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Bedding maker stock sleeps with the fishes

March 4, 2013: 11:48 AM ET
Wall Street's Sleep Number keeps getting lower. Shares of Sleep Number maker Select Comfort plunged after warning of weak sales.

Wall Street's Sleep Number keeps getting lower. Shares of Sleep Number maker Select Comfort plunged after warning of weak sales.

Putting cash in your mattress may work for conservative savers who don't trust the stock market or banks. But investing cash in mattress maker stocks? Not so much.

Shares of Select Comfort (SCSS), the company behind the Sleep Number line of beds, plunged more than 15% Monday after warning that sales since February have not been firm (sorry), and that the company will likely miss its first-quarter financial targets.

The company blamed the weakness on what it said were "accelerated changes to its media-buying strategy," and added that it will make changes to keep near-term expenses under control. Select Comfort did not elaborate further in its brief press release.

It looks like investors are not sure if the problems were company specific or a sign that consumers, who may be wary of making big purchases due to the payroll tax hike, are no longer shopping for new beds. Shares of Tempur-Pedic (TPX) were down 3%. But Sealy (ZZ), which Tempur-Pedic announced plans to buy last September, was down less than 1%. Mattress Firm Holding (MFRM) fell about 2%.

Nonetheless, several traders on StockTwits thought it was time to say good night to Select Comfort stock for awhile.

$SCSS Wow. Dont like the sound of that warning. Short term pain ahead.

answer to my posting about Select Comfort a month ago: bed bugs $SCSS

Ouch. I went back and looked at what researchpuzzler posted a month ago about the stock. The question was "a sleep with beautiful dreams or bed bugs?"

$SCSS Another hard knock. Basically a 1st quarter warning. Not good, pounding due today.

It is hard to get excited about Select Comfort stock right now, especially since the warning follows a disappointing outlook the company gave back in late January. But one trader felt that the damage could spread to other bedding companies. If the economy is on less solid footing, sales for Select Comfort competitors could take a hit as well.

Bed manufacturers highly cyclical $SCSS $TPX

That may be true. But so far, investors seem to be treating Select Comfort's woes as something unique to it. Tempur-Pedic's stock is up nearly 25% this year.

Shares of Leggett & Platt (LEG), a diversified manufacturer that has a unit which makes adjustable beds and bed frames, are up 13%. And according to several stories in trade newspaper Furniture Today, privately held mattress company Serta has been doing well lately too.

So sleep enthusiasts may be able to keep counting sheep ... and profits ... for most mattress makers. Only short sellers are getting a good night's rest with Select Comfort though.

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Paul R. La Monica
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Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

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