarter. He said the company is moving ahead with its cost restructuring, which will involve store closings, an enhanced focus on design and quality improvements among its current products, and further decreasing marketing expenses. Select Comfort expects to close about 20 stores by the end of the first quarter of 2009.