Have you ever had those moments when you wake up in the middle of the night, thirsty? You're in such a sleepy funk that you can't muster the strength to lift yourself up to fetch a glass of water, even if you know it's in your best interest?
Well, that's how I feel after watching Select Comfort
I mean, I saw this coming. This is what I wrote after rival Tempur-Pedic
Hooray for Tempur-Pedic. As a Select Comfort shareholder -- and Sleep Number bed owner -- I think I'm going to be sick.
It seems as if the market is willing to reward just one mattress maker at a time. Obviously, the bedding market didn't grow by 22% this past quarter. Retailers like Bed Bath & Beyond
(NASDAQ:BBBY), Limited's (NYSE:LTD)Bath & Body Works, and Pier 1 (NYSE:PIR)would be flying high if folks were splurging on home furnishings and feel-good knickknacks. They're not. Tempur-Pedic is in its own cool groove at the moment.
If it's pulling in those kinds of numbers, its premium-mattress rivals are going to come in weak. So I'm braced for the worst when Select Comfort reports next week.
Like a chump, I let my own warning dangle like an inviting glass of water as I catatonically counted down the days to Select Comfort's report.
I guess I deserve what I got. Tempur-Pedic may have grown net sales by 22%, but Select Comfort's top line inched just 3% higher. Earnings took a similar baby step, up to $0.26 a share after last year's $0.25.
"Well, at least Select Comfort is growing," a bull would argue. Let's not even go there. For starters, a massive share buyback is why earnings held up on a per-share basis. Net income actually fell 15% during the period. Don't get too giddy about the top-line growth, either. The company continues to ramp up its outlets, but same-store sales fell by 6%. Healthy online sales (up 30%) and plans to enter new markets (g'day, Australia) aren't enough to offset the weakness that's about to get even worse. Even a stodgy mattress giant like Sealy
The maker of the Sleep Number air-filled mattress says that instead of earning $0.87 to $0.93 per share this year, it's now looking to earn $0.75 to $0.81. Its net sales targets are being slashed as well. In other words, the current quarter is going to be ugly.
So what am I doing craving water in the middle of the night? With the company unlikely to keep buying back enough shares to offset its bottom-line declines, I should be reaching for a harder drink.
For more Foolishness:
Select Comfort is a Motley Fool Hidden Gems newsletter recommendation. A 30-day trial will let you sleep on it for a while to see if the stock research service inspires better dreams. Bed Bath & Beyond is a Stock Advisor pick.
Longtime Fool contributor Rick Munarriz thinks that a good night's sleep is better than a balanced breakfast to start the day off right. He owns shares in Select Comfort and his Sleep Number is 35. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.