Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
If you have not been paying attention there has been a huge bull market happening of late in the mattress stocks. No, I’m serious. Select Comfort (SCSS) and Tempur Pedic (TPX) have had a barn storming YTD in 2012. (Someone joked on twitter today it makes sense since mattresses are the new banks) 
Select Comfort just reported a stellar quarter, but the stock is flattish to slightly down after hours. That said, it’s had a big run already. But mid 30% sales growth in the consumer discretionary space? Awesome. Full report here.
Via Reuters and press release:
- Mattress maker Select Comfort Corp posted better-than-expected quarterly results for the thirteenth time in a row, helped by higher comparable store sales. First-quarter net income rose to $22.4 million, or 39 cents per share, up from $16.6 million, or 30 cents per share, last year. Excluding items, the company earned 45 cents per share for the first quarter.
- Minneapolis, Minnesota-based Select Comfort said sales rose 36 percent to $262.4 million, as comparable sales of company-controlled stores jumped 34 percent.
- Analysts, on average, expected earnings of 40 cents a share on revenue of $233.7 million.
Main issue I see is some drop in gross sales due to “promotional activities (i.e. sales) among other reasons:
- Gross-profit margin in the first quarter of 2012 was 62.6 percent of net sales, compared with 63.8 percent in the prior-year period. The decrease reflects the strength of consumer response during key promotional events and changes in product mix, partially offset by pricing increases taken during the past year.
No major change in guidance, and if they can keep growth rates up over 20-25%, this 15% target will prove to be very conservative; analysts are in for $1.38:
- The company anticipates 2012 GAAP earnings per diluted share, including the $5.6 million non-recurring charge, to be within the previously communicated range of between $1.32 and $1.40, a 23 to 31 percent increase versus prior year. Excluding the charge, this represents an increase in non-GAAP guidance to between $1.38 and $1.46, a 29 to 36 percent increase versus prior year.
- This outlook continues to assume company-controlled comparable sales growth of at least 15 percent and a net increase in store count from 381 at year-end 2011 to between 400 and 410 by year-end 2012. It also continues to assume a year-over-year increase in operating margin of at least 100 basis points.
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
