MINNEAPOLIS-Reduced margins and a spike in expenses combined to slash Select Comfort’s third-quarter net income by 22.7 percent, to $20.3 million.
The manufacturer/retailer’s gross margin took a hit to the tune of 200 basis points, finishing the quarter at 63.1 percent. Selling, general and administrative expenses rose 16.3 percent in dollars and 370 basis points as a percentage of sales, to 41.2 percent.
Both of these numbers trumped a 6.8 percent increase in net sales, which finished the quarter (which ended on Sept. 28) at $263.7 million. Same-store sales at Select Comfort-owned stores were down 1 percent. Select Comfort opened 16 new stores in the quarter and closed six, ending the time period with 423 stores.
Shelly Ibach, the company’s president and CEO, said, “The consumer responded positively to our product innovations and exclusive retail experience as evidenced by market-share gains along with favorable operational and customer-focused metrics. However, our execution was muted by a progressively more challenged macroeconomic environment, resulting in performance below expectations.”
Looking ahead, Select Comfort said it now expects net sales growth in the low double digits in the fourth quarter. By the end of the quarter, the company’s store count is expected to range between 435 and 445, up from 410 at the end of 2012.