Yesterday afternoon, after the markets were safely closed and trading was dependably light, cutting-edge airbed maker and Motley Fool Hidden Gems re-re-re-recommendation Select Comfort (NASDAQ:SCSS) put out its mid-quarter sales report in the form of a "listen-only" conference call. If you haven't heard the news yet ... well, you might want to stay in bed. And pull up the covers tight, and put in some earplugs while you're at it.

Reviewing "actual business results for the 10-weeks ended Saturday," and with just three weeks left to go in the quarter, CFO Jim Raabe advised that sales for the quarter are trending towards a 5% decline versus last year's Q2. Management's efforts to boost sales through a costly new marketing campaign (marketing costs were up 7% last quarter, versus just a 2% rise in sales) "have not driven incremental traffic." As a result, Select Comfort felt compelled to lower guidance for the current fiscal year. (Meanwhile, archrival Tempur-Pedic (NYSE:TPX) is pushing its own guidance in the other direction. Read about that here.) Select Comfort management now expects sales to come in between $840 million and $860 million, for year-over-year growth of just 4% to 7% -- far short of the firm's oft-repeated promise of 15% to 20% long-term sales growth. Short, too, of the 12%-15% growth promised just a few months ago.

Also gone by the wayside is the firm's previous prediction of $1.05 in per-share profits this year. In its place, Raabe promised just $0.87 to $0.93 -- and even that will only be achieved by dint of the firm buying back stock to concentrate profits among fewer shares. Again, this is not at all what investors, promised long-term annualized profits growth of 20% to 25%, had been led to expect.

The good news
Considering the tepid sales and profits outlook, you may be surprised to learn that there is any good news. But it's there -- and it's the bad news that's the good news. Or rather, the fact that management didn't try to spin the bad news, instead taking full responsibility for this disaster in the making. Said Raabe: "We are not at all satisfied with our performance, particularly our marketing." Moreover: "Our key challenges of marketing and sales are largely within our control."

Noticeably absent from the call were any attempts to blame rain, a weak housing environment, rising interest rates, or a generally "challenging" business environment in the furniture industry for Select Comfort's problems. No, Select Comfort did this to itself. They know it. We know it. You know it. The only surprising thing is ... they admit it.

Cold comfort to investors who are watching their shares plunge in value as they read this, I know. But from the looks of things, it's the only comfort we're going to get between now and 2008.

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Fool contributor Rich Smith does not own shares of any company named above.