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Select Comfort Corporation (NASDAQ:SCSS)

F2Q08 Earnings Conference Call

July 23, 2008 5:00 pm ET

Executives

Mark Kimball – Senior Vice President and General Counsel

Bill McLaughlin - President and CEO

Jim Raabe - SVP and CFO

Analysts

Budd Bugatch – Raymond James

Anthony Gikas – Piper Jaffray

Joel Havard – Hilliard Lyons

Mark Rupe – Longbow Research

Robert Evans – Craig-Hallum Capital

Steve Denault – Northland Securities

Stanley Elliot - Stifel Nicolaus

Robert [Denougher] – Individual Investor

Operator

Welcome to the Select Comfort second quarter 2008 earnings conference call. (Operator’s instructions) Now I would like to turn the meeting over to your host for today's call, Mark Kimball.

Mark Kimball

Welcome to the Select Comfort Corporation second quarter 2008 earnings conference call. Thank you all for joining us. I am Mark Kimball, Senior Vice President and General Counsel. With me on the call are Bill McLaughlin, our President and Chief Executive Officer and Jim Raabe, our Senior Vice President and Chief Financial Officer. In a moment, I will turn the call over to Bill. Following our prepared remarks, we will open the call to your questions.

Please be advised that this telephone conference is being recorded and will be available by telephone replay. It also will be archived on our website. Please refer to the details set forth in our news release to access the replay on our website. The primary purpose of this call is to discuss the results of fiscal period just ended. However, our commentary and our responses to your questions may include certain forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties outlined in our earnings release and discussed in some detail in our Annual Report on Form 10-K and other periodic filings with the SEC. The company’s actual future results may vary materially.

Before I turn the call over to Bill, we have prepared a few slides to supplement our discussion today. To access these slides, please go to the Investor Relations section of our website at selectcomfort.com\investors.

I will now turn the call over to Bill for his comments.

Bill McLaughlin

Our second quarter is always the most challenging because it is the seasonal low point of our sales. This year the second quarter was particularly demanding giving the need to demonstrate progress in moving the company towards profitability in the face of an extremely challenging business environment. It is clear that our actions have begun to payoff as our second quarter met key performance expectations and we made real progress in stabilizing sales and reducing our cost structure.

Having said that, we recognized that we still have work ahead of us. As you recall, the plan we shared during our first quarter call focused on returning our business to profitability in the second half of the year. This plan involves specific initiatives to reduce costs, increase margins and preserve cash while selectively investing to stabilize volume. Specifically we said we would implement cost and margin actions to benefit the company by approximately $30 million in 2008 and stabilize volume declines by restoring media spending to year ago levels.

We did however anticipate an operating loss in the second quarter given that this is historically our seasonal low point of sales. Importantly, we did what we said we would do in the second quarter; stabilizing revenue and profit versus the first quarter and we are now more strongly positioned to achieve our second half goals.

Turning to specifics in the quarter. Revenue declined versus prior year by 15% which is far from our ultimate goal but it is about the improvement we were looking for over the first quarter’s rate of -22%. On a relative basis, earnings improved ahead of first quarter on $16 million less in sales and the Company achieved its cash preservation goals during the quarter with strong work done in controlling inventory and reducing CapEx. During the quarter, we restructured our bank agreement, a significant accomplishment especially in the current financial sectors’ challenging environment. We appreciate the work of our team and our bank partners support while we are by no means satisfied with declining volume and continued operating losses in the quarter, we are increasingly confident that we are controlling all that we can control and executing well against our plans.

We are now focused on the second half and remain committed to delivering a profit despite continued challenging market conditions. Looking ahead, I do not believe anyone can predict what the macro environment will look like over the next six to twelve months let alone the next three months. Therefore, our goal is not to try to project the future economic situation but rather to focus on maintaining the flexibility through actions within our controls specifically those that focus on cost and margin improvements, product innovation and selling and marketing.

Let me begin with cost and margin. Incremental to the actions we took in the first quarter, we have identified an additional $6 million in savings and margin improvement that will benefit the second half of the year. These additional enhancements will allow us to at least offset what could be up to another $3 million in incremental inflation driven by oil and currency risks. This margin protection comes from stronger productivity across the Company and from additional tactical price increases and delivery charges implemented in July.

We have also identified an additional ten stores that we plan to close which will bring our total closures to 25 stores. Initial EBITDA benefits will be limited as there will be offsetting revenue decline. However, closures will improve profitability as we transfer sales within a market and spread sales across lower fix cost. We will continue to evaluate additional store closures for EBITDA growth. In addition to tightly controlling expenses, margin and cash, we intend to further stabilize sales.

Our second half plans offer introducing exciting product innovation in both beds and bedding accessories and continue the investment in marketing. We expect to spend the advertising at year ago levels while maintaining the flexibility to adjust commensurate with the sales performance. As you know, marketing is an important driver of consumer consideration and sales as both the branded manufacturer with relatively low awareness and a multi channel retailer benefiting from destination business. We are acutely focused on our marketing approach.

In the second quarter, it was difficult to definitively read the impact of the revised advertising that we introduced in March. The external environment presented ups and downs through the quarter. We saw improvement in both volume trends and brand awareness tracking when advertising was launched. However, the list was not consistent through the quarter and while our sales trends did improve, we are making further improvements to our marketing. In the second half, we are adjusting our media plans to enhance efficiency and we are making the message even more relevant and actionable for the consumers of today.

Our testing shows that our unique benefits of individualized comfort and its importance to Better Sleep are highly important and relevant to our target consumers and we know that spending on advertising continues to directly impact sales and the better the execution, the better the impact. So improving the impact of our Sleep Number campaign continues to represent significant increased opportunity for our business.

We also remain focused on product innovation and we are on track to launch a new bed model nationally in September and to introduce several new accessory programs throughout the second half. We expect our enhanced bedding accessory business to contribute incremental revenue as well as to bring in incremental customers to consider Sleep Number bed purchases. Sales momentum in accessories increased in the second quarter to 10% of our total sales and we expect this to build through our new initiatives which include the unique create your own pillow launch to as much as 15% or more of total revenue in the fourth quarter.

The senior team and I are more committed than ever to restore profitability this year. We are now focused on execution of our plans and selectively pursuing additional opportunities to create further flexibility and improvement. With normal seasonality and relatively stable conditions, we believe our initiatives position us to deliver a profitable second half.

I will now turn the call over to Jim for more detailed analysis in the second quarter and how it projects into the second half.

Jim Raabe

. It has been a challenging first half of the year but we feel we have made significant progress adjusting our margins structure, aggressively managing our cash and working capital while investing against our sales opportunities. I would like to start by providing an overview of our second quarter results.

Sales in the quarter declined 15% from $179 million a year ago to a $152 million this year. Sales in all channels declined on a year-over-year basis with comparable store sales down 20%. Sales have fluctuated on a week to week and month to month basis with no discernable trend other than to say we, along with the rest of the mattress industry, are certainly experiencing a challenging consumer environment. One that we expect will continue for the foreseeable future.

Net operating profit declined from $4.8 million in income last year to a $10.3 million loss in the second quarter of 2008. In addition to a decline in sales, lower gross margins also negatively impacted our profitability. While product mix is in line with a year ago, pricing actions have covered cost increases but has not restored the gross margin percent. The most significant cost impact compared to a year ago have been fire retardant regulations which took affect mid-year 2007 and which will begin to last in third quarter and rising oil prices which directly affect logistics cost and import cost for several of our component.

We have a number of initiatives and plans to restore gross margin percent at historical levels which will improve margins in 2009 and beyond. For the remainder of 2008, we expect to maintain gross margins of approximately 60%. All the gross margin lines are selling, general and administrative cost improved by approximately $4 million compared to a year ago. Marketing cost was slightly lower even though media was essentially flat to a year ago to at $25 million. Selling costs were slightly higher than last year with 18 more stores than at this time last year partially offset by cost reduction initiatives and variable cost.

G&A cost were $2.5 million lower than last year reflecting our various restructuring actions. In addition, we took store asset charge offs totaling $700,000 in the quarter. An important indicator that our initiatives are stabilizing the business, our second quarter performance improved compared to first quarter results. Our rate of sales improved minus 15% versus minus 22% in the first quarter and we reduced our operating loss to $10.3 million compared to $11 million in the first quarter despite $16 million lower sales due to seasonal trends.

Sales trends improved due to factors outlined in our first quarter call. First, we restored media investments to equal to prior year levels while media spend declined by 23% in the first quarter. Second, the factors impacting our decline in full store sales generally in QVC in particular were isolated to the first quarter and third, our sales mix improved due to the introduction of our 6000 model and a reduction in our entry level price point activity.

Our gross margins improved significantly to 59.6%, 200 basis points higher than the first quarter. This is despite the fact that lower margins wholesale sales made up a greater percentage of sales in the second quarter. The improvement reflect several actions; staffing reductions in our plants, improvements in product mix and price increases all which more than offset the pressure of commodity cost inflation. Selling, general and administrative expenses declined by a total of $7.5 million from first quarter level including $2 million in G&A while some of the decrease is associated with sales levels, it also reflects reductions in staffing and discretionary spending in our stores and our home office.

In addition, our store count declined from 481 stores at the end of first quarter to 478 stores at the end of Q2. We plan to close an incremental ten stores for a total of 25 store closures during the year. We now expect 477 stores at year end versus our original plan of 493 stores. We continue to evaluate margin opportunities and are making further improvements to productivity and discretionary spending as Bill outlined.

On the balance sheet, we made progress with our cash flexibility and working capital management. Despite difficult economic conditions and challenging sales trends, we have maintained positive operating cash flows for the first six months of the year covering the lowest seasonal sales period. We have significantly reduced inventory levels by $12 million since the beginning of 2008 and $5 million in the end of the first quarter. We also have renegotiated the terms of our credit agreement and a difficult banking environment. We worked with our bank partners to structure our dead covenants to reflect current economic conditions.

Our priority for the balance of the year is to return to profitability. We are assuming no improvement in macro trends but do expect historical quarterly seasonal sales comparisons to whole. As noted in our release, second quarter sales historically are 10% to 15% lower than other quarters. We are focused on what we can control-our cost structure and working capital. We have now reduced the cost and offset inflationary pressures by approximately $50 million on an annual basis and continue to look for opportunities to further adjust.

I would now like to turn it back to Bill for some final comments.

Bill McLaughlin

Let me just summarize by emphasizing that we believe we have stabilized the business and are now single mindedly focused on returning the Company to profitability in the second half. We will continue to benefit from actions we took in the first quarter along with the additional initiatives we have recently identified to further stabilize the business and support our unique brand. Thank you for joining us today and Matt, I would now like to now open the floor to questions.

Question-and-Answer Session

Operator

(Operator’s instruction) Our first question comes from Budd Bugatch of Raymond James.

Budd Bugatch – Raymond James

I am glad to see some of the improvement you have demonstrated in this quarter and some of the cost savings that you have done. So, hope that continues and hopefully the year unfolds better. If you would just address for me a little bit on the comps, if I look at the 2-year and 3-year stock comp rate for the retail segment, it seems to me that you are running pretty much similar at the two year rate right now when you or even with the additional media spend, do you see that improving as you go forward in the third and fourth quarter? Can you give us any feel about that?

Bill McLaughlin

Well, as you know we do not provide guidance overall but I think that we as we said earlier we expect that we are going to see the normal, we are planning for the normal type of seasonality which would give a different outlook on the 2-year comp versus what we have experienced recently and I do not think we have any reason to believe that we should not see that seasonality at this point.

Budd Bugatch – Raymond James

So, you think it will be a slightly better than where we have been running for the first six months of the year which is relatively similar either two or three year.

Bill McLaughlin

If you are looking at it on a 2-year comp basis, yes.

Budd Bugatch – Raymond James

Right and did the quarter unfold any differently to give you that kind of? Did you have momentum coming in to the middle or in the beginning of the third quarter that gives you some comfort that it is correct?

Bill McLaughlin

I think as we said in the comments, there has been a fair amount of movement both directions without a lot of consistency throughout the quarter with but no specific trend that I would point to that does in the Q3 that is going to be any different in what we have seen in Q2.

Budd Bugatch – Raymond James

You talked a little bit, Bill I think about increased enhanced efficiency with the advertising, could you maybe put some middle nose bones and give us some idea without going into maybe a competitive issue so what you should might be thinking in that range, is it a different campaign or is it more promotionally based in terms of pricing or how should we think about that?

Bill McLaughlin

Budd, when I talked about the efficiency adjustments that we are going to make in the third quarter, it was really more about the national versus regional or local emphasis of the media plan and the second quarter we had a fairly heavy component of the media plan that was more locally oriented around our highest growth potential markets and what we have showed, what we proved ourselves is that we can influence the business but that local spending premium was such that we think there is a better way to do it by allocating more of our weight on a national basis so I when I talked about efficiency that is really what I was implying and going forward, we will continue to evolve the Sleep Number campaign emphasizing the personalized comfort. The SHeDaisy spot was always a single spot within that Sleep Number campaign and our intent is to continue to develop around personalized comfort but making it even more relevant for the consumer in the marketplace today.

Budd Bugatch – Raymond James

So the mix will gravitate more to a national even in the face of well, it is going to be obviously a cluttered advertising challenge or until early part of November.

Bill McLaughlin

We have the flexibility within our media plans to move it around between particularly with prints and radio to achieve what we want to achieve on a reach basis.

Budd Bugatch – Raymond James

Okay and my last question and I will let others have it, is can you give us a feel of gross margin at retail in the quarter year over year and how that faired. I know that you said 60% overall margin for the rest of the year and I take it that is in each quarter or there should be some difference I guess quarter by quarter but how did retail versus margins fair year over year and what do you see for that?

Bill McLaughlin

I think the retail gross margins improved on a similar basis on a year-over-year basis actually it is a little bit better than what the overall margin is so, we are in that kind of low 60s to 62 kind of plus range from our Company owned channels and that is similar improvement to what in business..

Operator

Our next question comes from Anthony Gikas of Piper Jaffray.

Anthony Gikas – Piper Jaffray

Few questions, historically category sales, declines in category sales have been relatively short lived, is there any reason to think that this industry downturn could be prolonged? What is perhaps different this time around and recognize maybe the housing market is worse than previous downturns that we have seen? Second question, how about consumers? Do you see them trading down or are they holding off on purchases, some other higher-end mattress manufactures have indicated it, consumers are holding off and not necessarily trading down continue to have interest in that and how about sales trends during the first few weeks of July? Have they showed any improvement to the quarter? And then I have one follow up.

Bill McLaughlin

All somewhat difficult questions to answer for different reasons. In terms of commenting on the decline as the category and how long we would anticipate it, as I said I do not think anybody has had a real crystal ball in how to project and it is really tied to consumer confidence and I think what we are doing is influencing what we can influence and I think from a Select Comfort standpoint, our share as to category is still so low that our focus is on presenting our product benefits and how they are relevant to people today and the value of our product today.

From a consumer holding off and I think the second part of the question was are they trading down as Jim indicated in his comments, our average selling price actually increased during the quarter and so we are seeing a continued solid mix. Our issue is total overall units and to the degree that there are people not entering the market possibly holding off. I do not have a way to comment really on whether they are holding off or not.

Anthony Gikas – Piper Jaffray

You do not have that kind of a measure?

Bill McLaughlin

In terms of sales trends within the quarter, we just do not talk about that by rule.

Anthony Gikas – Piper Jaffray

Okay.

Bill McLaughlin

One thing I would add, Tony is that I think is you are aware on your first question, I think it is difficult to predict how long it last. I think we feel we are just in pretty well positioned for when it does turnaround and as you are probably aware when historically within the industry when the industry returns and consumers start buying, there is a lot of head up demands so we are just trying to make sure we are best positioned for when that happens.

Anthony Gikas – Piper Jaffray

Okay and then my last question with the evaluation coming in to where it has over the course of the last year, do you have any interested buyers? Anyone knocking on the door at this point?

Jim Raabe

We cannot comment on any type of speculation on that at this time.

Operator

Our next question comes from Joel Havard of Hilliard Lyons.

Joel Havard – Hilliard Lyons

Jim, I do not know if this one would be for you but could you give us a little tutorial on how your relationship with UPS is shaking out given the fuel price environment?

Jim Raabe

Well, I think our relationship is good. We have always been, they have been a very strong supplier for us and one in which we have got a very committed relationship with and a number of recent pacts in particular in fact it is door to door but I think the relationship is as strong as it ever has been. They obviously have pressures from fuel that are very directly impacting their business and that is a pressure that we discussed with them and that we worked with them on the pricing side.

Joel Havard – Hilliard Lyons

That is really the heart of my question, are you all set up? And I am sorry I do not know this offhand already but are you all set up on sort of let us call the contract that covers certain volumes at certain prices for a certain length timers or is this more flexible in nature which could go either way I understand.

Jim Raabe

We do have a contract that is set up but I think that there are surcharges available to them when they are increases like we are seeing in the fuel environment.

Joel Havard – Hilliard Lyons

Was that a big problem in Q2?

Jim Raabe

I would say any more so than with the indicative of just what is going with the oil prices overall.

Operator

Our next question comes from Mark Rupe of Longbow Research.

Mark Rupe – Longbow Research

You mentioned the accessories business and I believe 10% of the second quarter. You said it was I believe you said it was on a ramp to 15% in the fourth quarter. I am just curious to see how that related to previous fourth quarters and I know that, I believe it is a little margin segment for you. I am just curious to see if that is building the kind of a 60% gross margin assumption.

Bill McLaughlin

It is about 2 to 5 points higher than historic and you are right with historically the gross margin has been a bit less. The total contribution margin has been about equal but we are doing some pretty good work on improving the gross margin at that line as well so I guess it has been incorporated in our forecast.

Mark Rupe – Longbow Research

Okay and then on the September new mattress model introduction, can you provide any kind of information on that?

Bill McLaughlin

I cannot provide much more than that it is in the premium or the upper price blank segment of our line.

Mark Rupe – Longbow Research

So that it is still in the seven and the nine?

Bill McLaughlin

In that area, yes.

Operator

Our next question comes from Bob Evans of Craig-Hallum Capital.

Robert Evans – Craig-Hallum Capital

Can you talk a little bit more about what we should think about for free cash flow trends second half and for the year?

Jim Raabe

Well, roughly getting back to profitability in the second half obviously gets us to a positive EBITDA situation because we will see non-cash comp and depreciation. We are going to run in the range of $30 million plus with non-cash charges so getting it back to profitability in the back half obviously gets us pretty positive there and as we have mentioned, we get about $30 million plan for CapEx, it was $20 million that we spent for staff so we got about $10 million left for the balance of the year.

From working capital standpoint, there could be some fluctuations that I would expect that roughly we are going to be slightly positive, slightly negative overall from a free cash flow in the back half but we should be pretty close to even assuming to get back to profitability in the second half.

Robert Evans – Craig-Hallum Capital

So, we should not expect a lot on the working capital from a free cash flow standpoint being that more net neutral?

Jim Raabe

Yes, we have done really good work on the receivables and the inventory side of things and in particular on the inventories to get to the back half and the accessory business that we are building, put a little bit of pressure on accessories and then on the inventory side and then similarly on receivables I think. There is a little bit more QVC business in those price of things in the back half of the receivable to go up some as well so we would not expect that improvement that we have seen in the working capital in the first half will continue in the improvement. We just will not build on it.

Robert Evans – Craig-Hallum Capital

Sure and I know it is early but how should we view CapEx for next year? I mean should we, you have had some larger items this year that probably do not recur so what should we think about kind of actually having next year?

Bill McLaughlin

We have not provided the specifics number there but as we are thinking about 2009, certainly our focus is getting to a positive same store growth and until we get to positive same store growth, we are not going to do a lot with stores so that obviously a big piece of our capital. Our SAP will be completed in February and that was a large capital item so minimal CapEx items maybe in that $5 million to $10 million range although that is obviously subject to changes as our planning develops.

Robert Evans – Craig-Hallum Capital

Okay and I know you talked about profitability in the second half but can you give us some sense of how you review the quarter of the second half. Is that in total or do you view both quarters as being profitable or can you give us a little bit of sense of how you view Q3 versus Q4?

Bill McLaughlin

We are really only speaking to the second half from the total standpoint. There is obviously kind of seasonal volatility that occurs just naturally within those two quarters so we will just have to see how the plays out for the quarters.

Robert Evans – Craig-Hallum Capital

Okay and the SHeDaisy marketing campaign, is that something that you are going to continue second half year or is that going to be modified at all? Can you give us some level of how successful or unsuccessful that has been?

Bill McLaughlin

Yes again the SHeDaisy spot was an individual execution within the campaign. The campaign will continue into the second half and for some, there will be continued use of SHeDaisy as it exist but what we are building on is the insight that personalize comfort leads to Better Sleep and that is getting developed and other campaigns as well and other executions within the campaign and that will be ruled out to the second half of the year.

Robert Evans – Craig-Hallum Capital

So, we should expect to see new spots from a radio and TV standpoint?

Bill McLaughlin

The mediums are not yet decided. We are working on the development of the concepts and everything from infomercial to radio and friends. So, you will see continued evolution of the grade to the second half of the year.

Operator

Our next question comes from Steve Denault of Northland Securities.

Steve Denault – Northland Securities

It looks like from a retail standpoint, the price mix was up considerably. I am calculating 8.5% in quarter, it sounds like the 6,000 entry may have considered to that and I think your reference maybe the 3000 or 4000 some of those entry level price points that were not in a lot of transactions at that level, number one, am I calculating correct and number two, can you give a little bit of color in terms of what you think went on where you the traffic that was coming to the store, were you getting a trade up or was there any chance at the store level in the quarter?

Jim Raabe

Yes, I will speak to it a little bit and let Bill add in but as you are looking at relative to the second quarter certainly the 6000 has contributed to the overall mix and creating an opportunity for our sales professionals to address the price point that really was available to the point which I think is really positive for them. In addition, I would not say the 3000 or 4000 they were not seeing transactions. There is more back to the historical mix that we have seen where in the first quarter, it was the heavier mix when we were doing some things from an advertising standpoint to really highlight those price points and that really drove more traffic and more buying to that entry level price points but I think our mix in the second quarter was more normal from a historical standpoint. I think the other piece that I will add to that is certainly part of what is contributing to the ST is I think like to the accessory sales with the incremental sales that we are getting there because as you know that the ASP in a lot of times from more perspective gets measures in total sales by massive units and so you are certainly seeing some improvement from that as well.

Bill McLaughlin

You did a pretty complete job between the 6000 and the change in the promotion schedule and accessories. The only other thing I would add is that we have taken some tactical pricing through the end of last year and right to this year and you are seeing of that reflected in that every selling price increase as well.

Steve Denault – Northland Securities

So, let me ask you, if the price mix at the retailer was up 8.5% that implies that unit volumes were down 28.5% which is a little bit worse than what we have seen coming out of both industry and some other alternative bedding manufacturers. How do you think about that? I mean what, how should one interpret that?

Bill McLaughlin

I am trying to figure out your 28%.

Steve Denault – Northland Securities

Well, when you look at the, you had a 20% comp at the retail level but your average mattress sales per unit was up 8.5% which implies that your price mix, the other component of a comp would be volume so the two in effect net to your comp.

Jim Raabe

Well, I would say the other thing to that that you are looking at is well one of the reasons why the ASP growth was so high is because we did have a wider mix in the last year in the second quarter and some other activities as well so I think there is a number of variables going on there but it is a difficult environment overall and I think we are doing things that we need to do in order to really get the volumes we need to get back to profitability in the second half.

Operator

Our next question comes from Stanley Elliot of Stifel Nicolaus.

Stanley Elliot - Stifel Nicolaus

This must have been answered but are there any sort of covenant issues since the amended agreement that we need to be aware of?

Bill McLaughlin

As we said, as you are aware we have amended the agreements and we believe that the amendment provides the flexibility that we need to operate in the current environment.

Stanley Elliot - Stifel Nicolaus

And when we are looking at interest expense going forward, something similar to what was in the most recent report of the quarter?

Bill McLaughlin

It should be higher going forward because the amendment took affect in the middle of the year and the rates are higher in the new agreement.

Operator

Our last question comes from Robert [Denougher], an individual investor.

Robert [Denougher] – Individual Investor

Yes, my only question for you regarding the RV industry, I am an RVer myself and I bought your mattress 9 years ago and put it in my RV and I noticed that you had a dramatic improvement in the sales in the higher end RVs with Select Comfort beds in there and I was just curious to know whether is that direct sales from you or is to a third party?

Bill McLaughlin

It is sales that we have directly to the RV manufacturers and we have had a lot of success selling into that RV manufacturer business but we do also sell through some RV retailers as well where we sell beds that they can install into an RV as well so it has been a combination of those things.

Robert [Denougher] – Individual Investor

I see, you sell it directly to the RV industry like Camping World.

Bill McLaughlin

Yes, that is right.

Robert [Denougher] – Individual Investor

Are those considered doors with your company or they are just..?

Bill McLaughlin

No, they are not. The only thing that are considered doors are our stores and then we also report we got stores in our retail and doors in our retail partners but the Camping World is not included in the door account or from retail partners.

Robert [Denougher] – Individual Investor

Alright well, congratulations on your improvement in the RV industry. You did a great job. Good luck. Thank you.

Bill McLaughlin

Well that will conclude our call for the second quarter. Thank you all for joining us and we thank you for your support and we look forward to next quarter’s call. Thank you.

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Source: Select Comfort Corporation F2Q08 (Qtr End 06/28/08) Earnings Call Transcript
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