Shares of mattress retailer,
Select Comfort Corp.
), declined 19.1% after the company lowered its guidance for the
fourth quarter of 2013. Failure to meet the sales target during
the period from Cyber Monday till December-end compelled the
company to trim its earnings expectations.
According to the company, its performance in November was in line
with expectations. However, sales growth during the busy holiday
season could not keep up with management's anticipations and
hence, the lower guidance.
Earnings are now projected to fall below the lower end of the
guided range of 18-26 cents. The current Zacks Consensus Estimate
is pegged at 21 cents and could be revised downward in the coming
Earlier, during the third-quarter results, Select Comfort
projected its fourth-quarter 2013 earnings in the range of 18-26
cents and GAAP earnings in the band of $1.14-$1.22, as against
$1.30-$1.45 forecasted earlier. Further, management expected
total net sales to increase in low double-digits and
comparable-store sales were anticipated to grow in mid
Select Comfort also furnished preliminary sales data for the said
quarter. Net sales increased 5% year over year to $231 million in
the fourth quarter but fell short of the Zacks Consensus Estimate
of $241 million. Company-controlled comparable sales remained
stable from the prior-year quarter.
Select Comfort is slated to report its fourth-quarter results on
Feb 5, 2014. However, our proven model does not conclusively show
that the company is likely to beat the Zacks Consensus Estimate
this quarter. This is because Select Comfort carries a Zacks Rank
#4 (Sell) and an
of 0.00% (as both the Zacks Consensus Estimate and the Most
Accurate Estimate stand at 21 cents).
For a stock to outperform it needs to have both a positive
Earnings ESP and a Zacks Rank #1, 2 or 3, but the components of
Select Comfort do not suggest so.
We also observed that Select Comfort has missed the Zacks
Consensus Estimate in the trailing four quarters with an average
miss of 18%. Heightened macroeconomic challenges, higher costs
and lower-than-expected sales primarily caused the dismal
Not all retail stocks have been performing as poorly as Select
Comfort. Better-ranked retail stocks include
Hooker Furniture Corp.
Virco Mfg. Corp.
). While Hooker Furniture and La-Z-Boy carry a Zacks Rank #1
(Strong Buy), Virco has a Zacks Rank #2 (Buy).
HOOKER FURNITUR (HOFT): Free Stock Analysis
LA-Z-BOY INC (LZB): Free Stock Analysis
SELECT COMFORT (SCSS): Free Stock Analysis
VIRCO MFG (VIRC): Get Free Report
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