Company Implements Workforce Reductions; Halts SAP Implementation
MINNEAPOLIS--(BUSINESS WIRE)--Dec. 16, 2008--Select Comfort Corporation (NASDAQ: SCSS), the nation's leading bed
retailer and creator of the SLEEP NUMBER(R) bed, today
announced a series of cost reduction initiatives in response to a
further slowing of sales after Thanksgiving and in anticipation of
continued macro-economic challenges in 2009.
Actions being taken include a workforce reduction of approximately 120
positions within headquarters, or approximately 22 percent of the
corporate workforce, which includes general and administrative and
customer service positions. In addition, the company will immediately
cease all activities associated with the implementation of SAP(R)-based
IT applications.
The cumulative benefit from these initiatives, as well as additional
actions currently being explored, is expected to be approximately $15
million on an annualized basis, beginning in the first quarter of 2009.
The company expects to incur a charge of approximately $35 million in
the fourth quarter of 2008, which is primarily asset impairments with
approximately $4.0 million of severance and other cash costs.
"During the course of the year, we've navigated through an extremely
difficult macro-economic environment by focusing on reducing our cost
structure and improving product margins," explained Bill McLaughlin,
president and CEO, Select Comfort Corporation. "We expect these
macro-economic challenges to continue and possibly worsen in 2009.
Therefore, we've taken additional actions to better align our cost and
cash structure with our 2009 outlook for the economy."
As communicated during the third quarter earnings announcement, the
company is on track to close approximately 20 stores during the first
quarter of 2009. The company will continue to examine its store base and
expects to close additional stores throughout 2009; and the company is
assessing supplemental opportunities across all functions to reduce
overall cost structure.
About Select Comfort Corporation
Founded more than 20 years ago, Select Comfort Corporation is the
nation's leading bed retailer(1). Based in Minneapolis, the
company designs, manufactures, markets and supports a line of
adjustable-firmness mattresses featuring air-chamber technology, branded
the Sleep Number(R) bed, as well as foundations and bedding
accessories. SELECT COMFORT(R) products are sold through its
more than 470 company-owned stores located across the United States;
select bedding retailers; direct marketing operations; and online at www.sleepnumber.com.
Forward-Looking Statements
Statements used in this news release relating to future plans, events,
financial results or performance are forward-looking statements subject
to certain risks and uncertainties including, among others, such factors
as general and industry economic trends; uncertainties arising from
global events; consumer confidence; effectiveness of our advertising and
promotional efforts; our ability to fund our operations through cash
flow from operations or availability under our bank line of credit or
other sources, and the cost of credit or other capital resources
necessary to finance operations; the risk of non-compliance with
financial covenants under our bank line of credit, and the potential
need to obtain additional capital through the issuance of debt or equity
securities; our ability to attract and retain qualified sales
professionals and other key employees; consumer acceptance of our
products, product quality, innovation and brand image; our ability to
continue to expand and improve our product line; industry competition;
warranty expenses; risks of pending litigation; our dependence on
significant suppliers, and the vulnerability of any suppliers to
commodity shortages, inflationary pressures, labor negotiations,
liquidity concerns or other factors; rising commodity costs; the
capability of our information systems to meet our business requirements
and our ability to maintain our systems on a cost-effective basis
without disruptions to our business; and increasing government
regulations, including new flammability standards for the bedding
industry, which have added product cost pressures and have required
implementation of systems and manufacturing process changes to ensure
compliance. Additional information concerning these and other risks and
uncertainties is contained in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K, and other
periodic reports filed with the SEC. The company has no obligation to
publicly update or revise any of the forward-looking statements in this
news release.
(1) Top 25 Bedding Retailers, Furniture/Today,
August 2008.
CONTACT: Select Comfort Corporation
Media Contact:
Gabby Nelson, 763-551-7460
gabby.nelson@selectcomfort.com
or
Investor Contact:
Jim Raabe, 763-551-7498
investorrelations@selectcomfort.com
Source: Select Comfort Corporation