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Select Comfort Management Discusses Q2 2012 Results - Earnings Call Transcript

Our #1 growth opportunity is increasing unaided awareness of Sleep Number. As we've continued to invest in marketing, we've increased unaided brand awareness from 15% to 20%, a high point for our brand. We also have seen a notable increase in unaided store awareness over the past 6 months from 6% to 8%. These awareness improvements indicate our strategies are working as planned and are important to the sustainability of Sleep Number's future growth.

Second quarter results validated the advantage of our exclusive distribution strategy. Marketing dollars are focused on increasing awareness and consideration for our brand and products, while driving traffic to our Sleep Number stores, where sleep professionals individualize our customers' sleep experience with proprietary benefit-driven products.

Our customers continue to respond positively, as indicated by record-high average sales per mattress unit in the quarter. Company-controlled ASP was also up 13% over prior year. Our average sales per comp store exceeded $2 million for the trailing 12-months in the second quarter, a 35% increase over the prior year. And our new stores average $2 million in year 1.

As we have communicated, our national distribution strategy involves local market development by optimizing existing stores and filling in current markets with new stores. In the quarter, we continued to invest in our stores by expanding and remodeling 7 mall stores and relocating another 7 stores from mall to non-mall locations.

In addition, we executed a brand refresh in 15 existing locations. We also opened 5 new non-mall Sleep Number stores. And after closing 4 mall stores, we ended the quarter with 1 net new store for a total of 381. We are on track to open 27 to 31 total net new stores for 2012.

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