By RTT News, October 16, 2013, 08:50:00 PM EDT
(RTTNews.com) - Shares of Select Comfort Corp. ( SCSS ) plummeted more than 26 percent in extended trade on Wednesday after the mattress maker reported results for the third quarter that missed analysts' expectations. The company also slashed earnings guidance for the full-year 2013.
Meanwhile, the company reported a profit for the quarter that declined from last year, hurt by comparable store sales decline and significantly lower operating margins amid higher operating expenses.
"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," President and CEO Shelly Ibach said in a statement.
The Minneapolis, Minnesota-based company reported net income of $20.26 million or $0.36 per share for the third quarter, lower than $26.21 million or $0.46 per share in the prior-year quarter.
On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.43 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 7 percent to $263.69 million from $246.82 million in the same quarter last year, but missed eight Wall Street analysts' consensus estimate of $277.47 million.
Meanwhile, company-controlled comparable-store sales decreased 1 percent. Sales growth was driven by 29 net new stores opened during the past 12 months, including 10 net new stores opened during the third quarter.
Operating margin for the quarter contracted 470 basis points to 11.6 percent from last year, as operating expenses, as a percentage of total sales, increased 270 basis points to 41.2 percent, and gross margins decreased 200 basis points to 63.1 percent from last year.
Looking ahead to the fourth quarter, the company expects earnings in a range of $0.18 to $0.26, while analysts are expecting $0.32 per share.
For fiscal 2013, the company slashed its earnings guidance to a range of $1.14 to $1.22 per share from the prior outlook of $1.30 to $1.45 per share. Street is currently looking for full-year 2013 earnings of $1.33 per share.
The company noted that the outlook assumes total sales growth during the fourth quarter in the low double-digits. Analysts' expect revenues of $255.49 million in the fourth quarter.
"Given the ongoing economic uncertainty, we are actively managing costs across the company, while continuing to support priorities important to long-term growth and profitability," Ibach added.
SCSS closed Wednesday's regular trading session at $24.20, down $0.49 or 1.98% on a volume of 5.59 million shares. The stock plummeted a further $6.34 or 26.20% in after-hours trading.
For comments and feedback: contact firstname.lastname@example.org