Why Select Comfort (SCSS) Stock Is Up Today

NEW YORK (TheStreet) -- Select Comfort  (SCSS) rose Monday after the Sleep Number bed manufacturer reported first-quarter earnings that beat analysts' expectations. The company reported the earnings after the market closed on Thursday.

Net sales climbed 7% year over year to $276.4 million, which beat the Zacks consensus estimate of $275 million. Comparable-store sales increased 2%. Gross profit increased 4.9% to $171.3 million, though gross profit margin narrowed 130 basis points (bps) to 62%.

Total operational expenses climbed 13.6% to $145.6 million due mostly sales and marketing cost increases. Operating income dropped 25.9% year over year to $25.8 million, while operating margin narrowed 420 bps to 9.3%. Adjusted EBITDA was $34.7 million, a 17.6% year-over-year decrease. Adjusted EBITDA margin as a percentage of net sales dipped 380 bps to 12.6%.

Select Comfort also reiterated its guidance for 2014 and expects revenue growth in the mid-to-high single-digits range. The company also expects 20 to 30 additional net new stores by the end of the year. Select Comfort anticipates full-year earnings in line with 2013 adjusted earnings of $1.07 per share, which is also in line with the Zacks consensus estimate. The company also plans to spend $70 million to $80 million in 2014 to open new stores, relocate and remodel existing establishments and enhance its information technology.

The stock was up 11.04% to $19.71 at 11:56 a.m. Nearly 1.5 million shares had changed hands, which surpassed the average volume of 976,332.

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