Select Comfort Corp. financial results fell out of bed in January, February and March. Same-store sales plunged 25 percent, Internet sales dropped 27 percent and wholesale revenue slid 37 percent.
Citing a weak economy and rising materials costs, Plymouth-based Select Comfort on Wednesday reported a net loss of $7.1 million for the first quarter, compared with a profit of $10.7 million a year earlier.
The company held out little hope for a sudden upswing in sales and a return to profitability.
"Second quarter will continue to be difficult, as it is our seasonal low," Chief Executive Bill McLaughlin said in a call with industry analysts.
The company does not provide specific earnings forecasts. But McLaughlin and other Select Comfort executives said a new marketing campaign, refurbished stores and cost cuts should lead to a return to profit in the third quarter.
Select Comfort shares fell 13 percent in after-hours trading Wednesday, to $2.82, a 52-week low. The earnings news was released after the markets closed.
"First-quarter results were pretty ugly but not totally unexpected," said Robert Evans, a securities analyst at Craig-Hallum Capital Group, a Minneapolis-based brokerage firm.
Select Comfort, which sells beds that cost $1,000 to $5,000, has been struggling in the face of a housing slump and a consumer credit crunch.
Sales in the quarter were reduced by $6 million alone from customers buying lower-cost beds than in the past, company officials said.
McLaughlin said company executives were working to improve results. But Evans noted that many economic factors are out of Select Comfort's control.
"The company can certainly control the cost side of the profit equation in the second half of the year," Evans said. "However, it remains unclear how effective the new marketing campaign will be on sales."
Select Comfort, which employs 3,000 people, said it has cut 170 positions since late last year, including 17 percent of the company's corporate staff. It also cut back its plans for new stores this year from 30 to 24.
Company executives said they'll increase advertising investments by $10 million to $15 million in the third quarter in an effort to boost sales through a revamped advertising campaign.
Mike Meyers • 612-673-1746
