Select Comfort Cuts Staff, Ceases SAP Implementation

Select Comfort Corp. will cut 120 positions from its payroll as part of a cost-savings initiative. The layoffs, which include customer service as well as general and administrative positions, represent around 22% of the company’s workforce.

The company did not indicate when the layoffs were scheduled to begin, or whether they already had.

Additionally, the company said it would immediately suspend all activities related to implementing SAP-based information technology applications.

Select Comfort anticipates $15 million in annualized savings once all of its actions have taken effect, starting with the first quarter of 2009. The company expects to incur a charge of approximately $35 million in the fourth quarter of 2008, primarily consisting of asset impairments with approximately $4 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,” Bill McLaughlin, president and CEO of Select Comfort Corp. said in a statement.

McLaughlin continued “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.”

The company had previously announced plans to close approximately 20 stores during the first quarter of 2009. Select Comfort created and sells the Sleep Number bed.