A good night's rest doesn't always come cheap, but apparently more and more consumers are willing to pay up. On Tuesday, Select Comfort (NASDAQ:SCSS) announced that favorable trends over the holiday shopping season make it comfortable delivering full-year earnings guidance of $1.05 to $1.08 per share, "with some upside potential."
The maker of the high-end Sleep Number beds is projecting sales to grow by 15% to 20% on impressive same-store sales gains of 7% to 12%. Earlier this month, Select Comfort instituted a 5% price increase to keep pace with inflationary pressures. Sleepy-eyed shoppers aren't even flinching at the increase, and that's obviously a great sign for the company.
Shares of Select Comfort were first recommended to Motley Fool Hidden Gems subscribers in the spring of 2004. Even though the stock is trading only marginally higher now than it was back then, the signs are pointing to restful trading days in the future.
With 396 stores in place, the company has been growing its sales presence outside its chain. Sleep Number beds are now being sold through nearly 300 non-Select Comfort stores, and the company is making a global push by selling beds through one of Canada's leading mattress retailers.
With the price hike's warm reception, Select Comfort is now expecting comps to climb by 10% to 12% next year. Overall sales will rise by as much as 20%, with earnings clocking in between 20% and 25% higher.
The performance seems even more impressive in light of weakness at other high-end furniture and home accessory peddlers. La-Z-Boy (NYSE:LZB) and Select Comfort rival Tempur-Pedic (NYSE:TPX) disappointed investors back in September, when they announced that folks ponying up for new car promotions were eating up the big-ticket buying dollar that was often earmarked for their cozy pieces. Hooker Furniture (NASDAQ:HOFT), another Hidden Gems selection, has also had a rough showing this year.
So does that mean you should buy into the Select Comfort story? If you do, you may find a familiar face buying alongside you. Select Comfort has acquired 178,000 of its own shares so far this quarter. For the year, the company has bought back 2.4 million shares -- roughly 7% of its outstanding stock.
Share buybacks aren't a perfect gauge, but when you couple that with the company's upbeat outlook, it certainly makes Select Comfort one of the more attractive investing options out there. Go ahead and sleep on it -- just to be sure.
La-Z-Boy is a Motley Fool Income Investor selection.
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Longtime Fool contributor Rick Munarriz thinks that home is where the hard is. He does not own shares in any of the companies mentioned in this story He is also part of the Rule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
