Select Comfort Stock Plunges; Co. Debuts New Bed Tech

Select Comfort Stock Plunges; Co. Debuts New Bed Tech

The maker of Sleep Number beds said that sales missed internal goals during the holiday season and it is planning for a “challenging environment” in 2014.

Select Comfort Corporation, the Plymouth-based maker of Sleep Number adjustable beds, said Monday that it expects to fall short of its previously announced fourth-quarter earnings forecast—news that sent its stock price down significantly.

Select Comfort said that its sales results were “solid” through November, but between so-called “Cyber Monday” and the end of December, “sales trends fell below internal goals.”

The company had previously expected earnings per share to be between $0.18 and $0.26, based on “low-double-digit growth in total net sales and mid-single-digit growth in company-controlled comparable sales.” (“Comparable sales” refers to revenue generated at stores that have been open for at least a year.)

But based on its preliminary fourth-quarter results, the company said that its sales grew only 5 percent year-over-year, while comparable sales were flat. Consequently, the company said it expects to miss its earnings estimate, although it didn’t specify how much it now expects to earn. Select Comfort plans to release its official fourth-quarter financial results on February 5.

“The sales slowdown following the Thanksgiving holiday reflected a tepid retail holiday shopping season,” President and CEO Shelly Ibach said in a statement. “We expect this challenging environment to continue in 2014 and are planning accordingly.”

New Product, and a New CMO

Select Comfort is one of Minnesota's 40 largest public companies based on revenue, which totaled $935 million in 2012. In addition to sharing some of its preliminary fourth-quarter financial results on Monday, the company also said it has appointed a new chief marketing officer and senior vice president: Kevin Brown. Most recently, Brown served as group vice president and CMO for retailer Meijer, Inc.

“Kevin brings a history of proven leadership in consumer products, retail brand marketing and business development that fits well with our unique vertical business model and strong Sleep Number brand experience,” Ibach said in a statement. “We look forward to integrating Kevin’s consumer focused marketing expertise and strategic business orientation across our consumer touch-points—from digital to store experience.”

Select Comfort is also debuting a new product, as it is among more than two-dozen Minnesota companies that will unveil new technology at the International Consumer Electronics Show in Las Vegas this week. The company said Tuesday morning that it is revealing what it calls “the most technologically advanced bed in the world.” The new product, called the Sleep Number x12 bed, is designed to track and monitor users' sleep, subsequently offering recommendations for adjustments that would help the user sleep more comfortably.

Roller-Coaster Stock

Select Comfort’s stock has seen its share of ups and downs recently. For example, shares climbed in mid-2013, fueled in part by analysts’ upgrades, but soon after took a dive on news of declining second-quarter profits. It then rose before sliding in October, once again in response to lower quarterly earnings.

On Monday, following the company's warning about fourth-quarter earnings, shares of Select Comfort’s stock closed down more than 19 percent at $17.28. It was trading up about 3 percent at $17.85 late Tuesday morning.

While Select Comfort’s stock has had a roller-coaster year, other Minnesota companies saw their stocks climb or fall more consistently in 2013. In fact, Minnesota businesses appeared on a national list of the top-performing and worst-performing stocks of the year.