MINNEAPOLIS (AP) -- Select Comfort Corp.'s shares soared in after-hours trading Wednesday after the mattress maker beat expectations for its second quarter on strong sales and raised its full-year forecast. The Minneapolis company also announced plans to add more stores.
Mattress makers have grown intensely competitive over the past few years as consumers have curbed big ticket spending. In turn, the companies have increased their marketing and promotions to draw new shoppers.
Select Comfort's approach of new products, aggressive marketing and higher prices appears to have paid off.
The company's net income climbed to $17 million, or 30 cents per share, for the quarter that ended June 30. That's compared with $11.3 million, or 20 cents per share, earned in the same quarter last year. Revenue increased 27 percent to $205.2 million.
The results beat analyst expectations of 27 cents per share on revenue of $197.6 million, according to FactSet.
Select Comfort said the gain was driven by a 25 percent increase in its sales at stores open at least a year. This is considered a key indicator of a retailer's financial performance as it strips away the impact of recently opened or closed stores.
The company's profit margin — up to 64.1 percent from 63.5 percent — also improved thanks to a variety of pricing increases it has put in place over the past 12 months.
Select Comfort raised its outlook for the year and now expects to earn $1.35 to $1.41 per share, up from its prior forecast of $1.32 to $1.40 per share, based on expectations of continued sales growth. Analysts had forecast $1.39 per share for the year.
The company also said it will open more stores, it expects to have a total of 408 to 412 stores by the end of the 2012 fiscal year. That's up from its prior forecast of 400 to 410.
Shares soared nearly 19 percent in after-hours trading. Its stock price was up $4.05 to $25.82 on the news, after closing regular trading up 3 percent at $21.77.
