BASSETT, VA - Bassett Furniture Industries, Inc. (Nasdaq:BSET) sales rose 20% third quarter, to $77.2 million, but net income was slim, at $600,000 about, a 75% drop from a year ago, when a $1.9 million tax benefit was accrued.
The prior year quarter included a $1.9 million tax benefit as a result of favorable provision to return adjustments related to the 2011 Federal income tax return and the release of a portion of the valuation allowance against certain deferred tax assets.
"Although our operating income increased marginally for the quarter, we still have work to do in our efforts to bolster our bottom line, particularly during our fiscal third quarter which is historically our toughest reporting period," Robert H. Spilman, Jr., President and CEO. Spilman said shipments to Bassett Furniture's open market HGTV dealer network met internal goals.
Bassett Furniture Industries incurred added expenses as it migrates to a new retail operating system. The $3 million capital expenditure will be completed in November 2013. Bassett's retail strategy is centered on custom-built furniture ready for delivery in the home within 30 days or order.
Also dampening results: Bassett Furniture's wholesale wood division suffered margin erosion as it discounted some wood inventories. And it lost a case in court with a vendor, taking a $400,000 hit.
Bassett Furniture owns or licenses 55 stores and licenses 34. The new retail computer operating system was running in 36 of the company owned stores by August. Spilman said the roll-out "process has been disruptive to the sales, administration, warehousing and delivery areas of our retail business."
In SEC filings Bassett Furniture reported that its percentage of domestically manufactured furniture is on the rise. It also notes it owns 49% of Zenith Global Logistics, which it says is well positioned to grow with the furniture industry overall.
Our wholesale operations include an upholstery complex in Newton, North Carolina that produces a wide range of upholstered furniture. We believe that we are an industry leader with our quick-ship custom upholstery offerings. We also operate a custom dining manufacturing facility in Martinsville, Virginia. Most of our wood furniture and certain upholstery offerings are sourced from several foreign plants, primarily in Vietnam, Indonesia and China. We define imported product as fully finished product that is sourced internationally. For the first nine months of 2013, approximately 47% of our wholesale sales were of imported product compared to 50% for the first nine months of 2012.
Have something to say? Share your thoughts with us in the comments below.