Activist hedge fund Clinton Group Inc. is pushing to unseat Select Comfort Corp. CEO William McLaughlin, in part blaming him for operational missteps that have helped depress its share price. Clinton, a 7.52% shareholder in the Minneapolis mattress company, called for McLaughlin's ouster in a letter to its board, written by Clinton vice chairman Jerry Levin, filed late Monday.
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Levin urged Select Comfort to focus on direct marketing rather than branding, shut underperforming stores, halt store openings, sell or sublease its headquarters, outsource its call center and discontinue spending on a new software system pending an evaluation by a consultant.
Clinton initially called for the aforementioned cost cutting initiatives and marketing changes when it first announced a 5% stake in early March. Levin said Select Comfort has taken "some limited actions" since then, however, "they are not nearly substantial enough to turn around Select Comfort." He also voiced Clinton's disappointment with Select Comfort's rejection of the fund's request for two board seats.
The company has a market cap of about $102 million. Select Comfort shares, which have sunk about 65% since trading around $7 at the beginning of 2008, dropped 4.3% to $2.25 Tuesday. - Michael Rudnick
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Select Comfort management talks about diversity and strength of their employees. In reality, there is no upward communication. Management is arrogant and ignorant. They use fear of termination to prevent thinking out of the box. Their box. Marketing is a dismal failure. But one dares not talk about it or make suggestions. Local marketing in non existent, sales promotions are basically "Secret Sales". Not even a window sign. They depend on list of potential customers. Some who called for info and most others from mall shoppers. Mall traffic has slowed for over a year and will continue to slow. With no local marketing a majority of people have no idea that there even is a local store. However even if there were a large list of potential customers, Select Comfort relies on store telemarketing to get people into the store. That may have worked 20 years ago, but this is a new century. It does not work now.