MINNEAPOLIS–Select Comfort, the mattress manufacturer and retailer, reported a net loss for the first quarter of $7.1 million, compared to net income of $10.7 million in the first quarter of 2007.
In what had been widely anticipated as a weak quarter for the company, net sales dropped 22 percent to $168.2 million, pulled downward by a 25 percent decline in same-store sales. Bill McLaughlin, chief executive officer of Select Comfort, said the weak U.S. economy and the resulting dropoff in consumer discretionary spending “significantly impacted” the company’s results. Select Comfort did manage to reduce its sales and marketing costs and its general and administrative expenses on a dollar basis, but both items still rose as a percentage of net sales in the quarter.
Late in 2007, Select Comfort began accelerating several initiatives to improve its bottom line. These include the elimination of more than 170 positions, including 17 percent of its corporate staff; reducing promotional discounts; and increased prices. For 2008, the company will close about 15 stores and reduce its planned store openings from 30 to 24. It will also restore its media spending to 2007 levels and introduce new products at new price points.
Select Comfort also said net losses will probably continue into the second quarter, its weakest sales period of the year. Earnings should improve in the second half with the return of seasonally higher sales periods and as a result of the company’s cost-cutting initiatives.