MINNEAPOLIS—Net income for Select Comfort plummeted by nearly 42 percent last year as the company continued to struggle with declining sales and rising costs.
The mattress manufacturer-retailer posted net profit of $27.6 million in 2007, on sales of $799.2 million, which slipped 1 percent from 2006. A 9 percent hike in sales and marketing expenses also led to a 40 percent drop in operating income, which totaled $43.5 million last year.
Bill McLaughlin, Select Comfort’s chairman and chief executive officer, said in a company statement that as tough a year 2007 proved to be, more challenges are in the offing this year. “Given the outlook for economic softness in 2008, we are focused primarily on reducing costs and improving operational efficiencies,” McLaughlin said. “We plan to slow the growth of new store openings, while investing in high-return store models. Moreover, we have focused our retailer-partner program on fewer regional mattress retailers.”
However, Select Comfort still expects that net income for this year will be down from 2007, while sales will be flat to slightly lower. Along with the difficult environment for consumers, the company said rising costs of oil and the weaker dollar will depress margins this year.