Revisit Select Comfort (SCSS)
Select Comfort (SCSS), one of my favorites in the portfolio, plunged over 18% on Thursday (hurts!) after an projected earning adjustment from $0.95 - $0.97 per share for 2006 to $0.80 - $0.87, citing its bed sales associations with weak house market. Reading the same filing, the management remains confident to deliver its long-term growth rate in 2007.
A substantial adjustment like this from SCSS, does caught me off the guard. Though the 18% price drop doesn't surprise me, as I get used to these overreactions, and usually get excited about it. However a statement like this deserves some rethinking - I revisit the stock, and here is my thought.
SCSS sells bed - a commodity product. In my opinion, winning formula to a commodity product are two words - different and simple. I think SCSS still has it.
Different - "what's your sleep number?" SCSS's tagline successfully turns a commodity to a personalized product.
Simple - SCSS still keeps very simple product lines, simple store layout, simple pricing, and no pressure sales.
SCSS continues to spend a significant amount of resource and money to support local community - they provide over 3,700 beds to 150+ Ronald McDonald Houses for free since 2001. To me, it is a sign of great company culture and confidence in the business.
If you have doubt, last year, the board approved $150 million buyback program for 2006. The comany only used $50 million so far. You can keep a close eye on it this month, see if and how they spend the remaining $100 million.
I haven't yet pulled trigger. However I won't wait long, will buy more early next week.
A substantial adjustment like this from SCSS, does caught me off the guard. Though the 18% price drop doesn't surprise me, as I get used to these overreactions, and usually get excited about it. However a statement like this deserves some rethinking - I revisit the stock, and here is my thought.
SCSS sells bed - a commodity product. In my opinion, winning formula to a commodity product are two words - different and simple. I think SCSS still has it.
Different - "what's your sleep number?" SCSS's tagline successfully turns a commodity to a personalized product.
Simple - SCSS still keeps very simple product lines, simple store layout, simple pricing, and no pressure sales.
SCSS continues to spend a significant amount of resource and money to support local community - they provide over 3,700 beds to 150+ Ronald McDonald Houses for free since 2001. To me, it is a sign of great company culture and confidence in the business.
If you have doubt, last year, the board approved $150 million buyback program for 2006. The comany only used $50 million so far. You can keep a close eye on it this month, see if and how they spend the remaining $100 million.
I haven't yet pulled trigger. However I won't wait long, will buy more early next week.
posted by Siyu LI at
11:25 PM
2 Comments:
I was going to buy this last week, but it get to it. I guess i will buy this week then. Thanks for the comment.
By
Anonymous, at December 02, 2006 2:06 PM
At the current price, SCSS is a good value. Hope ya had bought it on Monday before the rally.
I had a buy limit order @18.05 on Monday and Tuesday since later in the morning, but missed both. Won't chase, but $18 is a good entry point to me.
SCSS has a fair amount of stores in NY, given just a 1B company.
By
Siyu LI, at December 05, 2006 11:32 PM
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