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Select Comfort Corp. Reports Operating Results (10-K)

February 24, 2011 | About:

Select Comfort Corp. (NASDAQ:SCSS) filed Annual Report for the period ended 2011-01-01.

Select Comfort Corp. has a market cap of $618.4 million; its shares were traded at around $11.16 with a P/E ratio of 19.6 and P/S ratio of 1. Hedge Fund Gurus that owns SCSS: Bruce Kovner of Caxton Associates, Manning & Napier Advisors, Inc, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

We generated positive net income for six consecutive years from 2002 through 2007. In 2008 our operating results were significantly affected by a decrease in consumer spending and we generated a net loss. In 2009 and 2010, we returned to profitability and generated operating income of $20.7 million and $52.4 million, respectively. The expansion of profitability over the last two years is the result of aggressive cost reductions and disciplined cost controls, leveraging our advantaged business model which generates significant variable profit contribution on modest sales gains. As of January 1, 2011, we had no borrowings under our $20 million revolving credit facility and increased our cash balance to $81 million from $18 million one year ago.

Our U.S. mattress price points range from approximately $699 for the entry-level c2 queen-size mattress to $3,999 for the luxurious Sleep Number i10 queen-size mattress. Our most popular model is the p5 queen-size mattress which sells for approximately $1,699. Actual prices are at times lower than those quoted due to promotional offerings.

Our retail stores accounted for 84% of our net sales in 2010. Average net sales per company-owned store were $1,295,000 in 2010 versus $1,046,000 in 2009, $984,000 in 2008, $1,318,000 in 2007 and $1,493,000 in 2006, with average sales per square foot of $873 in 2010 versus $710 in 2009, $703 in 2008, $1,024 in 2007 and $1,244 in 2006. In 2010, 70% of our stores generated net sales of over $1,000,000.

In late 2007, we began distribution in Australia and New Zealand through relationships with an Australian-based manufacturer and an Australian-based retailer. Our total net sales attributable to foreign countries were $2.3 million in 2010, $3.7 million in 2009 and $5.4 million in 2008.

Since 2001, the Sleep Number brand positioning has been integrated into our marketing messages across all of our distribution channels, advertising vehicles and media types. We look to our direct response advertising on national cable TV as an economical means to generate leads for our stores. Through our dedicated call center, we are able to provide the inquiring customer more information including the nearest store location, and/or send a video and brochure. We also leverage local advertising, as well as digital and social media, to increase both awareness and consideration of the Sleep Number brand and products. Our total media spending was approximately $70 million in 2010, $61 million in 2009 and $92 million in 2008.

Read the The complete Report

About the author:

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