Bassett Announces Fiscal Third Quarter Results
28 Setembro 2023 - 10:00AM
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 |
|
2023 |
2022 |
|
Change |
Change |
2023 |
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 |
|
Amount |
Net Sales |
|
Amount |
Net Sales |
|
Amount |
Net Sales |
|
Amount |
Net 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) |
|
|
Assets |
August 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 andChief Financial Officer(276)
629-6614 – Investorsmdaniel@bassettfurniture.com
Peter D. Morrison Vice
President of Communications (276) 629-6450 – Media
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