Shareholders pummeled bed maker Select Comfort to a new 52-week low Monday after a key investor, the Clinton Group, submitted a letter to the company's board of directors and the Securities and Exchange Commission demanding that the air-bed maker promptly close unprofitable stores and cease store openings.

The New York-based hedge fund also called for Select to return to direct marketing through infomercials and the Internet and to shut stores in regions that lacked the critical mass needed to justify advertising.

The Clinton Group, which owns about 5 percent of Select's stock, complained that Select's stock had lost 79 percent of its value over the past year. The stock traded around $19 last April and closed Monday at $3.39.

Select Comfort spokeswoman Gabby Nelson declined to comment about the Clinton letter beyond saying, "We respect shareholder input." Company officials have previously cited the housing slump and the pullback in consumer spending for recent poor results.

"As one of Select Comfort Corporation's largest shareholders, we are writing to express our concern over missteps we believe the company has taken that have resulted in a deterioration of the company's performance and that has obscured its strong growth prospects," Clinton Vice Chairman Jerry Levin wrote in the letter, which was sent last week.

"The dramatic declines cannot be blamed on a difficult macroeconomic environment alone, as the declines in the broader consumer discretionary indices and overall market declines have not been nearly as severe," he wrote.

The stocks of competitors Sealy Corp. and Tempur-pedic fell 55 and 37 percent in the last year, while their net income grew 7 and 26 percent.

In contrast, Select Comfort's 2007 earnings fell 41 percent to $27 million. At the same time, the company opened nearly 50 stores last year.

CEO Bill McLaughlin stepped down last month as chairman and decided to not take a salary this year. He also froze wages, laid off 20 people and pledged to close weak stores. However, he said 30 stores would still open this year.

In its letter, the Clinton Group said McLaughlin failed to respond to requests for a meeting.

The hedge fund is asking that McLaughlin and new chairman Ervin Shames sublease or dispose of what it described as a costly new headquarters in Plymouth and disband the company's "wasteful" Quality of Life Advisory Board. It also wanted Select Comfort to consider outsourcing call center operations.

"Even in a difficult market, we believe that the company should be able to capture market share if it effectively communicates the value of its mattress products with respect to comfort, sleep quality and price," Levin wrote. "After all, specialty sleep, as in the non-inner spring mattresses, is increasingly gaining consumer acceptance and market share."

The International Sleep Products Association reported that sales of non-inner-spring beds jumped 12 percent last year, while those with inner springs rose 1 percent.

Dee DePass • 612-673-7725