Select Comfort Corp. recorded $608.5 million in sales during 2008, a drop from the $799.2 million it generated in 2007. The company took a net loss of $70.2 million during the most recent year, compared with $27.6 million in 2007. The year ended Jan. 3.
Part of the loss was due to $34.6 million in asset impairment charges. Additionally, even as sales were dropping, the cost of sales was going up: Marketing expenses, which totaled 8.1% of sales in 2007, jumped to 9.5% of sales in 2008.
The company is trimming its sails in 2009. It anticipates that cost-savings measures will save it approximately $80 million during the year. These include previously implemented workforce reductions of 22%, and shuttering underproductive stores. The company operated 471 stores at the end of 2007. By the end of 2008 this had dropped to 471.
Despite these shifts, retail made up more of its sales (78.2% in 2008) than it did in 2007 (75.4%). Direct sales fell from 8% to 7.7%, and e-commerce sales dropped from 6.8% to 6.1%.
It is also shifting marketing and promotional activities to focus on more affordable entry-level products, according to comments from president and CEO Bill McLaughlin which accompanied its financial results.
During the first quarter of 2009, Select Comfort anticipates an additional $20 million reduction in fixed and discretionary marketing and sales expenses.
The Marketer’s Take: There’s a hotel line that ran a series of commercials in which people pretended to wisdom and knowledge beyond their abilities. When questioned as to whether they were the experts they claimed to be, the standard response was “No, but I did stay at a Holiday Inn Express.” The idea was that a good night’s sleep gave people a leg up. Given that people are losing sleep over the recession, it might be interesting for Select Comfort to tout the advantage a good night’s sleep offers in retaining a current job, or in hunting for a new one.
