Select Comfort Corp. (NASDAQ:SCSS) will release results for the first quarter ended Mar. 29, 2014, after close of the regular trading session on Apr. 17, 2014. Management will host its regularly scheduled conference call to discuss the company's results at 5 p.m. EDT (4 p.m. CDT; 2 p.m. PDT) that day.
Wall Street anticipates that the consumer goods company will earn $0.32 per share for the quarter, which is $0.09 less than last year's profit of $0.41 per share. iStock expects SCSS to miss Wall Street's consensus number. The iEstimate is $0.30, two cents less than expected; however, a bullish surprise is possible - read on.
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Sales, unlike earnings, are expected to grow, rising 6.2% year-over-year (YoY). Select Comfort's consensus revenue estimate for Q1 is $ 274.27 million, more than last year's $ 258.24 million.
Select Comfort Corporation is a bed manufacturer and retailer. The Company is a manufacturer, marketer, retailer and servicer of the Sleep Number bed, which allows individuals to adjust the firmness and support on each side at the touch of a button. The Company offers Sleep Number beds in four series, which includes Classic Series, Performance Series, Innovation Series and Memory Foam Series. As of December 28, 2013, it operated 440 retail stores in the United States.
According to Google Trends, there is a chance that the air-mattress maker could do better than expected. Year-over-year (YoY), search volume intensity (SVI)for the keyword "Sleep Number Bed" increased 8% for Q1 2014 versus Q1 2013.
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If SVI translates to the top line, then sales could come in closer to $279 million, almost $5 million more than forecasted. Provided the home furnishings company hits Wall Street's expected net margin of 6.39%, EPS would register $0.33 per share, a penny better than expected.
There are a few minor financial statement concerns we have heading into Thursday afternoon's announcement. First up, cost of sales increased by 5.90% during 2013 while sales grew at a slower 2.69%. It may not seem like a lot, but if the cost of sales grew at the same pace as revenue, SCSS would have earned $0.19 more last year. That's a lot.
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Outside of that, management made considerable investments in research & development and sales and marketing, both of which we see as long-term positives despite lowering bottom line profits.
Moving over to the balance sheet, a 12.9% rise in inventory is a bit more than we'd like to see compares to 2.69% revenue growth. Old product usually requires sales and clearances to get the old out to make room for the new, and that makes for lower profit margins.
Overall: Google Trends hint that Select Comfort Corp. (NASDAQ:SCSS) could do a little better on than expected on the sales and earnings front. However, the executive team needs to manage cost of goods sold and inventory better; otherwise, any top line upside could be lost in squeezed margins, resulting in a small bearish surprise as the iEstimate suggests.
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