BASSETT, VA - Bassett Furniture Industries, Inc. /quotes/zigman/68955/quotes/nls/bset BSET -0.83% announced today its results of operations for its fiscal quarter ended February 25, 2012.
Fiscal 2012 First Quarter
-- Consolidated sales for the first quarter decreased 5.1% to $61.0 million
as compared to the first quarter 2011 due to strategic store closings
during and subsequent to first quarter 2011.
-- Company-owned store delivered sales increased 5.0% to $38.8 million.
-- Wholesale sales declined 7.3% to $42.6 million.
-- Gross margins increased to 51.9% of sales for first quarter 2012 from
49.6% for first quarter 2011 attributable to a higher mix of retail
sales in consolidated sales.
-- Operating profit for first quarter 2012 was $0.2 million versus a $7.2
million loss for first quarter last year.
-- Bad debt and notes receivable charges, restructuring and asset
impairment charges and lease exit costs were $0.5 million in first
quarter 2012 versus $8.5 million in first quarter 2011.
-- Repurchased 82,545 shares using $0.6 million and paid $6.1 million in
dividends during the quarter.
The Company's underlying performance improved in the first quarter despite our overall decline in sales and three distinct items that adversely affected our financial results," said Robert H. Spilman Jr., president and chief executive officer. "As previously noted, we will experience difficult consolidated top line comparisons year over year until we can make up the volume we lost from closing 13 underperforming stores in 2011. Our remaining network of Bassett Home Furnishings (BHF) corporate stores, however, turned in a strong 5.0% overall sales increase that included a 6.5% increase by comparable stores. We believe that continued improvement in our store sales coupled with the execution of several growth initiatives currently underway will allow us to recapture the sales that were lost in last year's store closings and begin to generate sales growth as a result. We recorded in the quarter restructuring costs of $0.5 million in conjunction with relocating an existing store in Richmond, Va., to a better retail site, and demolishing a manufacturing facility in Bassett, Va., that closed in 2007. Also in the quarter, the Company recorded a $0.8 million impairment of a financial investment that we have held since 2005. This followed a write-down taken by the fund manager, who recently advised us of an adverse court ruling in Delaware affecting certain insurance-related investments in the fund. These losses were partially offset by tax benefits of approximately $0.5 million recognized for the quarter. Also in the quarter, the Company paid a special dividend to shareholders of $.50/share amounting to $5.7 million and announced an increase to our quarterly dividend from $.035/share to $.05/share. Subsequently, the Company paid the dividend at the new rate on March 1, 2012. And, finally, the Company acquired 82,545 shares of its common stock during the quarter for approximately $0.6 million."
Fiscal 2012 First Quarter
-- Wholesale shipments declined 7.3% to $42.6 million as compared to the
first quarter of 2011 due primarily to fewer stores in the dedicated
retail network in 2012. This decline was partially offset by increased
shipments in the traditional and export channels in 2012.
-- Wholesale operating margins increased to 4.3% from a loss of 8.5%
primarily from improved wood margins and lower bad debt charges,
partially offset by higher SG&A expenditures, primarily in preparation
for the launch of the new HGTV Home platform.
"Once again, the 7.3% decline in wholesale shipments for the quarter was attributable to fewer shipments to BHF licensees," commented Mr. Spilman. "On the other hand, wholesale shipments to furniture retailers outside of the Bassett store network grew by 11%. Future wholesale growth should result from continued improvement in comparable corporate retail performance, new store openings, and from the introduction of the HGTV Design Studio and HGTV Home Furniture Collection lines this fall. The strategic partnership with Home & Garden Television that was announced last September is an exciting opportunity for the Company. A tremendous amount of preparation has been underway for the past nine months as the Company has incurred the expense of opening a new HGTV dedicated showroom in High Point, additional sample costs, and added payroll expense to manage the HGTV opportunity. Additionally, the Company opened a new wholesale showroom at the World Market Center in Las Vegas. Even with the added costs of these investments in operations, wholesale operating income improved to $1.8 million. More significantly, bad debt expense was reduced by $6.8 million. After many quarters of significant bad debt expense, the Company has returned to a normalized level of delinquent account charges."
Fiscal 2012 First Quarter
-- Company-owned store delivered sales increased 5.0% to $38.8 million with
a 6.5% comparable store increase.
-- Written sales for comparable stores increased 9.4% compared to first
-- Operating margins improved from a 4.8% loss in first quarter 2011 to a
2.6% loss in first quarter 2012 due to increasing leverage of fixed
costs from higher comparable store sales and greater operating
-- Comparable stores generated $0.2 million operating profit.
-- Opened a new store in Torrance (Los Angeles), California on December 26,
2011 and repositioned the Richmond, Virginia market with a new store
opening on February 16, 2012.
"Our corporate retail division continued to turn in improved operating results once again this quarter," Mr. Spilman continued. "This marks four consecutive quarters that corporate retail has been able to post better year over year performance. The visual merchandising in our corporate stores has markedly improved, our e-training platform is bearing fruit, and we are consistently attracting a higher caliber of design associate to sell our products. Furthermore, our investment in the 16 stores that we have remodeled over the past 4 years is producing solid returns as this group of stores is significantly more profitable than the remainder of the fleet. Also noteworthy is the fact that 30% of our operating loss was attributable to new store opening costs. We plan to open two more stores in 2012 -- one in Paramus, New Jersey around Memorial Day and one in Dallas, Texas this fall. We continue to analyze all of our existing markets to assess the quality of our locations. As a result, we are closing a store on the south side of Austin, Texas later this month."
About Bassett Furniture Industries, Inc.
Bassett Furniture Industries, Inc. /quotes/zigman/68955/quotes/nls/bset BSET -0.83% , is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With 89 company- and licensee- owned stores, 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. The most significant growth opportunity for Bassett continues to be the Company's dedicated retail store program. Bassett's retail strategy includes affordable custom-built furniture that is ready for delivery in the home within 30 days. The stores also feature the latest on-trend furniture styles, more than 750 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. 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," "expects," "anticipates," "intends," "should," "estimates," or similar expressions, or those relating to or anticipating financial results for periods beyond the end of the first fiscal quarter of 2012, 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; 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.
SOURCE: Bassett Furniture Industries, Inc.
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