Select Comfort Corporation (SCSS) has reported 88.61 percent jump in profit for the quarter ended Apr. 01, 2017. The company has earned $24.46 million, or $0.56 a share in the quarter, compared with $12.97 million, or $0.27 a share for the same period last year. Revenue during the quarter grew 11.59 percent to $393.90 million from $352.98 million in the previous year period. Gross margin for the quarter expanded 334 basis points over the previous year period to 62.57 percent. Total expenses were 90.90 percent of quarterly revenues, down from 94.36 percent for the same period last year. This has led to an improvement of 346 basis points in operating margin to 9.10 percent.
Operating income for the quarter was $35.83 million, compared with $19.90 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $55.73 million compared with $37.44 million in the prior year period. At the same time, adjusted EBITDA margin improved 354 basis points in the quarter to 14.15 percent from 10.61 percent in the last year period.
“Consumers are responding enthusiastically to our brand and differentiated products. Our investments over the past few years have made us a stronger competitor and this is evident in our first quarter results,” said Shelly Ibach, President and Chief executive officer of Select Comfort. “In the second quarter, we will begin the phased introduction of the revolutionary Sleep Number 360 smart beds. This innovation will set a new standard for what people should expect from their bed.”
For financial year 2017, the company forecasts diluted earnings per share to be in the range of $1.25 to $1.50.
Operating cash flow improves significantly
Select Comfort Corporation has generated cash of $86.87 million from operating activities during the quarter, up 35.77 percent or $22.89 million, when compared with the last year period. The company has spent $10.06 million cash to meet investing activities during the quarter as against cash inflow of $2.82 million in the last year period.
The company has spent $51.96 million cash to carry out financing activities during the quarter as against cash outgo of $58.27 million in the last year period.
Cash and cash equivalents stood at $36.45 million as on Apr. 01, 2017, up 23.48 percent or $6.93 million from $29.52 million on Apr. 02, 2016.
Working capital remains negative
Working capital of Select Comfort Corporation was negative $103.17 million on Apr. 01, 2017 compared with negative $47.89 million on Apr. 02, 2016. Current ratio was at 0.59 as on Apr. 01, 2017, down from 0.78 on Apr. 02, 2016.
Cash conversion cycle (CCC) has increased to 37 days for the quarter from 2 days for the last year period. Days sales outstanding went down to 7 days for the quarter compared with 8 days for the same period last year.
Days inventory outstanding has decreased to 21 days for the quarter compared with 53 days for the previous year period. At the same time, days payable outstanding went up to 65 days for the quarter from 63 for the same period last year.
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