Shares of Select Comfort (SCSS 32.03, +1.65, +5.5%) are up nicely in early action following the mattress company's third quarter earnings report. The company did not do as well as expected, yet it still did reasonably well in the face of some sales difficulties related to the hurricanes.
Net sales for the period ended September 30, 2017, increased 9% to a quarterly record of $403 million, comparable sales increased 5%, and earnings per diluted share increased 11% to $0.62.
Analysts, however, were expecting better of the company's top and bottom lines. It is unclear how they modeled for the impact of the hurricanes, yet the hurricanes had an impact on Select Comfort's business.
According to the company, 13% of its store portfolio was directly affected by Hurricanes Harvey and Irma, resulting in an estimated $12-$15 million in lost or delayed sales in the quarter.
That sales shortfall notwithstanding, Select Comfort still managed to grow its earnings with the help of strong demand for its Sleep Number 360 smart beds, higher than expected gross margins, and expense controls.
In conjunction with the report, Select Comfort updated its fiscal 2017 outlook. The company narrowed its earnings per diluted share guidance to a range of $1.30 to $1.45 from $1.25 to $1.50. The updated guidance assumes high single-digit sales growth, which will include 5 to 6 percentage points from net new store openings and low single-digit comp store growth.
Select Comfort is not assuming a big rebound in the fourth quarter from the lost sales due to hurricane store closures, so its guidance could end up being conservative if those lost sales are found again.
It all remains to be seen, but one thing is known for sure. When Select Comfort reports its year-end results, it will be doing so as the Sleep Number Corporation and its ticker symbol will be changed from SCSS to SNBR. The company said this official name and ticker symbol change will be effective November 1.