MINNEAPOLIS (AP) -- Select Comfort Corp.'s shares sank in after-hours trading Wednesday after the mattress retailer's first-quarter results came in below market expectations and it lowered its full-year forecast.
The company warned investors in March its sales might suffer due to changes advertising strategy. The company said Wednesday that those changes did hurt traffic in stores and sales. Select Comfort said that it has made changes to correct the issue.
The Minneapolis-based company makes Sleep Number-brand mattresses, as well as pillows and sheets. Mattress makers overall have been struggling with intense competition as they battle to get consumers to make big-ticket purchases.
Competitor Tempur-Pedic International completed its acquisition of fellow mattress maker Sealy Corp. last month.
Select Comfort reported after the market closed Wednesday that it earned $23.5 million, or 42 cents per share, for the period that ended March 30. That compares with $22.4 million, or 39 cents per share, in the first quarter of 2012. On an adjusted basis, it earned 41 cents per share versus 45 cents per share.
The company's total revenue fell 2 percent to $258.2 million from $262.4 million.
Analysts polled by FactSet were expecting adjusted earnings of 44 cents per share on revenue of $288 million.
Select Comfort said its revenue from company-owned stores open at least a year fell 9 percent. This is considered a key indicator of operating performance because it strips away the impact of recently opened or closed stores.
During the quarter, the company opened 10 stores and closed nine, ending the quarter with 411 stores.
Select Comfort said it plans to introduce a number of new products in the second quarter in an attempt to draw more shoppers.
Still, the company lowered its outlook for full year, saying it expects to earn $1.30 to $1.45 per share. That is down from its prior forecast of $1.65 and $1.80 per share. The company said the downgrade was due to the advertising problems and slower industry trends, as well as the costs of adding 25 to 35 stores.
The full-year forecast also fell short of market forecasts. Analysts were anticipating earnings of $1.52 per share for the year.
Select Comfort's shares fell almost 13 percent in after-hours trading to $15.28. Its stock price closed regular trading at $17.56, down almost 50 percent from its price at this time last year.