• Bassett Announces Fiscal Third Quarter Results

    Source: Nasdaq GlobeNewswire / 28 Sep 2023 09:00:01   America/New_York

    BASSETT, Va., Sept. 28, 2023 (GLOBE NEWSWIRE) -- Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today its results of operations for its third quarter ended August 26, 2023.

    Fiscal 2023 Third Quarter Highlights
    (Dollars in millions)

     

     Sales Operating Income (Loss)
     3rd Qtr Dollar% 3rd Qtr% of 3rd Qtr% of
     20232022 ChangeChange2023
    		Sales 2022
    		Sales
    Consolidated(1)$87.2$118.0 $(30.8)-26.1% $(3.8)-4.4% $10.7 9.1%
                
    Wholesale$56.7$79.0 $(22.3)-28.2% $6.3 11.1% $10.0 12.7%
                
    Retail$52.3$70.9 $(18.6)-26.2% $(3.0)-5.7% $3.9 5.5%
                
    Corporate & Other(2)$1.8$- $1.8 100.0% $(7.4)N/A $(7.8)N/A
                
    (1) Our consolidated results include certain intercompany eliminations. See Table 4, “Segment Information” below for an illustration of the effects of these items on our consolidated sales and operating income.
                
    (2) Corporate and Other includes the operations of Noa Home Inc. for 2023 along with the shared Corporate costs that are benefiting both the Wholesale and Retail segments. This represents a change in our segment presentation from prior year periods. Previously, those shared Corporate costs had been included in the Wholesale segment and the operations of Noa Home Inc. were included in the Retail segment. Prior period results have been restated to conform to the current presentation.

    Writing new business, both at wholesale and retail, proved very difficult in the twelve weeks between Memorial Day and the start of our Labor Day promotion in late August. Although we continue to see increased business around the important holiday events, day-to-day store traffic and wholesale order writing between the big events remain very challenging. We first began to see signs of a slowdown in the third quarter of 2022 and this year’s period represented another 4.6% decline in wholesale orders. Despite this softness, we continue to maintain a strong balance sheet while executing on the elements of our growth plans with the expectation of returning to profitability.

    Wholesale margins of 11.2% were comparable to our second quarter margins despite an 8.5% sequential decline in wholesale revenue. Once again, we wrote down the value of certain slow-moving styles of our Club Level imported motion line, this time to the tune of $800 thousand. Recall that our Club Level inventory peaked at $22 million at the end of August 2022. At the most recent August close, our inventory was slightly over $11 million, or some 49% less than last year. Recognizing that we have some $6 million of excess and discontinued inventory, we still have several good selling styles in the Club Level line which produce good margins. Ultimately, we believe that $5 to $6 million of inventory will be sufficient to support this strategically important assortment.

    A counter-balance to this situation is the steady performance of our domestic upholstery team that was able to improve margins over last year while dealing with a 31% decline in shipments. Their ability to drive efficiency and manage costs in such a demanding environment is impressive. Imported wood margins declined compared to last year but improved sequentially as compared to the second quarter on reduced shipments. The pandemic-related freight costs imbedded in our oldest import wood inventory is beginning to burn off, a trend which should accelerate and result in margin expansion in the coming months. Work schedules in our two domestic wood plants improved as the quarter wore on and continued on that path in the first weeks of the current quarter. It is hard to see the positive in a quarter where wholesale shipments declined by 28%, but we do have several trends that point to better results moving ahead.

    Our retail results for the quarter constituted the primary basis for the Company’s overall operating loss. Things have changed dramatically from 2022, our best retail year ever. In short, for the period, we did not generate enough retail revenue to break even. Actually, retail gross margins were comparable to prior year amidst a 26% decline in sales, but we were unable to reduce our fixed and variable SG&A costs enough to maintain profitability with the reported level of sales. In the five weeks prior to this writing (which include the first four weeks of Q4), average weekly sales have improved markedly, but were aided by the expected Labor Day boost and by several new product introductions that coincided with the promotion. Although we cannot predict the longevity or the depth of the furniture industry’s current slump, we are once again focused on the disciplines of margin improvement, customer service, digital outreach, and store upgrades as we head toward 2024. Over the next four months, we also look forward to opening two new stores and re-opening an existing location that has been closed for remodeling.

    August 10th marked the debut of our new bassettfurniture.com website. The project was three years in the making and included the complete re-architecture of our product data, which now serves as the foundation of the new platform. We believe that, over time, we will improve site traffic and enhance both e-commerce and store conversions as a result of this investment. We are already seeing that engagement has improved as consumers are spending more time on the new site with each visit compared to previous metrics with our old platform. The launch of the new website coincided with the mailing of our fall catalog and the styling of the merchandise and its corresponding imagery represents a fresh new style direction for Bassett and the sell-through of the new items is off to a good start.

    We have now completed our first year of Noa Home ownership and we continue to use their perspective to provide insight for Bassett’s e-commerce journey and to build the future of the Noa brand. Advertising efficiency has been the recent focus at Noa as they have been able to reduce spending significantly while keeping their web traffic largely intact. A targeted entry into the U.S. market is imminent as is our expansion of their product offerings. Noa management is also evaluating the contributions of their global markets as they strive to further build North American penetration in Canada and the U.S.

    Balancing investment in the business, returns to shareholders, and cash flow planning is particularly important in a tough sales climate. To date in 2023, the Company has returned approximately $8.5 million to shareholders in the form of dividends and share repurchases, including the 12.5% dividend increase, which was approved by our Board of Directors in July. Capital expenditures will likely come in between $17 and $19 million this year. Operating cash flow for the third quarter was $3.8 million. Our capital expenditure plan for 2024 is currently being formulated but will be significantly less than this year’s level of investment. We will continue to evaluate our capital allocation strategy closely as we better understand the implications of the current business landscape.

    Robert H. Spilman, Jr., Chairman and CEO

    About Bassett Furniture Industries, Inc.
    Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer and marketer of high quality home furnishings. With 89 company- and licensee-owned stores at the time of this release, Bassett has leveraged its strong brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. Bassett’s retail strategy includes stylish, custom-built furniture that features the latest on-trend furniture styles, free in-home design visits, and coordinated decorating accessories. Bassett also has a traditional wholesale business with more than 700 accounts on the open market, across the United States and internationally and a logistics business specializing in home furnishings. For more information, visit the Company’s website at bassettfurniture.com. (BSET-E)

    Certain of the statements in this release, particularly those preceded by, followed by or including the words “believes,” “plans,” “expects,” “anticipates,” “intends,” “should,” “estimates,” or similar expressions, or those relating to or anticipating financial results or changes in operations for periods beyond the end of the third fiscal quarter of 2023, constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward-looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause actual results to differ materially from those indicated in the forward looking statements: the effects of national and global economic or other conditions and future events on the retail demand for home furnishings and the ability of Bassett’s customers and consumers to obtain credit; the success of marketing, logistics, retail and other initiatives; and the economic, competitive, governmental and other factors identified in Bassett’s filings with the Securities and Exchange Commission. Any forward-looking statement that Bassett makes speaks only as of the date of such statement, and Bassett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indication of future performance, unless expressed as such, and should only be viewed as historical data.

    Table 1
    BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
    Condensed Consolidated Statements of Operations - unaudited
    (In thousands, except for per share data)
                
                
     Quarter Ended Nine Months Ended
     August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022
      Percent of  Percent of  Percent of  Percent of
     AmountNet Sales AmountNet Sales AmountNet Sales AmountNet Sales
                
    Net sales of furniture and accessories$87,217 100.0% $118,012 100.0% $295,434 100.0% $364,582 100.0%
    Cost of furniture and accessories sold 42,173 48.4%  57,240 48.5%  140,360 47.5%  180,479 49.5%
    Gross profit 45,044 51.6%  60,772 51.5%  155,074 52.5%  184,103 50.5%
                
    Selling, general and administrative expenses 48,848 56.0%  54,695 46.3%  154,709 52.4%  160,536 44.0%
    Gain on sale of retail real estate - 0.0%  4,595 3.9%  - 0.0%  4,595 1.3%
    Gain on revaluation of contingent consideration - 0.0%  - 0.0%  1,013 0.3%  - 0.0%
    Income (loss) from operations (3,804)-4.4%  10,672 9.0%  1,378 0.5%  28,162 7.7%
                
    Interest income 923 2.0%  120 0.3%  1,644 3.6%  132 0.3%
    Other loss, net (309)-0.4%  (714)-0.6%  (1,381)-0.5%  (1,982)-0.5%
    Income (loss) from continuing operations before income taxes (3,190)-3.7%  10,078 8.5%  1,641 0.6%  26,312 7.2%
                
    Income tax expense (benefit) (599)-0.7%  2,305 2.0%  711 0.2%  6,505 1.8%
    Income (loss) from continuing operations (2,591)-3.0%  7,773 6.6%  930 0.3%  19,807 5.4%
                
    Discontinued operations:           
    Income from operations of logistical services -    -    -    1,712  
    Gain on disposal (less adjustments) -    (193)   -    53,061  
    Income tax expense -    (48)   -    14,261  
                
    Income (loss) from discontinued operations - net of tax -    (145)   -    40,512  
                
    Net income (loss)$(2,591)  $7,628   $930   $60,319  
                
    Basic and diluted earnings (loss) per share:           
    Income (loss) from continuing operations$(0.30)  $0.84   $0.11   $2.08  
    Income (loss) from discontinued operations -    (0.02)   -    4.26  
    Basic and diluted earnings (loss) per share$(0.30)  $0.82   $0.11   $6.34  


    Table 2
    BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
    Condensed Consolidated Balance Sheets
    (In thousands)
     (Unaudited)  
    AssetsAugust 26, 2023 November 26, 2022
    Current assets   
    Cash and cash equivalents$48,012  $61,625
    Short-term investments 17,743   17,715
    Accounts receivable, net 15,339   17,838
    Inventories, net 66,866   85,477
    Recoverable income taxes 3,777   2,353
    Other current assets 9,340   11,487
    Total current assets 161,077   196,495
        
    Property and equipment, net 84,247   77,001
        
    Other long-term assets   
    Deferred income taxes, net 5,117   5,528
    Goodwill and other intangible assets 21,547   21,727
    Right of use assets under operating leases 89,993   99,472
    Other 7,050   6,050
    Total long-term assets 123,707   132,777
    Total assets$369,031  $406,273
        
    Liabilities and Stockholders’ Equity   
    Current liabilities   
    Accounts payable$17,117  $20,359
    Accrued compensation and benefits 9,524   12,921
    Customer deposits 23,626   35,963
    Current portion of operating lease obligations 19,608   18,819
    Other current liabilities and accrued expenses 12,168   12,765
    Total current liabilities 82,043   100,827
        
    Long-term liabilities   
    Post employment benefit obligations 10,668   9,954
    Long-term portion of operating lease obligations 85,875   97,477
    Other long-term liabilities 1,668   2,406
    Total long-term liabilities 98,211   109,837
        
        
    Stockholders’ equity   
    Common stock 43,800   44,759
    Retained earnings 145,031   150,800
    Additional paid-in-capital -   -
    Accumulated other comprehensive income (loss) (54)  50
    Total stockholders' equity 188,777   195,609
    Total liabilities and stockholders’ equity$369,031  $406,273


    Table 3
    BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
    Consolidated Statements of Cash Flows - unaudited
    (In thousands)
        
     Nine Months Ended
     August 26, 2023 August 27, 2022
    Operating activities:   
    Net income$930  $60,319 
    Adjustments to reconcile net income to net cash provided by (used in)   
    operating activities:   
    Depreciation and amortization 7,502   8,732 
    Gain on sale of property and equipment -   (4,603)
    Gain on revaluation of contingent consideration (1,013)  - 
    Deferred income taxes 473   (2,856)
    Other, net 1,781   1,425 
    Changes in operating assets and liabilities   
    Accounts receivable 2,499   57 
    Inventories 18,611   (13,677)
    Other current and long-term assets (289)  2,961 
    Right of use assets under operating leases 13,668   15,881 
    Customer deposits (12,337)  (11,181)
    Accounts payable and other liabilities (6,586)  1,227 
    Obligations under operating leases (14,990)  (17,519)
    Net cash provided by (used in) operating activities 10,249   (12,295)
        
    Investing activities:   
    Purchases of property and equipment (14,657)  (17,266)
    Proceeds from sale of property and equipment -   8,226 
    Proceeds from disposal of discontinued operations, net 1,000   84,534 
    Other (1,664)  (1,428)
    Net cash used in investing activities (15,321)  74,066 
        
    Financing activities:   
    Cash dividends (4,406)  (18,734)
    Other issuance of common stock 275   340 
    Repurchases of common stock (4,056)  (10,263)
    Taxes paid related to net share settlement of equity awards (109)  - 
    Repayments of finance lease obligations (208)  (618)
    Net cash used in financing activities (8,504)  (29,275)
    Effect of exchange rate changes on cash and cash equivalents (37)  - 
    Change in cash and cash equivalents (13,613)  32,496 
    Cash and cash equivalents - beginning of period 61,625   34,374 
        
    Cash and cash equivalents - end of period$48,012  $66,870 


    Table 4
    BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
    Segment Information - unaudited
    (In thousands)
                    
     Quarter Ended Nine Months Ended 
     August 26, 2023 August 27, 2022 August 26, 2023 August 27, 2022
    Sales Revenue               
    Wholesale sales of furniture and accessories$56,660  $78,959  $188,318  $249,945 
    Less: Sales to retail segment (23,503)  (31,833)  (77,932)  (95,976)
    Wholesale sales to external customers 33,157   47,126   110,386   153,969 
    Retail sales of furniture and accessories 52,264   70,886   178,004   210,613 
    Corporate & Other(1) 1,796   -   7,044   - 
    Consolidated net sales of furniture and accessories$87,217  $118,012  $295,434  $364,582 
                    
                    
    Income from Operations               
    Wholesale$6,340  $9,989  $22,339  $31,656 
    Retail (3,036)  3,889   (751)  13,804 
    Net expenses - Corporate and other(1) (7,420)  (7,839)  (22,140)  (21,633)
    Inter-company elimination 312   38   917   (260)
    Gain on sale of real estate -   4,595   -   4,595 
    Gain on revaluation of contingent consideration -   -   1,013   - 
    Consolidated$(3,804) $10,672  $1,378  $28,162 
                    
    (1)Corporate and Other includes the operations of Noa Home Inc. for 2023 along with the shared Corporate costs that are benefiting both the Wholesale and Retail segments. This represents a change in our segment presentation from prior year periods. Previously, those shared Corporate costs had been included in the Wholesale segment and the operations of Noa Home Inc. were included in the Retail segment. Prior period results have been restated to conform to the current presentation.

    J. Michael Daniel 
    Senior Vice President and
    Chief Financial Officer
    (276) 629-6614 – Investors
    mdaniel@bassettfurniture.com

    Peter D. Morrison
    Vice President of Communications
    (276) 629-6450 – Media


    Primary Logo

Share on,