Select Comfort's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Select Comfort (SCSS)

Q1 2012 Earnings Call

April 18, 2012 5:00 pm ET


Mark A. Kimball - Chief Administrative Officer, Senior Vice President of Legal, Secretary and General Counsel

William R. McLaughlin - Chief Executive Officer, President and Executive Director

Shelly R. Ibach - Chief Operating Officer and Executive Vice President

Wendy L. Schoppert - Chief Financial Officer and Executive Vice President


Budd Bugatch - Raymond James & Associates, Inc., Research Division

Leah Villalobos - Longbow Research LLC

Todd A. Schwartzman - Sidoti & Company, LLC

John A. Baugh - Stifel, Nicolaus & Co., Inc., Research Division

Peter J. Keith - Piper Jaffray Companies, Research Division

Eric Hollowaty - Stephens Inc., Research Division

Bradley B. Thomas - KeyBanc Capital Markets Inc., Research Division



Welcome to the Select Comfort First Quarter 2012 Earnings Conference Call. [Operator Instructions] Today's call is being recorded. [Operator Instructions] I would like to introduce Mr. Mark Kimball, General Counsel. Sir, you may begin.

Mark A. Kimball

Thank you, Tamara. Good afternoon and welcome to the Select Comfort Corporation First Quarter 2012 Earnings Conference Call. Thank you all for joining us. I'm Mark Kimball, Senior Vice President and General Counsel. With me on the call today are Bill McLaughlin, our President and CEO; as well as Shelly Ibach, our Chief Operating Officer and incoming President and CEO; and Wendy Schoppert, our Executive Vice President and CFO.

This telephone conference is being recorded and will be available on our website at Please refer to the details set forth in our news release to access the replay. You can access the latest version of our investor presentation in the Investor Section of our website as well. Please also refer to our news release for a reconciliation of certain non-GAAP financial measures included in the news release or that may be discussed on this call.

The primary purpose of this call is to discuss the results of the fiscal period just ended. However, our commentary and responses to your questions may include certain forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties outlined in our earnings news release and discussed in some detail in our annual report on Form 10-K and other periodic filings with the SEC. The company's actual future results may vary materially.

I will now turn the call over to Bill for his comments.

William R. McLaughlin

Thank you, Mark, and welcome to our discussion of Select Comfort's performance for the first quarter of 2012 and update about strategies and expectations going forward.

We had a terrific first quarter, which was significant as we begin to build on several years of solid profitable growth and an exceptional performance in 2011. Given the fast approaching CEO change at the end of May, I'm going to keep my remarks brief so we can focus on Shelly's insights into our programs and strategies and Wendy's perspectives on financials and outlook.

There are 4 themes to consider as you evaluate our progress and potential. First, we are confident in the continued success of our growth formula. We are investing for short and long-term profitable growth. For example, driving record same-store comparable sales growth, and at the same time investing in major metro market development.

Second, SLEEP NUMBER is both contributing to and taking advantage of consumer and industry shifts towards quality, nontraditional bed solutions.

Third, we continue to employ discipline. For us, discipline is about profitable growth and financial flexibility. It's about increasing profit margin, achieving record average sales per store and further strengthening a balance sheet that ensures our continued ability to self-fund expansion.

And last and perhaps most important, we are confident in our leadership team and our succession plan. Both are important given our unique business model, established momentum and strong culture.

I'd like to personally thank those who have shown an interest in SLEEP NUMBER over the years. Your support has been important to us and to me and will continue to be critical in the future.

Let me conclude by saying a few words about Shelly. What has always impressed me about Shelly is her bold yet disciplined approach to all that she does. We benefited from those characteristics during the past 5 years and it's those same attributes that will be increasingly important to SLEEP NUMBER's acceleration of profitable growth. Congratulations, Shelly.

Now, I'll turn the call over to Shelly and Wendy, who will provide more detail about our company's solid performance and exciting future.

Shelly R. Ibach

Thank you, Bill. Good afternoon to everyone on the call. During the past few months, I've enjoyed meeting many of you and look forward to continuing our discussions at the company's upcoming Investor Day in Chicago on May 8. We hope you'll be able to join us.

Let me begin my remarks today by thanking our SLEEP NUMBER team for their execution excellence against our customer-focused strategy, which delivered record top and bottom line results and improved the lives of thousands of customers.

In the first quarter, we achieved a 36% increase in sales, a record 34% comparable sales growth and a record 15.2% adjusted operating margin. These results further validated our growth formula and demonstrated the progress we've made in raising brand awareness and in driving increased store productivity.

We are leveraging our unique ownership of all customer touch points by consistently innovating across marketing, product, distribution and customer experience. While delivering a record first-quarter performance, we also continued to allocate resources to fund longer-term initiatives to further differentiate and build demand for the SLEEP NUMBER brand.

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