Select Comfort has been a rollercoaster for mattress investors. In late 2015, the company suffered from a series of ERP (Enterprise Resource Planning) implementation issues which led to shipping delays and customer order cancellations. Company-controlled comparable store sales dropped by 31% after having grown by double-digits for the prior five quarters. The following year was then negatively impacted by the system’s lingering issues.
Investors are now hoping that 2017 will be a better year now that the ERP issues are behind them. The company should benefit from several quarters of easy, negative comparisons. Additionally, Select Comfort will be rolling out its new “360 Smart Bed” throughout the year. The bed offers a number of features that adjust the bed based on the sleeper’s positioning and state of sleep. Furthermore, the year is off to a strong start as the 1Q17 company-controlled comparable store sales growth of 3.0% was well-above the -1.3% consensus estimate. As a result, investors are looking for roughly 2.5% - 3.0% company-controlled comparable store sales growth for the remainder of the year (in line with management’s guidance for low-single digit growth).
Beyond 2017, however, investors remain cautious due to competition in the industry as well as the choppy consumer environment. Investors expect company-controlled comparable store sales growth to decelerate in 2018 and 2019 and remain in the low-single digits.