The sleepless nights continue at bedmaker Select Comfort Corp., where shares dropped 22 percent Monday after a news report on KSTP-TV, Channel 5, featured several unhappy customers with moldy mattresses.
 
It was the second steep stock decline in three weeks for the maker of the Sleep Number adjustable bed. On July 12, the company's stock fell 26 percent after it cited worries about softening second-quarter sales and revised its 2004 earnings guidance downward.

Shares closed at $15.91, down $4.52 a share, Monday on heavy volume as more than 5.1 million shares traded hands. Company officials said Monday's decline "is obviously" related to the KSTP report, which aired Sunday night, showing mold on the internal foam pad that's on top of the air chambers.
 
Select Comfort General Counsel Mark Kimball called the report unfair, noting that the company uses only anti-microbial foams in its products just as every other mattress maker does. And of the millions of Select Comfort beds sold over 16 years, "very few customers" have complained about mold. He said in an interview that he did not know the exact number of complaints.
 
However, he said some customers calling the company's help line at 1-800-472-7185 were advised to wash the inside foam pad with a bleach solution. For other customers, the company simply replaced the bed, he said. "We have always maintained high levels of customer satisfaction. We encourage them to contact us. Consumers that purchase our bed do get answers and solutions." The company's Web site is at www.selectcomfort.com.
 
Kimball stressed that the mold and mildew found in the beds were "common household variety" strains that are not unique to Select Comfort.
 
"The fact is that mold is potentially present in all different types of bedding products, including pillows and mattresses. It is not unique to Select Comfort. What is unique is the way our [mattress cover] is designed to be ... removable. And that allows consumers to open the product up and see if mold happens to be present and for it to be remedied. With other mattresses, if mold is present you would not be aware of it or be able to do anything about it."
 
Pete Bils, a Select Comfort product and sleep specialist, said in an interview Monday that hundreds of customers with allergies are drawn to Sleep Number beds solely because they must be vigilant about molds and mildews. Investors will have an opportunity to address these issues today with CEO Bill McLaughlin during the company's investors' conference.
 
Analysts said privately that they believe the company can weather this storm but must handle the latest problem quickly. The company has performed well in recent quarters. And even with its revised 2004 estimates, it still expects 15 percent earnings growth, analysts noted.
 
Kimball said he did not expect the news story to affect Select Comfort's new contract to provide Radisson hotels with about 90,000 beds.
 
Although Kimball acknowledged that the company must quell consumer and investor concerns, he said the company has not yet decided if it will issue a statement.
 
While no decision has been made, Select Comfort will continue with its "ongoing R&D effort to find the most robust solution to what consumers want and to offer it," Kimball said.
 
Some commercials might be revamped to emphasize the message that Select Comfort products have a look-see-and-act option for mold that is not available with other mattresses.
 
 

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