Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today
its results of operations for its first quarter ended March 2,
2024.
Fiscal 2024 First Quarter Highlights (Dollars in
millions)
|
|
Sales |
|
Operating Income (Loss) |
|
|
1st Qtr |
|
Dollar |
% |
|
1st Qtr |
% of |
|
1st Qtr |
% of |
|
|
|
2024 |
|
|
2023 |
|
|
Change |
Change |
|
|
2024 |
|
Sales |
|
|
2023 |
|
Sales |
Consolidated (1) |
|
$ |
86.6 |
|
$ |
107.7 |
|
|
$ |
(21.1 |
) |
-19.6 |
% |
|
$ |
(2.4 |
) |
-2.8 |
% |
|
$ |
2.7 |
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
$ |
54.7 |
|
$ |
69.9 |
|
|
$ |
(15.2 |
) |
-21.7 |
% |
|
$ |
6.8 |
|
12.4 |
% |
|
$ |
9.0 |
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
$ |
53.8 |
|
$ |
65.0 |
|
|
$ |
(11.2 |
) |
-17.2 |
% |
|
$ |
(1.6 |
) |
-3.0 |
% |
|
$ |
1.5 |
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Other (2) |
|
$ |
1.9 |
|
$ |
3.0 |
|
|
$ |
(1.1 |
) |
-36.7 |
% |
|
$ |
(7.6 |
) |
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.
along with the shared Corporate costs that are benefiting
both the Wholesale and Retail segments. |
|
As we once again compared to the inflated sales
of the pandemic period, our consolidated sales dropped by 19.6% (14
weeks vs. 13 weeks) in the first quarter of fiscal 2024 compared to
the first quarter of 2023. We do expect easier comparisons starting
with our second quarter of 2024. Wholesale and retail orders were
more stable and fell by 6.3% and 3.4%, respectively (14 weeks vs.
13 weeks). The final two weeks of January proved to be especially
damaging to written sales during the period as we lost the
historically strong MLK holiday event due to storms across several
regions of the country where we expect to write good business.
We produced an operating loss of $2.4 million
and a net loss of $1.2 million in the challenging sales
environment. Our consolidated gross margin of 55.3% was an all-time
high but spending reductions were not enough to generate
profitability at the reported level of sales. We continue to
explore expense reduction strategies that will not be detrimental
to gaining market share in the competitive furniture industry
landscape. Inventory levels are stable and are appropriate for the
current pace of business. Total headcount in our wholesale segment
has been reduced by 26% since the peak of the pandemic booms in
2022. The corporate retail organization is 44% leaner than February
2020, the last month before the world changed. And the balance
sheet is well built and provides stability as we focus on improving
results in anticipation of a better macro-economic environment in
the future.
Despite producing a record retail gross margin
for the quarter, corporate retail posted a $1.6 million operating
loss compared to a $1.5 million profit last year. We were excited
to open new stores in Tampa and Houston. Startup expenses recorded
on the income statement were in excess of $700 thousand. Our
average ticket was $3,800 and 41% of sales came from design
projects as we generally write a smaller percentage of design
business around the holidays. We did not curtail retail marketing
expenses for the quarter, although we are currently cutting back
prior to picking up again in May for the Memorial Day promotion. On
the digital front, we are continuing to optimize our tactics to
build our omnichannel capabilities and enhance website conversion.
Declining written and delivered sales obviously apply pressure to
results through the deleveraging of SG&A expenses. On the
expense side, we are at the early stages of implementing a new
retail distribution model designed to reduce warehouse and delivery
expenses by 200 basis points. The first phase of this plan will
eliminate five facilities that are currently in use primarily in
the mid-Atlantic region. After evaluation of the results, we plan
to implement further warehouse consolidations in other regions. On
the revenue front, we plan to sharpen the value proposition of a
portion of our assortment with the addition of several new products
that we believe will complement the wide array of customizable
furniture that currently dominates our stores. We have already seen
success in the small number of transactional products that we have
begun to integrate into the line and we plan to unveil more pieces
designed to increase unit velocity over the course of 2024.
There are currently no new corporately owned
stores planned for 2024, although we are performing due diligence
in several markets. Our attention is now focused on a refurbishment
program for the existing fleet, which will begin in earnest this
summer. Coming out of the pandemic, corporate retail posted 14
consecutive quarters of profitability; several quarters were at
record levels, albeit admittedly fueled by an unsustainable
tailwind of written business. The pendulum of consumer preferences
has since swung dramatically away from purchases surrounding the
home, not to mention several quarters of a weak housing market.
While our gross margin was at record levels, we were not able to
generate enough sales to overcome the burden of our fixed costs to
post a profit for the quarter. With our lean organization, we are
committed to returning to a consistently profitable corporate
retail network, no matter what the economy throws at us.
Total wholesale revenue declined by 22% for the
period (14 weeks vs 13 weeks). Despite the uncertainty of work
schedules, our team produced a 200-basis point gross margin
improvement for the quarter. Embedded in the wholesale results is
the return to profitability of the Club Level motion assortment
which has been a drag on the bottom line in recent quarters. We
expect further improvement in the Club Level results in the
upcoming months. 80% of the products that invoiced in the quarter
were manufactured in the U.S. and were shipped from a domestic
facility. We take pride in our Made-in-America positioning and
heritage but balancing capacity with order backlogs has been an
ongoing hurdle since the slowdown began. Our domestic wood
operation began production of the contemporary-styled solid maple
Parkway bedroom and the more popularly priced Origins dining
program. These products hit our store floors during the quarter and
the sell-through is encouraging. In upholstery, our facility in
Newton, North Carolina produced the first pieces of our Premier
Custom Upholstery in leather, which sold well at retail in the
final weeks of the quarter. We are also now shipping some of the
imported casegoods and accent furniture products that we introduced
last fall. Our move into sourcing from India has added new artistic
design elements to our line and we have been pleased with the
initial response by our wholesale customers. Unfortunately, the
historic ocean freight lead times that have existed for most of the
past two decades have once again been disrupted, this time by the
geopolitical turmoil in the Middle East that has affected traffic
through the Suez Canal.
Approximately 60% of wholesale revenue was
derived from the combination of our corporate and licensed Bassett
Home Furnishings retail stores. Another 18% came from the Bassett
Design Center (BDC) network that is currently comprised of nearly
100 independent furniture accounts with 150 locations. The Bassett
footprint in a BDC typically runs from 3,000 to 5,000 square feet
and is supported with space planning assistance, store fixtures and
signage, point of purchase materials, and promotional events. Many
of the business relationships with these dealers have been in place
for twenty years or more. The heartbeat of this strategy is the
emphasis placed on the display and promotion of our Premier Custom
Upholstery and Bench Made dining and bedroom products, all of which
are Made-In-America. Generally speaking, this template blossoms
into a larger commitment to the Bassett brand on the part of the
dealer, largely resulting from the high level of service and
training provided by our field representatives. In an effort to
expand the reach of our dedicated distribution universe, Bassett
introduced the new Bassett Design Studio concept in January.
In short, the Design Studio is a smaller version
of the BDC built almost entirely around the display of our Premier
Custom Upholstery program. For a comparatively modest financial
commitment, the dealer enjoys a product that is well proven at
retail and a program that includes several of the store elements
found in the BDC program complete with a compelling in-store
technology package. We are confident that the return on investment
for the retailer will be quite strong as our Premier Custom
Upholstery display model has been successfully executed in the
field for many years. Thus far, we have brought 17 Bassett Design
Studio accounts into the fold. Our initial target is 100 accounts
and we will make presentations on the Studio concept by featuring
the 1,000 square foot footprint in our showroom at the Spring
Furniture Market next week in High Point, North Carolina.
We used $7.7 million of cash in operations for
the period as we made the typical upfront payments to satisfy
annual service contracts and also incurred an extra monthly payroll
and rent outlay due to the fiscal calendar’s extra week.
Nevertheless, as we try to mention every quarter, we continue to
maintain a strong balance sheet to weather downturns like the one
we are in now while supporting the dividend. Meanwhile, we will
pursue product innovation, store refurbishment, enhanced
technology, and improved operating results in the current climate
as we look ahead to a better home furnishings landscape in the
future.
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 88 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. 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 first fiscal quarter of 2024,
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.
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
|
Table 1 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Operations –
unaudited |
(In thousands, except for per share data) |
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
March 2, 2024 |
|
February 25, 2023 |
|
|
|
Percent of |
|
|
Percent of |
|
|
Amount |
Net Sales |
|
Amount |
Net Sales |
|
|
|
|
|
|
|
Net sales of furniture and accessories |
|
$ |
86,554 |
|
100.0 |
% |
|
$ |
107,698 |
|
100.0 |
% |
Cost of furniture and accessories sold |
|
|
38,687 |
|
44.7 |
% |
|
|
50,501 |
|
46.9 |
% |
Gross profit |
|
|
47,867 |
|
55.3 |
% |
|
|
57,197 |
|
53.1 |
% |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
50,224 |
|
58.0 |
% |
|
|
54,495 |
|
50.6 |
% |
Income (loss) from operations |
|
|
(2,357 |
) |
-2.7 |
% |
|
|
2,702 |
|
2.5 |
% |
|
|
|
|
|
|
|
Interest income |
|
|
756 |
|
1.6 |
% |
|
|
152 |
|
0.3 |
% |
Other loss, net |
|
|
(104 |
) |
-0.1 |
% |
|
|
(567 |
) |
-0.5 |
% |
Income (loss) before income taxes |
|
|
(1,705 |
) |
-2.0 |
% |
|
|
2,287 |
|
2.1 |
% |
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
(512 |
) |
-0.6 |
% |
|
|
842 |
|
0.8 |
% |
Net income (loss) |
|
|
(1,193 |
) |
-1.4 |
% |
|
|
1,445 |
|
1.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share |
|
$ |
(0.14 |
) |
|
|
$ |
0.16 |
|
|
Table 2 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(In thousands) |
|
|
|
(Unaudited) |
|
|
Assets |
|
March 2, 2024 |
|
November 25, 2023 |
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
40,609 |
|
|
$ |
52,407 |
|
Short-term investments |
|
|
17,775 |
|
|
|
17,775 |
|
Accounts receivable, net |
|
|
13,942 |
|
|
|
13,736 |
|
Inventories, net |
|
|
62,957 |
|
|
|
62,982 |
|
Recoverable income taxes |
|
|
2,206 |
|
|
|
2,574 |
|
Other current assets |
|
|
12,016 |
|
|
|
8,480 |
|
Total current assets |
|
|
149,505 |
|
|
|
157,954 |
|
|
|
|
|
|
Property and equipment, net |
|
|
83,590 |
|
|
|
83,981 |
|
|
|
|
|
|
Other long-term assets |
|
|
|
|
Deferred income taxes, net |
|
|
5,567 |
|
|
|
4,645 |
|
Goodwill and other intangible assets |
|
|
16,069 |
|
|
|
16,067 |
|
Right of use assets under operating leases |
|
|
99,390 |
|
|
|
100,888 |
|
Other |
|
|
7,324 |
|
|
|
6,889 |
|
Total long-term assets |
|
|
128,350 |
|
|
|
128,489 |
|
Total assets |
|
$ |
361,445 |
|
|
$ |
370,424 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
14,635 |
|
|
$ |
16,338 |
|
Accrued compensation and benefits |
|
|
7,679 |
|
|
|
8,934 |
|
Customer deposits |
|
|
22,763 |
|
|
|
22,788 |
|
Current portion of operating lease obligations |
|
|
17,530 |
|
|
|
18,827 |
|
Other accrued expenses |
|
|
10,678 |
|
|
|
11,003 |
|
Total current liabilities |
|
|
73,285 |
|
|
|
77,890 |
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
Post employment benefit obligations |
|
|
10,678 |
|
|
|
10,207 |
|
Long-term portion of operating lease obligations |
|
|
95,312 |
|
|
|
97,357 |
|
Other long-term liabilities |
|
|
1,532 |
|
|
|
1,529 |
|
Total long-term liabilities |
|
|
107,522 |
|
|
|
109,093 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
Common stock |
|
|
43,883 |
|
|
|
43,842 |
|
Retained earnings |
|
|
136,588 |
|
|
|
139,354 |
|
Additional paid-in-capital |
|
|
175 |
|
|
|
93 |
|
Accumulated other comprehensive income (loss) |
|
|
(8 |
) |
|
|
152 |
|
Total stockholders' equity |
|
|
180,638 |
|
|
|
183,441 |
|
Total liabilities and stockholders’ equity |
|
$ |
361,445 |
|
|
$ |
370,424 |
|
Table 3 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Consolidated Statements of Cash Flows – unaudited |
(In thousands) |
|
|
|
|
|
|
|
Three Months |
|
|
March 2, 2024 |
|
February 25, 2023 |
Operating activities: |
|
|
|
|
Net income (loss) |
|
$ |
(1,193 |
) |
|
$ |
1,445 |
|
Adjustments to reconcile net income (loss) to net cash provided by
(used in) |
|
|
|
|
operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
2,664 |
|
|
|
2,340 |
|
Deferred income taxes |
|
|
(922 |
) |
|
|
132 |
|
Other, net |
|
|
302 |
|
|
|
852 |
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(206 |
) |
|
|
(470 |
) |
Inventories |
|
|
25 |
|
|
|
6,466 |
|
Other current and long-term assets |
|
|
(3,167 |
) |
|
|
30 |
|
Right of use assets under operating leases |
|
|
4,375 |
|
|
|
4,587 |
|
Customer deposits |
|
|
(24 |
) |
|
|
(4,923 |
) |
Accounts payable and other liabilities |
|
|
(3,374 |
) |
|
|
(4,596 |
) |
Obligations under operating leases |
|
|
(6,219 |
) |
|
|
(5,300 |
) |
Net cash provided by (used in) operating
activities |
|
|
(7,739 |
) |
|
|
563 |
|
|
|
|
|
|
Investing activities: |
|
|
|
|
Purchases of property and equipment |
|
|
(2,076 |
) |
|
|
(3,341 |
) |
Other |
|
|
(270 |
) |
|
|
(563 |
) |
Net cash used in investing activities |
|
|
(2,346 |
) |
|
|
(3,904 |
) |
|
|
|
|
|
Financing activities: |
|
|
|
|
Cash dividends |
|
|
(1,573 |
) |
|
|
(1,421 |
) |
Other issuance of common stock |
|
|
86 |
|
|
|
80 |
|
Repurchases of common stock |
|
|
– |
|
|
|
(1,844 |
) |
Taxes paid related to net share settlement of equity awards |
|
|
(161 |
) |
|
|
(109 |
) |
Repayments of finance lease obligations |
|
|
(74 |
) |
|
|
(69 |
) |
Net cash used in financing activities |
|
|
(1,722 |
) |
|
|
(3,363 |
) |
Effect of exchange rate changes on cash and cash
equivalents |
|
|
9 |
|
|
|
(29 |
) |
Change in cash and cash equivalents |
|
|
(11,798 |
) |
|
|
(6,733 |
) |
Cash and cash equivalents – beginning of
period |
|
|
52,407 |
|
|
|
61,625 |
|
|
|
|
|
|
Cash and cash equivalents – end of
period |
|
$ |
40,609 |
|
|
$ |
54,892 |
|
Table 4 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Segment Information – unaudited |
(In thousands) |
|
|
|
Quarter Ended |
|
|
March 2, 2024 |
|
February 25, 2023 |
Sales Revenue |
|
|
|
|
|
|
Wholesale sales of furniture and accessories |
|
$ |
54,700 |
|
|
$ |
69,884 |
|
Less: Sales to retail segment |
|
(23,762 |
) |
|
(30,099 |
) |
Wholesale sales to external customers |
|
30,938 |
|
|
39,785 |
|
Retail sales of furniture and accessories |
|
53,754 |
|
|
64,962 |
|
Corporate & Other (1) |
|
1,862 |
|
|
2,951 |
|
Consolidated net sales of furniture and accessories |
|
$ |
86,554 |
|
|
$ |
107,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations |
|
|
|
|
|
|
Wholesale |
|
$ |
6,760 |
|
|
$ |
8,994 |
|
Retail |
|
(1,612 |
) |
|
1,530 |
|
Net expenses – Corporate and other (1) |
|
(7,595 |
) |
|
(7,771 |
) |
Inter-company elimination |
|
90 |
|
|
(51 |
) |
Consolidated |
|
$ |
(2,357 |
) |
|
$ |
2,702 |
|
|
|
|
|
|
|
|
(1) Corporate and Other includes the operations of Noa Home
Inc. along with the shared Corporate costs that are benefiting both
the Wholesale and Retail segments. |
Bassett Furniture Indust... (NASDAQ:BSET)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Bassett Furniture Indust... (NASDAQ:BSET)
Gráfica de Acción Histórica
De May 2023 a May 2024