Select Comfort Corp. (NASDAQ: SCSS
) said on Wednesday that fiscal third quarter earnings dropped 23% as higher operating costs put the pressure on the bottom line, masking improvement in sales.
Shares tumbled more than 25% in aftermarket hours on Wednesday as both core earnings and revenue missed analysts’ expectation. The Company also slashed its outlook for the full fiscal year. The mattress maker now anticipates earnings of $1.14 to $1.22 a share for the fiscal 2013, down from its previous estimate of $1.30 to $1.45 a share.
For the current quarter, the Company expects earnings to be in the range of 18 cents to 26 cents a share, which is below analysts’ estimate of 32 cents a share, according to a poll conducted by Reuters.
Speaking to analysts in a conference call, Select Comfort Corp.’s President and Chief Executive, Shelly Ibach said, "The consumer responded positively to our product innovations and exclusive retail experience as evidenced by market-share gains along with favorable operational and customer-focused metrics,"
“However, our execution was muted by a progressively more challenged macro-economic environment, resulting in performance below expectations” added Ibach.
For the latest period, Select Comfort posted an income of $20.3 million or 36 cents a share compared to a profit of $26.2 million or 46 cents a share, in the year-ago period. Revenue rose 6.8% to $264 million.
Analysts surveyed by Thomson Reuters had forecasted earnings of 43 cents a share on revenue of $277 million.
Gross margin contracted to 63.1% from 65.1% while operating costs rose 13% as sales and marketing expenses climbed 16%. Same-store-sales slipped 1% in the fiscal third quarter.