Select Comfort profit bounces above expectations

MINNEAPOLIS (AP) — Mattress maker Select Comfort Corp. on Thursday reported a surge in third-quarter earnings and said it will post a profit for the full year as business begins to stabilize, sending shares up more than 6 percent in aftermarket trading.

For the three months that ended Oct. 3, the retailer said profit totaled $6.9 million, or 15 cents per share, up sharply from year-ago net income of $983,000, or 2 cents per share. The latest quarter included a one-time charge of $3.3 million, or 5 cents per share, linked to financing that was terminated.

Sales slipped 6 percent to $147.5 million from $157.2 million last year. But much of that was because Select Comfort had 14 percent fewer stores in the third quarter than it did one year ago. Select Comfort has closed 65 stores so far this year and said it plans to shut another six locations by the end of the year.

The results topped estimates of analysts surveyed by Thomson Reuters, who expected the company to earn 7 cents per share on revenue of $134.3 million.

Select Comfort, which is based in Minneapolis, said sales in its retail locations open at least a year grew 9 percent during the quarter. Profit margins also improved as the company cut costs and aggressively promoted products to generatestore traffic and drive sales.

"While our business has begun to stabilize and we're beginning to experience its longer-term potential, economic and market conditions remain uncertain," President and CEO Bill McLaughlin noted.

Looking forward, the company forecast a full-year profit between 2 cents and 8 cents per share, well above the loss of 2 cents per share predicted by analysts.

Select Comfort said current sales trends will likely continue in 2010. The company also continues to evaluate financing alternatives to boost its flexibility.

Shares climbed 42 cents, or 7.3 percent, to $6.20 in after-hours trading Thursday, having closed regular trading at $5.78.