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Too much information from Select Comfort?

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By pencils2
December 13, 2007

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This is absolutely ridiculous. In their 4Q 2007 "Business update" management warned that 4Q results would come in below expectations. Wow! No kidding! I'm so surprised given this management team's great record with this. I've got to admit that I'm very tempted to ditch right now, it's painful to watch management fret over how much sales will suffer in the coming quarter. Management has managed to diminish what was once a great cash position down to nothing ($8 million) just to buy back some stock. That's a nice idea and all, but when the business is struggling and not getting results it's flat-out stupid. Best of all, the company now has debt amounting to more than $20 million. That's right. Just 3-4 quarters ago Select Comfort had more than $60 million in cash with no debt. So much for that. The company continues to heavily struggle with advertising and sales keep growing below expectations they give to shareholders.

Honestly, these quarterly updates are the most ridiculous things I've seen recently. It's a nice idea to keep shareholders updated on progress the company's making, but there is a limit. Giving quarterly guidance is one thing, but having quarterly updates on that quarterly guidance is taking it a step way too far. Now the stock is down more than 10% in after-hours and now we know the business is continuing to struggle. Great. Thanks for helping us out, guys!

Anyway, I know it's my fault I made this investment and I probably should have waited to double down, but I'm getting so tired of this management team I'm tempted to sell. It'd feel so much nicer invested with Sally Smith of Buffalo Wild Wings or Steve Ells of Chipotle. But life is life, bad choices are made. I'm obviously regretting my decision to invest in Select Comfort; management simply hasn't proven they can do anything except miss quarterly guidance. I'll be watching more closely from here on out, but my opinion on management and this business has radically changed. I can't take this quarterly guidance BS much longer, something needs to show a sign of improvement.

And there you have it for today's unscheduled rant...

Best,

David K