Select Comfort Corporation (SCSS), sleep solutions and services provider, has recorded 14.56 percent fall in profit for the quarter ended Jun. 28, 2014. The company earned $8.48 million or $0.16 a share in the second-quarter compared with $9.93 million or $0.18 a share a year ago.
Analysts on average had predicted net income of $0.14 a share.
Revenue during the second-quarter grew 13.20 percent to $234.76 million from $207.39 million in the last year period.
Gross margin contracted by 270 basis points over the previous year period to 60.66 percent. Total expenses as a percentage of revenues increased to 94.59 percent from 92.72 percent in the same period last year. That has resulted in contraction of 187 basis points in operating margins to 5.41 percent.
The company disclosed operating income of $12.71 million, compared with operating income of $15.11 million in the last year period.
''Our second quarter results reflect the important role of product innovation in our strategy. Customers responded positively to our introductions, including our breakthrough SleepIQ technology,'' said Shelly Ibach, president and CEO of Select Comfort. ''We remain dedicated to our customer as we continue to transition the business through our growth initiatives. We know that when we focus on our customer, we deliver value for them and for our shareholders.''
The company reiterates its outlook for 2014 earnings per diluted share of $1.07. The company also plans to add 20 to 30 net new stores during 2014, ending the year with between 460 and 470 stores. It continues to expect full-year 2014 capital expenditures of $70-$80 million, with approximately one-half related to systems infrastructure, one-third related to market development and the remainder to support product innovations and other initiatives.
Cash Flow
Select Comfort Corporation has generated cash of $49.58 million from operating activities during the first half, up 37.17 percent or $13.44 million when compared with the last year period.
The company has spent $45.12 million cash to meet investing activities during the first half, as against cash outgo of $48.52 million in the last year period. It has made net capital expenditure of $39.77 million during the first half, which was higher by 7.20 percent or $2.67 million, from a year ago.
The company has spent $25.58 million cash to meet financing activities during the first half, as against cash outgo of $17.35 million in the last year period. It has spent net of $20.10 million on repurchase of common stocks.
As on Jun. 28, 2014, the company's cash balance stood at $37.11 million, down 36.23 percent or $21.08 million from Jun. 29, 2013.
Working Capital
Select Comfort Corporation has witnessed a decline in the working capital over the last one year. The company's working capital stood at $35.26 million as at Jun. 28, 2014, down $35.42 million or 50.11 percent from $70.68 million on Jun. 29, 2013. It registered a decrease in current ratio to 1.26 as at Jun. 28, 2014 from 1.61 on Jun. 29, 2013.
Shares of Select Comfort Corporation declined 22 cents or 1.15 percent to close at $18.98 on Wednesday.
