UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


                  For the Quarterly Period Ended March 30, 2002


                           COMMISSION FILE NO. 0-25121


                              --------------------


                           SELECT COMFORT CORPORATION
             (Exact name of registrant as specified in its charter)


                MINNESOTA                                       41-1597886
     (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                         Identification No.)

         6105 TRENTON LANE NORTH
         MINNEAPOLIS, MINNESOTA                                    55442
(Address of principal executive offices)                        (Zip code)

       Registrant's telephone number, including area code: (763) 551-7000



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES [X] NO [ ]


As of March 30, 2002,  18,449,096  shares of Common Stock of the Registrant were
outstanding.




                           SELECT COMFORT CORPORATION
                                AND SUBSIDIARIES



                                      INDEX


                                                                        Page No.
                                                                        --------

PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheets
         March 30, 2002 and December 29, 2001................................  3

         Consolidated Statements of Operations
         for the Three Months ended
         March 30, 2002 and March 31, 2001...................................  4

         Consolidated Statements of Cash Flows
         for the Three Months ended March 30, 2002
         and March 31, 2001..................................................  5

         Notes to Consolidated Financial Statements..........................  6

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations.......................  8

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.......... 11

PART II: OTHER INFORMATION

Item 1.    Legal Proceedings................................................. 12

Item 2.    Changes in Securities and Use of Proceeds......................... 12

Item 3.    Defaults Upon Senior Securities................................... 12

Item 4.    Submission of Matters to a Vote of Security Holders............... 12

Item 5.    Other Information................................................. 12

Item 6.    Exhibits and Reports on Form 8-K.................................. 13





PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                   SELECT COMFORT CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


                                                                    (UNAUDITED)
                                                                     MARCH 30,     DECEMBER 29,
                                                                       2002           2001
                                                                   -------------  -------------
                                                                               
                              ASSETS
 Current assets:
    Cash and cash equivalents                                         $ 20,086       $ 16,375
    Marketable securities                                                5,557              -
    Accounts receivable, net of allowance for doubtful
      accounts of $343, and $311, respectively                           1,059          2,623
    Inventories (note 2)                                                 8,889          8,086
    Prepaid expenses                                                     3,732          3,588
                                                                   -------------  -------------
        Total current assets                                            39,323         30,672

 Property and equipment, net                                            30,033         30,882
 Other assets                                                            5,831          5,882
                                                                   -------------  -------------
        Total assets                                                  $ 75,187       $ 67,436
                                                                   =============  =============

               LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
    Current maturities of long-term debt                              $     21       $     28
    Accounts payable                                                    18,589         15,216
    Accruals:
     Sales returns                                                       3,424          3,624
     Compensation and benefits                                           5,897          7,179
     Taxes and withholding                                               2,696          3,032
     Other                                                               7,963          5,332
                                                                   -------------  -------------
        Total current liabilities                                       38,590         34,411

 Long-term debt, less current maturities (note 3)                       17,276         17,109
 Accrued warranty costs                                                  5,085          5,030
 Other liabilities                                                       4,127          4,114
                                                                   -------------  -------------
        Total liabilities                                               65,078         60,664
                                                                   -------------  -------------
 Shareholders' equity:
    Undesignated preferred stock; 5,000,000 shares authorized,
      no shares issued and outstanding                                       -              -
    Common stock, $.01 par value; 95,000,000 shares authorized,
      18,449,096 and 18,302,307 shares issued and outstanding,
      respectively                                                         184            183
    Additional paid-in capital                                          81,779         81,687
    Accumulated deficit                                                (71,854)       (75,098)
                                                                   -------------  -------------
        Total shareholders' equity                                      10,109          6,772
                                                                   -------------  -------------
        Total liabilities and shareholders' equity                    $ 75,187       $ 67,436
                                                                   =============  =============





          See accompanying notes to consolidated financial statements.



                                       3


                   SELECT COMFORT CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


                                                      THREE MONTHS ENDED
                                                 ----------------------------
                                                   MARCH 30,      MARCH 31,
                                                     2002           2001
                                                 -------------  -------------

Net sales                                          $ 81,195       $ 65,456
Cost of sales                                        26,394         23,611
                                                 -------------  -------------
   Gross margin                                      54,801         41,845
                                                 -------------  -------------
Operating expenses:
   Sales and marketing                               44,171         44,174
   General and administrative                         7,209          7,013
   Store closings and asset impairments                  52            346
                                                 -------------  -------------
       Total operating expenses                      51,432         51,533
                                                 -------------  -------------
Operating income (loss)                               3,369         (9,688)
                                                 -------------  -------------
Other income (expense):
   Interest income                                       67             75
   Interest expense                                    (586)           (98)
   Other, net                                            46             (2)
                                                 -------------  -------------
Other income (expense), net                            (473)           (25)
                                                 -------------  -------------
Income (loss) before income taxes                     2,896         (9,713)
Income tax (benefit) expense                           (348)           115
                                                 -------------  -------------
Net income (loss)                                  $  3,244       $ (9,828)
                                                 =============  =============

Net income (loss) per share (note 4) - basic       $   0.18       $  (0.54)
                                                 =============  =============
Weighted average shares - basic                      18,386         18,056
                                                 =============  =============

Net income (loss) per share (note 4) - diluted     $   0.11       $  (0.54)
                                                 =============  =============
Weighted average shares - diluted                    33,059         18,056
                                                 =============  =============



          See accompanying notes to consolidated financial statements.



                                       4


                   SELECT COMFORT CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)



                                                           THREE MONTHS ENDED
                                                        ------------------------
                                                         MARCH 30,    MARCH 31,
                                                           2002         2001
                                                        -----------  -----------

Cash flows from operating activities:
  Net income (loss)                                       $ 3,244      $(9,828)
   Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
    Depreciation and amortization                           2,340        2,484
    Loss on disposal of assets                                 56          347
    Change in operating assets and liabilities:
      Accounts receivable, net                              1,564        1,411
      Inventories                                            (803)       1,382
      Prepaid expenses                                       (144)        (602)
      Other assets                                             42         (120)
      Accounts payable                                      3,373        4,722
      Accrued sales returns                                  (200)        (397)
      Accrued compensation and benefits                    (1,282)         292
      Accrued taxes and withholding                          (336)          24
      Other accrued liabilities                             2,617          225
      Accrued warranty costs                                   69          187
      Other liabilities                                        13          165
                                                        -----------  -----------
       Net cash provided by operating activities           10,553          292
                                                        -----------  -----------
Cash flows from investing activities:
  Purchases of property and equipment                      (1,367)      (1,296)
  (Investment in) sales of marketable securities           (5,557)       3,950
                                                        -----------  -----------
    Net cash (used in) provided by investing activities    (6,924)       2,654
                                                        -----------  -----------
Cash flows from financing activities:
  Principal payments on debt                                  (11)          (9)
  Proceeds from issuance of common stock                       93           97
                                                        -----------  -----------
    Net cash provided by financing activities                  82           88
                                                        -----------  -----------
Increase in cash and cash equivalents                       3,711        3,034
Cash and cash equivalents, at beginning of period          16,375        1,498
                                                        -----------  -----------
Cash and cash equivalents, at end of period               $20,086      $ 4,532
                                                        ===========  ===========




          See accompanying notes to consolidated financial statements.



                                       5


                   SELECT COMFORT CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  BASIS OF FINANCIAL STATEMENT PRESENTATION

The consolidated  financial statements for the three months ended March 30, 2002
of  Select  Comfort  Corporation  and  subsidiaries  ("Select  Comfort"  or  the
"Company"),  have been prepared by the Company,  without audit,  pursuant to the
rules and regulations of the Securities and Exchange  Commission and reflect, in
the opinion of management, all normal recurring adjustments necessary to present
fairly the  financial  position of the Company as of March 30, 2002 and December
29, 2001 and the results of operations and cash flow for the periods presented.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America have been condensed or omitted  pursuant to such
rules and regulations, although management believes the disclosures are adequate
to make the information presented not misleading.  These consolidated  financial
statements  should be read in conjunction with the Company's most recent audited
consolidated  financial  statements  and related notes included in the Company's
Annual  Report to  Shareholders  and its Form  10-K for the  fiscal  year  ended
December 29, 2001.  Operating  results for the Company on a quarterly  basis may
not be indicative of operating results for the full year.

(2)  INVENTORIES

Inventories consist of the following (in thousands):

                                                MARCH 30,     DECEMBER 29,
                                                  2002           2001
                                              -------------  -------------

         Raw materials                              $2,167         $1,824
         Work in progress                              105             26
         Finished goods                              6,617          6,236
                                              -------------  -------------
                                                    $8,889         $8,086
                                              =============  =============

(3)  LONG-TERM DEBT

In June 2001, the Company  issued $11 million in principal  amount of its senior
secured notes (the "Notes") in a private  placement.  The Notes have a five-year
maturity,  bear  interest  at 8% per  annum  payable  annually  in cash  and are
convertible  into shares of the Company's  common stock at the rate of $1.00 per
share. The principal amount of the Notes is subject to automatic conversion into
shares of the Company's  common stock,  at the rate of $1.00 per share of common
stock (i) any time  after June 6, 2002,  provided  that the market  price of the
common stock has equaled or exceeded $4.00 per share for a period of at least 10
out of 20 consecutive  trading days after June 6, 2002 or (ii) in the event that
the  holders of at least 67% of the  outstanding  principal  amount of the Notes
consent to such  conversion.  Upon automatic  conversion,  any unamortized  debt
issuance  costs and debt  discount  will be  written-off  and  classified  as an
extraordinary  item in the Company's  Statement of Operations.  Unamortized debt
issuance  costs and debt  discount  totaled $1.6 million at March 30, 2002.  The
Notes are secured by a lien on  substantially  all of the Company's  assets.  In
addition,  the holders of the Notes  received  warrants to purchase  4.4 million
shares of the  Company's  common stock for $1.00 per share.  The warrants have a
five-year term. The Note conversion price and warrant exercise price are subject
to  standard  anti-dilution  protections.   The  net  proceeds  from  the  Notes
approximated $10.4 million after deduction of placement fees and expenses.

In  September  2001,  the  Company  obtained $5 million of senior  secured  debt
financing (the "Debt"). The Debt has a five-year maturity, bears interest at 12%
per annum  payable  monthly in cash and calls for payment of  interest  only for
years one and two of the term and payment of interest  and  principal  for years
three through five. The Debt is secured by a first lien on substantially  all of
the Company's assets.  In addition,  the holder of the Debt received warrants to
purchase  922,819 shares of the Company's  common stock for $1.02 per share. The
warrants  have a  five-year  term  and are  subject  to  standard  anti-dilution
protections.  The net proceeds  from the Debt  approximated  $4.8 million  after
deducting fees and expenses.





                                       6


                   SELECT COMFORT CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The warrants were valued at $0.6 million and have been recorded as debt discount
to be amortized as interest expense over the 5-year term. The Debt is subject to
certain  financial  covenants  consisting  primarily of achieving minimum EBITDA
levels. The Company was in compliance with the financial  covenants at March 30,
2002.

(4)  NET INCOME (LOSS) PER COMMON SHARE

The  following  computations  reconcile net income (loss) with net income (loss)
per common share-basic and diluted (in thousands, except per share amounts).


                                                       NET                 PER SHARE
           THREE MONTHS ENDED MARCH 30, 2002         INCOME      SHARES      AMOUNT
           ---------------------------------       ----------  ----------  ----------
                                                                     
 Net income                                         $ 3,244

 BASIC EPS
 Net income attributable to common shareholders       3,244      18,386       $0.18
                                                   ----------  ----------  ==========
 EFFECT OF DILUTIVE SECURITIES
   Options                                                -       1,256
   Common stock warrants                                  -       2,417
   Convertible debt                                     309      11,000
                                                   ----------  ----------
 DILUTED EPS
 Net income attributable to common shareholders
  plus assumed conversions                          $ 3,553      33,059       $0.11
                                                   ==========  ==========  ==========



                                                       NET                 PER SHARE
           THREE MONTHS ENDED MARCH 31, 2001          LOSS       SHARES      AMOUNT
           ---------------------------------       ----------  ----------  ----------
                                                                     
 Net loss                                           $(9,828)
                                                   ----------
 BASIC AND DILUTED EPS
 Net loss attributable to common shareholders       $(9,828)     18,056      $(0.54)
                                                   ==========  ==========  ==========


Additional  potentially dilutive securities  oustanding during the periods ended
March 30, 2002, and March 31, 2001, of 3,698 and 5,639, respectively,  have been
excluded from the EPS calculations  because the effect on the calculation  would
have been anti-dulutive.

(5)  LITIGATION

In June of 1999,  the Company and certain of its former  officers and  directors
were named as defendants in a class action lawsuit filed in U.S.  District Court
in Minnesota.  The suit,  filed on behalf of purchasers of the Company's  common
stock  between  December 4, 1998 and June 7, 1999,  alleges that the Company and
the named former  directors  and officers  failed to disclose or  misrepresented
certain  information  concerning the Company in violation of federal  securities
laws. In March of 2000, the same  defendants  were named in another class action
lawsuit asserting factual  allegations  identical to the first suit.  Neither of
the suits  specified  an amount of  damages  claimed.  The U.S.  District  Court
consolidated the two class actions in July of 2000.

In September of 2001, the consolidated  case was certified to proceed as a class
action on behalf of  purchasers  of the  Company's  common stock issued under or
traceable to the Company's initial public offering  prospectus dated December 4,
1998 and purchasers of the Company's  common stock in the open market during the
period from December 4, 1998 through June 7, 1999.

The Company  believes  that the suit is without  merit and intends to vigorously
defend the claims. Discovery has begun.

The  Company is involved  in other  various  claims,  legal  actions,  sales tax
disputes,  and other complaints  arising in the ordinary course of business.  In
the opinion of  management,  any losses that may occur from these other  matters
are  adequately  covered by insurance  or are  provided for in the  consolidated
financial  statements  and the ultimate  outcome of these other matters will not
have a material  effect on the  consolidated  financial  position  or results of
operations of the Company.



                                       7


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE FOLLOWING  DISCUSSION AND ANALYSIS  SHOULD BE READ IN  CONJUNCTION  WITH THE
CONSOLIDATED  FINANCIAL  STATEMENTS AND THE NOTES THERETO INCLUDED HEREIN.  THIS
QUARTERLY  REPORT ON FORM 10-Q CONTAINS  FORWARD-LOOKING  STATEMENTS  WITHIN THE
MEANING  OF THE  PRIVATE  SECURITIES  LITIGATION  REFORM  ACT OF  1995.  YOU CAN
IDENTIFY FORWARD-LOOKING  STATEMENTS BY THOSE THAT ARE NOT HISTORICAL IN NATURE,
PARTICULARLY  THOSE  THAT  USE  TERMINOLOGY  SUCH AS  "MAY,"  "WILL,"  "SHOULD,"
"EXPECTS,"  "ANTICIPATES,"  "CONTEMPLATES,"  "ESTIMATES,"  "BELIEVES,"  "PLANS,"
"PROJECTS,"  "PREDICTS,"  "POTENTIAL"  OR "CONTINUE" OR THE NEGATIVE OF THESE OR
SIMILAR TERMS.  THESE STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND  UNCERTAINTIES
THAT  COULD  CAUSE  ACTUAL  RESULTS  TO  DIFFER  MATERIALLY  FROM THE  COMPANY'S
HISTORICAL  EXPERIENCE AND ITS PRESENT  EXPECTATIONS OR  PROJECTIONS.  IMPORTANT
FACTORS KNOWN TO SELECT COMFORT THAT COULD CAUSE SUCH MATERIAL  DIFFERENCES  ARE
IDENTIFIED AND DISCUSSED IN PART I, ITEM 1 OF OUR ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 29, 2001, WHICH DISCUSSION IS INCORPORATED HEREIN
BY REFERENCE. THESE IMPORTANT FACTORS INCLUDE:

o    GENERAL AND INDUSTRY ECONOMIC TRENDS,
o    CONSUMER CONFIDENCE,
o    THE  EFFECTIVENESS  AND  EFFICIENCY  OF  OUR  ADVERTISING  AND  PROMOTIONAL
     EFFORTS,
o    CONSUMER ACCEPTANCE OF OUR PRODUCTS AND SLEEP TECHNOLOGY,
o    INDUSTRY COMPETITION,
o    OUR DEPENDENCE ON SIGNIFICANT  SUPPLIERS,  INCLUDING  UNITED PARCEL SERVICE
     (UPS) FOR DELIVERY OF OUR SLEEP  SYSTEMS AND CONSECO  FINANCE FOR EXTENSION
     OF  CONSUMER  CREDIT,  AND  THE  VULNERABILITY  OF ANY  SUCH  SUPPLIERS  TO
     RECESSIONARY  PRESSURES,  LABOR  NEGOTIATIONS,  LIQUIDITY CONCERNS OR OTHER
     FACTORS,
o    THE  POTENTIAL  DILUTION  FROM  THE  ISSUANCE  OF  ADDITIONAL  SHARES  FROM
     FINANCINGS COMPLETED IN 2001,
o    OUR ABILITY TO MAINTAIN COMPLIANCE WITH LISTING REQUIREMENTS OF NASDAQ, AND
o    RISKS AND UNCERTAINTIES DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS
     WITH THE SEC,  INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND OTHER
     PERIODIC REPORTS FILED WITH THE SEC.

THE  COMPANY  HAS  NO  OBLIGATION  TO  PUBLICLY  UPDATE  OR  REVISE  ANY  OF THE
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-Q.

OVERVIEW

Select  Comfort(R) is the leading  manufacturer and retailer of premium quality,
innovative adjustable-firmness air-beds and other sleep related products.

We  generate  revenue  by  selling  our  products  through  four   complementary
distribution  channels.  Three of these channels,  retail,  direct marketing and
e-commerce,  are  Company-owned  and  sell  directly  to  consumers,  while  our
wholesale  channel  sells to leading  furniture  retailers  and the QVC shopping
channel.  Sales directly to consumers through  Company-owned  channels generally
generate higher gross margins than sales through our wholesale  channels because
we capture both the manufacturer and retailer margins.  We record revenue at the
time product is shipped to the customer,  except when  mattresses  are delivered
and set up by our home delivery employees,  in which case revenue is recorded at
the time the  mattress is delivered  and set up in the home.  We reduce sales at
the time revenue is recognized for estimated returns.

The  proportion  of our total net sales,  by dollar  volume,  from each of these
channels is summarized as follows:

                                      Three Months Ended
                                     --------------------
                                      3/30/02    3/31/01
                                     ---------  ---------
       Stores                           75%        81%
       Direct Call Center               15%        14%
       E-commerce                        4%         3%
       Wholesale                         6%         2%



                                       8


Our Company-owned retail store locations are summarized as follows:

                                      Three Months Ended
                                     --------------------
                                      3/30/02    3/31/01
                                     ---------  ---------
       Beginning of period               328        333
       Opened                              1          2
       Closed                             (5)        (9)
                                     ---------  ---------
       End of period                     324        326
                                     =========  =========

Company-owned stores include leased space within 20 Bed, Bath & Beyond stores as
of March 30, 2002 and 24 at March 31,  2001.  We  anticipate  that the number of
stores  open will not  change  significantly  in 2002.  Comparable  store  sales
increased  (decreased) by 15.1% and (6.5)% in March 30, 2002 and March 31, 2001,
respectively.

In 2002 our goal is to deliver profitable  results and continued growth,  driven
by the following four strategic priorities:

o    BUILDING CONSUMER AWARENESS - we plan to continue to build awareness of our
     Sleep  Number(R)  brand  by  expanding  advertising  by  10-15%,  including
     increases  in national  advertising  and the number of stores  supported by
     local TV and radio.
o    EXPANDING  PROFITABLE  DISTRIBUTION  - we plan to  continue  to improve and
     expand  our  distribution  with  planned  store  remodels  and  identifying
     selective  new store  openings at the end of 2002 and early  2003.  We will
     also expand our wholesale  distribution  with new  distribution  through 40
     Sleep Train stores beginning in second quarter of 2002 and will continue to
     evaluate the addition of wholesale partners.
o    IMPROVING PRODUCT QUALITY, INNOVATION AND SERVICE LEVELS - we will continue
     to improve our core products,  upgrading  three of four mattress models and
     adding sleep related  products,  including  adjustable  frames and expanded
     accessory offerings.
o    RIGHTSIZING  OUR  COST  STRUCTURE  - we will  continue  to  apply  the cost
     disciplines  employed during our turnaround - looking to improve  operating
     margins  by  identifying  additional  cost  savings  and  maintaining  cost
     increases below sales growth rates.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the Company's results
of operations expressed as percentages of net sales.  Percentage amounts may not
total due to rounding.

                                                      THREE MONTHS ENDED
                                                 ----------------------------
                                                    MARCH 30,      MARCH 31,
                                                      2002           2001
                                                 -------------  -------------
      Net sales                                      100.0%         100.0%
      Cost of sales                                   32.5           36.1
                                                 -------------  -------------
         Gross margin                                 67.5           63.9
                                                 -------------  -------------
      Operating expenses:
         Sales and marketing                          54.4           67.5
         General and administrative                    8.9           10.7
         Store closings and asset impairments          0.1            0.5
                                                 -------------  -------------
             Total operating expenses                 63.3           78.7
                                                 -------------  -------------
      Operating income (loss)                          4.1          (14.8)
      Other income (expense), net                     (0.6)           0.0
                                                 -------------  -------------
      Income (loss) before income taxes                3.6          (14.8)
      Income tax expense (benefit)                    (0.4)           0.2
                                                 -------------  -------------
      Net income (loss)                                4.0%         (15.0)%
                                                 =============  =============



                                       9


COMPARISON  OF THREE  MONTHS  ENDED MARCH 30, 2002 WITH THREE MONTHS ENDED MARCH
31, 2001

Operating  income for the first quarter 2002 totaled $3.4 million compared to an
operating loss of $9.9 million for the first quarter of 2001. The improvement in
profitability is a direct result of 24% higher sales and successful execution of
cost restructuring efforts.

NET SALES
Net sales  increased 24.0% to $81.2 million for the three months ended March 30,
2002 from $65.5  million for the three months  ended March 31,  2001,  due to an
increase in mattress unit sales and higher average selling prices.  The increase
in net sales by sales channel was attributable to (i) a $7.8 million increase in
sales from  Company-owned  retail  stores,  including an increase in  comparable
store sales of $7.7 million,  (ii) a $3.1 million  increase in direct  marketing
sales,  (iii) a $1.3 million increase in sales through the Company's  e-commerce
channel and (iv) a $3.5 million  increase in sales from the Company's  wholesale
channel.

GROSS MARGIN
Gross  margin  increased to 67.5% for the three months ended March 30, 2002 from
63.9% for the three  months ended March 31,  2001,  primarily  due to lower cost
promotional  offerings and  reductions in  manufacturing  costs  resulting  from
improved quality,  greater  manufacturing  leverage,  reduced warranty costs and
savings in processing returned product.

SALES AND MARKETING
Sales and marketing  expenses  remained  constant at $44.2 million for the three
months ended March 30, 2002 and March 31, 2001, but decreased as a percentage of
net sales to 54.4% from 67.5% for the comparable prior-year period. The decrease
as a percentage of net sales was  attributable  primarily to greater leverage in
media, media production and other marketing expenses.  In the first quarter 2001
we introduced the Sleep Number ad campaign, launching initial markets with heavy
advertising spending, and developed the creative material to support the ongoing
campaign.  In addition,  fixed selling  expenses have been reduced and leveraged
across a higher sales base.

GENERAL AND ADMINISTRATIVE
General and  administrative  expenses were held  relatively flat at $7.2 million
for the three  months  ended March 30,  2002  versus $7.0  million for the three
months ended March 31, 2001,  and decreased as a percentage of net sales to 8.9%
from 10.7% for the prior year period. The decrease in general and administrative
expenses as a percentage of net sales was due to higher net sales levels.

STORE CLOSINGS AND ASSET IMPAIRMENTS
Store closing and asset impairment expense decreased $294,000 to $52,000 for the
three months ended March 30, 2002 from $346,000 for the three months ended March
31, 2001. In 2002, this expense related entirely to store closures. In 2001, the
expense included $8,000 related to store closures and $338,000 related primarily
to the  write-off  of unusable  fixtures for  merchandising  of our sleeper sofa
products and for unusable leased space.

OTHER INCOME (EXPENSE), NET
Other expense increased $448,000 to approximately  $473,000 for the three months
ended March 30, 2002 from $25,000 for the three months ended March 31, 2001. The
increase is primarily due to interest expense from long-term debt.

INCOME TAX (BENEFIT) EXPENSE
Income tax (benefit)  expense changed  $463,000 to a $348,000 income tax benefit
for the three months ended March 30, 2002 from a $115,000 income tax expense for
the three  months  ended  March 31,  2002 due to a federal tax law change in the
first quarter of 2002 allowing for additional  carryback  periods which resulted
in recognizing an income tax benefit during the quarter.

LIQUIDITY AND CAPITAL RESOURCES

Historically,  our  primary  source  of  liquidity  has been the sale of  equity
securities.  Our most recent  source of capital has been from the  completion of
our $11.0 million convertible debt offering in June 2001 and $5.0 million senior
secured  term debt  financing  completed  in September  2001.  In  addition,  we
generated  cash from  operations  for the full year in 2001 and during the first
quarter of 2002.  Substantially  all of our assets are pledged as collateral for
these  debt  offerings  and the  Company  presently  has little or no ability to
obtain additional debt financing. Barring any unexpected significant external or
internal  developments,  we  expect  current  cash  balances  on hand  and  cash
generated from  operations to be sufficient to meet our liquidity  needs for the
foreseeable future.



                                       10


Net cash provided by operating  activities  for the three months ended March 30,
2002 was approximately  $10.6 million and consisted  primarily of the net income
adjusted for non-cash expenses,  decreases in accounts  receivable and increases
in accounts payable and other accrued liabilities, partially offset by decreases
in accrued compensation and benefits and increases in inventories.  The decrease
in our accounts  receivable  and increase in accounts  payable and  inventory is
primarily  a  function  of the timing and size of QVC  shows.  The  decrease  in
accrued compensation is a result of annual incentive  compensation payments made
during the  quarter.  Net cash  provided by operating  activities  for the three
months  ended  March 31,  2001 was  approximately  $0.3  million  and  consisted
primarily of the net loss adjusted for non-cash  expenses,  partially  offset by
increases  in  accounts  payable  and  decreases  in  accounts   receivable  and
inventories.  The increase in accounts  payable  related  primarily to increased
advertising during the first quarter of 2001.  Decreases in accounts  receivable
related to the timing of customer shipments at the end of the quarter. Decreases
in inventory balances were a result of specific  initiatives to reduce inventory
balances at our manufacturing locations.

Net cash used in investing  activities  was  approximately  $6.9 million for the
three months ended March 30, 2002. Net cash provided by investing activities was
$2.7 million for the three months  ended March 31,  2001.  Investing  activities
consisted primarily of purchases of property and equipment for new retail stores
and information  technology system  development  costs. In 2002 we invested $5.6
million of cash in short-term marketable securities, while in 2001 we liquidated
$4.0 million of marketable securities to support continuing operations.

Net cash  provided by financing  activities  was  approximately  $82,000 for the
three  months  ended March 30, 2002 and $88,000 for the three months ended March
31, 2001 and consisted  primarily of proceeds from the issuance of common stock,
net of debt repayments.

At March 30, 2002, we had net operating loss carryforwards  ("NOLs") for federal
income tax purposes of  approximately  $37.9 million  expiring between the years
2003 and 2022. We have not recorded any value in our Consolidated  Balance Sheet
for the potential future benefit of these NOLs.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's debt  obligations at March 30, 2002, of $11 million and $5 million
carry fixed interest  rates of 8% and 12%,  respectively.  As these  instruments
bear interest at fixed rates over the life of the instruments,  the Company does
not believe it has significant exposure to interest rate risk.

Other   financial   instruments   that   potentially   subject  the  Company  to
concentrations   of  credit  risk  consist   principally  of  investments.   The
counterparties  to the  agreements  consist of  government  agencies and various
major  corporations of high credit standing.  The Company does not believe there
is  significant  risk of  non-performance  by these  counterparties  because the
Company  limits the amount of credit  exposure to any one financial  institution
and any one type of investment.



                                       11


PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In June of 1999,  the Company and certain of its former  officers and  directors
were named as defendants in a class action lawsuit filed in U.S.  District Court
in Minnesota.  The suit,  filed on behalf of purchasers of the Company's  common
stock  between  December 4, 1998 and June 7, 1999,  alleges that the Company and
the named former  directors  and officers  failed to disclose or  misrepresented
certain  information  concerning the Company in violation of federal  securities
laws. In March of 2000, the same  defendants  were named in another class action
lawsuit asserting factual  allegations  identical to the first suit.  Neither of
the suits  specified  an amount of  damages  claimed.  The U.S.  District  Court
consolidated the two class actions in July of 2000.

In September of 2001, the consolidated  case was certified to proceed as a class
action on behalf of  purchasers  of the  Company's  common stock issued under or
traceable to the Company's initial public offering  prospectus dated December 4,
1998 and purchasers of the Company's  common stock in the open market during the
period from December 4, 1998 through June 7, 1999.

The Company  believes  that the suit is without  merit and intends to vigorously
defend the claims. Discovery has begun.

The  Company is involved  in other  various  claims,  legal  actions,  sales tax
disputes,  and other complaints  arising in the ordinary course of business.  In
the opinion of  management,  any losses that may occur from these other  matters
are  adequately  covered by insurance  or are  provided for in the  consolidated
financial  statements  and the ultimate  outcome of these other matters will not
have a material  effect on the  consolidated  financial  position  or results of
operations of the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

ITEM 5.  OTHER INFORMATION

         Not applicable.



                                       12


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits.
               --------

               Exhibit
               Number        Description
               -------       -----------
                10.1         Employment Letter Agreement dated February 1, 2002
                             between the Company and Keith C. Spurgeon.

         (b)   Reports on Form 8-K
               -------------------
               During the quarter ended March 30, 2002, the Company filed one
               Current Report on  Form  8-K.  The Report consisted  of the
               following:

               (i) Current Report filed February 5, 2002, announcing fourth
                   quarter and year-end results for December 29, 2001.





                                       13


                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    SELECT COMFORT CORPORATION



                                    /s/ William R. McLaughlin
                                    -------------------------------------------
May 14, 2002                        William R. McLaughlin
                                    President and Chief Executive Officer
                                    (principal executive officer)




                                    /s/ James C. Raabe
                                    -------------------------------------------
                                    James C. Raabe
                                    Chief Financial Officer
                                    (principal financial and accounting officer)




                                       14


                                  EXHIBIT INDEX

   Exhibit Number                 Description                       Location
   --------------                 -----------                       --------
        10.1          Employment Letter Agreement dated
                      February 1, 2002 between the
                      Company and Keith C. Spurgeon...........   Filed herewith.





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