Select Comfort helped by lower costs

Third quarter profit of Select Comfort Corp beat the market estimates by a cent, due to select price increases and lower expenses. The mattress maker said it plans to decrease its store base to cut costs.

The bedding maker and retailer reported net income of $983,000, or 2 cents a share, for the quarter ended September 27, compared with $11.9 million, or 26 cents a share, a year earlier.

Net sales fell 26 percent to $157.2 million. Retail revenue was down 24 percent, driven by a 27 percent decline in same-store sales.

According to Reuters Estimates, “Analysts on average expected earnings of 1 cent a share, before special items, on revenue of $180.2 million”.

Gross profit margin rose to 62.2 percent from 61.6 percent during the quarter. Total operating expenses fell about 15 percent to $95.7 million.

Mattress makers struggling with low sales

Select Comfort together with mattress makers Sealy Corp and Tempur-Pedic, has been struggling with lower sales at its U.S. markets as conscious shoppers cut down on their appetite for big-ticket items among falling home values and tighter lending conditions.

Sealy, earlier this month, reported a 9 percent fall in its third-quarter sales, while sales at Tempur-Pedic International Inc declined 14 percent during the period.

"We expect difficult conditions to persist for the remainder of the year and through 2009, as the economy and consumer buying continue to weaken," Select Comfort Chief Executive Bill McLaughlin said in a statement .

The company, which sells its products under Sleep Number bed and Select Comfort brands in more than 470 company-owned stores, said it will close five stores during the fourth quarter and about 20 stores in the first quarter of 2009 to cut costs. It closed eight stores during the third quarter.

Shares of the Minneapolis, Minnesota-based company closed at 80 cents Wednesday on NASDAQ. They have lost more than 93 percent of their value in the past one year.