NEW YORK (AP) -- Shares of Select Comfort plunged 27 percent in premarket trading after the mattress company fell well short of Wall Street expectations for the third quarter and it cut its earnings forecast for the year.
KeyBanc Capital Markets stripped the company of its "buy" rating Thursday.
Analyst Bradley Thomas said the poor quarter raises the specter of an entrenched U.S. consumer, which would create a much more competitive sales environment. That, Thomas said, may require additional spending by Select Comfort to get revenue backup.
Longer term, Thomas said that the company should benefit from easier comparisons, new product rollouts and a strong balance sheet.
Late Wednesday, the company reported quarterly earnings of 36 cents per share, 7 cents short of what analysts had predicted. Revenue was also about $14 million short of what Wall Street projected.
The Minneapolis company lowered its full-year earnings guidance to a range of $1.14 to $1.22 per share. Its prior forecast was for $1.30 to $1.45 per share. Wall Street's consensus view was for earnings of $1.33 per share.
KeyBanc's rating on Select Comfort Corp. is now a "Hold."
The company's shares declined $6.50 to $17.70 before the market opened.