BASSETT, VA - Bassett Furniture Industries, Inc. /quotes/zigman/68955/quotes/nls/bset BSET +1.72% announced today its results of operations for its fiscal quarter ended May 26, 2012.

Fiscal 2012 Second Quarter Highlights

        
          --  Consolidated sales for the second quarter 2012 increased 1.8% as
              compared to the second quarter 2011.
          --  Operating profit for the second quarter was $1.6 million versus a $14.3
              million loss for the second quarter last year.
          --  Company-owned store delivered sales increased 12.6% with a 7.9% increase
              from the 43 comparable stores.
          --  Company-owned stores generated a $0.1 million operating profit for the
              quarter.
          --  Received $9.0 million distribution from U.S. Customs and Border
              Protection as part of the Continued Dumping and Subsidy Offset Act of
              2000.
          --  Repurchased 64,350 shares using $0.6 million and paid $0.6 million in
              dividends during the quarter.
        

On a consolidated basis, the Company reported net sales for the second quarter of 2012 of $67.5 million, an increase of $1.2 million, or 1.8%, from sales levels attained in the second quarter of 2011. Operating income improved to $1.6 million from a loss of $14.3 million driven primarily by increased gross margins and significantly lower bad debt and notes receivable, licensee debt cancellation, restructuring, asset impairment and lease exit charges. This was partially offset by higher selling, general and administrative expenses due to the increased mix of Company-owned stores as well as investments in our new Home and Garden Television (HGTV) initiatives and new showrooms in Las Vegas and High Point. The Company received a $9.0 million cash distribution from U.S. Customs and Border Protection in the second quarter of 2012, representing the final distribution due the Company as part of the Continued Dumping and Subsidy Offset Act of 2000, which is included as other income in the condensed consolidated statement of operations. As a result, the Company recorded net income of $8.0 million or $0.71 per diluted share compared to $62.6 million or $5.39 per diluted share in the second quarter of 2011. Included in the prior year quarter was an $85.5 million gain associated with the Company's sale of its interest in the International Home Furnishings Center.

"Our second quarter was highlighted by an overall sales increase and an increase in consolidated operating profit," commented Robert H. Spilman Jr., president and chief executive officer. "Perhaps more significantly, our Corporate Retail Division generated its first ever operating profit. Moving forward, we will continue to vigorously pursue our strategies designed to grow the Company through sales to our store network, independent accounts, and our new partnership with HGTV. Although it is difficult to gauge the strength of the overall economy at the moment, we are encouraged by the improved traffic in our Bassett Home Furnishings (BHF) stores and by our efforts to increase our business with independent furniture retailers. We believe that our strong balance sheet in conjunction with our service levels in both our domestically produced and imported products are enabling us to take market share."

Wholesale Segment

Net sales for the wholesale segment were $45.9 million for the second quarter of 2012 as compared to $45.8 million for the second quarter of 2011, an increase of 0.4%. Wholesale shipments increased primarily due to a 5.8% increase in wholesale sales outside the BHF store network partially offset by a 1.0% decrease in shipments to the network. The decrease in sales to the store network was due to the decline in the number of BHF stores; however, the average shipments per store actually increased by 4.3%. Gross margins for the wholesale segment were 32.9% for the second quarter of 2012 and 32.8% for the second quarter of 2011. Wholesale SG&A, excluding bad debt and notes receivable valuation charges, decreased $0.1 million to $12.8 million for the second quarter of 2012 as compared to $12.9 million for the second quarter of 2011. As a percentage of net sales, SG&A decreased 0.3 percentage points to 28.0% for the second quarter of 2012 as compared to 28.3% for the second quarter of 2011. The Company recorded $0.2 million of bad debt and notes receivable valuation charges for the second quarter of 2012 as compared with $6.2 million for the second quarter of 2011, which reflects the improved credit positions of the Company's current fleet of licensees.

"We were pleased to achieve sales growth in our wholesale segment despite operating fewer stores than we did in the same period of fiscal 2011, primarily due to increased market share with independent furniture stores," said Mr. Spilman. "In addition, the debut of the HGTV Furniture Collection in our new HGTV showroom at the April High Point Market was very encouraging as we placed the assortment with several major new customers. These products will begin to ship in September of this year and will continue to be phased in to our dealers through the first quarter of 2013.

"Excluding bad debt charges, our wholesale operating profit was flat with last year," continued Mr. Spilman. "Even though we have been incurring expense in preparation for the launch of HGTV, wholesale SGA costs were down slightly for the quarter. Upfront expenditures for product development, personnel, marketing, and showrooms have been substantial as we set the table for this new venture. Once again, we look forward to leveraging these investments with additional sales beginning this fall."

Retail Segment

Company-owned stores had sales of $42.8 million in the second quarter of 2012 as compared to $38.0 million in the second quarter of 2011, an increase of 12.6%. The increase was comprised of a $2.8 million or 7.9% increase in comparable store sales along with a $2.0 million increase in non-comparable store sales. Contributing to the improvement in comparable store sales are such factors as improved pricing and merchandising strategies and improvements in the quality and training of the design associates who sell the Company's products, as well as a general improvement in the retail environment in combination with targeted advertising which produced increased traffic through the Company's stores. While the Company does not recognize sales until goods are delivered to the customer, management tracks written sales (the dollar value of sales orders taken, rather than delivered) as a key store performance indicator. Written sales for comparable stores increased by 11.2% for the second quarter of 2012 as compared to the second quarter of 2011.

Operating income for the Company-owned stores improved to $0.1 million in the second quarter of 2012 as compared to a loss of $0.3 million for the second quarter of 2011 which was primarily driven by the sales increases noted above and a 1.5 percentage point improvement in gross margins. The gross margin improvement was primarily due to the adverse impact of store liquidation sales which ran during the second quarter of 2011 related to the closure of five retail locations and the improved pricing strategies and increased sales of higher margin mattresses in the second quarter of 2012. SG&A increased $2.5 million, primarily due to increased store count. Included in the operating income for the second quarter of 2012 was a $0.2 million loss associated with the start-up of the new store in Paramus, New Jersey at the end of the quarter as there were essentially no delivered sales due to the timing of the opening. Refer to the accompanying schedule of Supplemental Retail Information for results of operations for the Company's retail segment by comparable and all other stores.

The following table summarizes the changes in store count during the six months ended May 26, 2012:

        
        
                                      November                    Stores   May
                                         26,     New     Stores            26,
                                        2011    Stores  Acquired  Closed  2012
                                      --------  ------  --------  ------  ----
        
          Licensee-owned stores             39      --        --     (2)    37
        
          Company-owned stores              49       3        --     (2)    50
                                      --------  ------  --------  ------  ----
        
        
            Total                           88       3        --     (4)    87
                                      ========  ======  ========  ======  ====
        
        


"Our corporate retail group produced a milestone achievement this quarter by producing their first ever quarterly operating profit," added Mr. Spilman. "This marks the fifth consecutive quarter of year over year improvement for the segment. The delivered sales increase of 7.9% and the written sales increase of 11.2% are the result of the continuing maturation of our merchandising and marketing strategies and the absence of the distraction of the many licensee store takeovers that has hampered our corporate retail performance for the past few years. We opened a new store in Paramus, New Jersey in late May and plan a new store in Dallas later this year. Meanwhile, we will focus on the conversion of our in-store design centers to HGTV Design Studios at Bassett that will be rolled out later this summer and featured nationally on the HGTV network beginning Labor Day weekend."

Balance Sheet and Cash Flow

As previously stated, the Company received a $9.0 million cash distribution from U.S. Customs and Border Protection in the second quarter of 2012, representing the final distribution due the Company as part of the Continued Dumping and Subsidy Offset Act of 2000. Excluding this distribution, the Company generated $0.5 million in cash from operating activities for the three month's ended May 26, 2012 as compared with cash used in operations of $0.9 million for the three month's ended May 28, 2011. Capital expenditures for the second quarter of 2012 were $2.4 million primarily related to the expansion of the Company-owned store network. The Company also repurchased 64,350 shares using $0.6 million and paid $0.6 million in dividends during the quarter.

About Bassett Furniture Industries, Inc.

Bassett Furniture Industries, Inc. /quotes/zigman/68955/quotes/nls/bset BSET +1.72% , is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With 87 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 second 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.

        
                                         BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                                       Condensed Consolidated Statements of Income - unaudited
                                              (In thousands, except for per share data)
        
        
                                              Quarter Ended       Quarter Ended     Six Months Ended     Six Months Ended
                                              May 26, 2012        May 28, 2011        May 26, 2012         May 28, 2011
                                           ------------------  ------------------  -------------------  -------------------
        
                                                      Percent             Percent              Percent              Percent
                                                         of                  of                   of                   of
                                                        Net                 Net                  Net                  Net
                                            Amount     Sales    Amount     Sales     Amount     Sales     Amount     Sales
                                           ---------  -------  ---------  -------  ----------  -------  ----------  -------
        
          Net sales                         $ 67,454   100.0%   $ 66,261   100.0%   $ 128,422   100.0%   $ 130,525   100.0%
        
        
          Cost of sales                       31,793    47.1%     33,064    49.9%      61,090    47.6%      65,480    50.2%
                                           ---------  -------  ---------  -------  ----------  -------  ----------  -------
        
        
           Gross profit                       35,661    52.9%     33,197    50.1%      67,332    52.4%      65,045    49.8%
                                           ---------  -------  ---------  -------  ----------  -------  ----------  -------
        
          Selling, general and
           administrative expense
           excluding bad debt and notes
           receivable valuation charges       33,213    49.2%     30,879    46.6%      64,209    50.0%      61,387    47.0%
          Bad debt and notes receivable
           valuation charges                     222     0.3%      6,200     9.4%         254     0.2%      13,026    10.0%
          Licensee debt cancellation
           charges                                --     0.0%      6,447     9.7%          --     0.0%       6,447     4.9%
          Restructuring and asset
           impairment charges                    475     0.7%      1,080     1.6%         711     0.6%       1,959     1.5%
        
          Lease exit costs                       131     0.2%      2,844     4.3%         359     0.3%       3,728     2.9%
                                           ---------  -------  ---------  -------  ----------  -------  ----------  -------
           Operating income (loss)             1,620     2.4%   (14,253)   -21.5%       1,799     1.4%    (21,502)   -16.5%
        
          Gain on sale of affiliate               --     0.0%     85,542   129.1%          --     0.0%      85,542    65.5%
          Income from Continued Dumping &
           Subsidy Offset Act                  9,010    13.4%         --     0.0%       9,010     7.0%          --     0.0%
        
          Other loss, net                      (677)    -1.0%    (4,815)    -7.3%     (1,924)    -1.5%     (5,773)    -4.4%
                                           ---------  -------  ---------  -------  ----------  -------  ----------  -------
          Income before income taxes           9,953    14.8%     66,474   100.3%       8,885     6.9%      58,267    44.6%
        
        
          Income tax expense                 (1,911)    -2.8%    (3,928)    -5.9%     (1,439)    -1.1%     (3,975)    -3.0%
                                           ---------  -------  ---------  -------  ----------  -------  ----------  -------
        
          Net income                         $ 8,042    11.9%   $ 62,546    94.4%     $ 7,446     5.8%    $ 54,292    41.6%
                                           =========  =======  =========  =======  ==========  =======  ==========  =======
        
        
          Basic earnings per share            $ 0.72              $ 5.43               $ 0.67               $ 4.72
                                           =========           =========           ==========           ==========
        
        
          Diluted earnings per share          $ 0.71              $ 5.39               $ 0.67               $ 4.69
                                           =========           =========           ==========           ==========
        
        


        
        
           BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets
                             (In thousands)
                                       (unaudited)
        
                                         May 26,     November
          Assets                          2012       26, 2011
                                       -----------  ----------
          Current assets
           Cash and cash equivalents      $ 67,133    $ 69,601
           Accounts receivable, net         14,165      14,756
           Marketable securities             3,034       2,939
           Inventories                      47,915      45,129
        
           Other current assets              6,532       7,778
                                       -----------  ----------
        
          Total current assets             138,779     140,203
                                       -----------  ----------
        
          Property and equipment
           Cost                            142,864     143,824
           Less accumulated
            depreciation                    91,521      93,878
                                       -----------  ----------
        
          Property and equipment, net       51,343      49,946
                                       -----------  ----------
        
          Investments                           --         806
          Retail real estate                15,989      16,257
          Notes receivable, net              1,783       1,802
        
          Other                             13,730      14,160
                                       -----------  ----------
        
          Total long-term assets            31,502      33,025
                                       -----------  ----------
        
          Total assets                   $ 221,624   $ 223,174
                                       ===========  ==========
        
          Liabilities and
           Stockholders' Equity
          Current liabilities
             Accounts payable             $ 16,457    $ 18,821
             Accrued compensation and
              benefits                       6,491       7,201
            Customer deposits                9,918       9,238
            Dividends payable                  563       6,063
            Other accrued liabilities       12,618      10,302
           Current portion of real
            estate notes payable               208         202
                                       -----------  ----------
        
          Total current liabilities         46,255      51,827
                                       -----------  ----------
        
          Long-term liabilities
             Post employment benefit
              obligations                   11,015      11,226
             Real estate notes
              payable                        3,556       3,662
            Other long-term
             liabilities                     3,247       4,024
                                       -----------  ----------
        
          Total long-term liabilities       17,818      18,912
                                       -----------  ----------
        
          Commitments and
           Contingencies
        
          Stockholders' equity
             Common stock                   56,160      56,712
             Retained earnings             102,417      96,331
             Accumulated other
              comprehensive loss           (1,026)       (608)
                                       -----------  ----------
        
          Total stockholders' equity       157,551     152,435
                                       -----------  ----------
          Total liabilities and
           stockholders' equity          $ 221,624   $ 223,174
                                       ===========  ==========
        
        


        
        
               BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                 Consolidated Statements of Cash Flows - unaudited
                                  (In thousands)
        
        
                                                       Six        Six
                                                     Months     Months
                                                      Ended      Ended
                                                     May 26,    May 28,
                                                       2012       2011
                                                    ---------  ---------
          Operating activities:
          Net income                                  $ 7,446   $ 54,292
          Adjustments to reconcile net income to
           net cash provided by (used in)
           operating activities:
           Depreciation and amortization                2,615      2,907
           Equity in undistributed income of
            investments and unconsolidated
            affiliated companies                        (134)    (1,921)
           Provision for restructuring and asset
            impairment charges                            711      1,959
           Non-cash portion of lease exit costs           359      2,228
           Licensee debt cancelation charges               --      6,447
           Provision for lease and loan guarantees        219      1,457
           Bad debt and notes receivable valuation
            charges                                       254     13,026
           Gain on mortgage settlement                     --      (436)
           Gain on sale of affiliate                       --   (85,542)
           Other than temporary impairment of
            investments                                   806         --
           Impairment and lease exit charges on
            retail real estate                             --      4,790
           Other, net                                    (36)        852
           Changes in operating assets and
            liabilities
             Accounts receivable                          337      2,000
             Inventories                              (2,786)      2,782
             Other current assets                        (64)       (23)
             Accounts payable and accrued
              liabilities                             (1,465)    (9,439)
                                                    ---------  ---------
            Net cash provided by (used in)
             operating activities                       8,262    (4,621)
                                                    ---------  ---------
        
          Investing activities:
          Purchases of property and equipment         (4,352)      (964)
          Proceeds from sale of interest in
           affiliate                                    1,410     67,752
          Proceeds from sales of investments              875      2,603
          Purchases of investments                      (857)    (2,603)
          Dividend from affiliate                          --      3,756
          Equity contribution to affiliate                 --      (980)
        
          Other,net                                        13        201
                                                    ---------  ---------
            Net cash provided by (used in)
             investing activities                     (2,911)     69,765
                                                    ---------  ---------
        
          Financing activities:
          Repayments of real estate notes payable       (100)    (3,791)
          Issuance of common stock                        157         88
          Repurchases of common stock                 (1,250)      (473)
          Cash dividends                              (6,626)         --
        
          Payments on other notes                          --    (2,127)
                                                    ---------  ---------
        
            Net cash used in financing activities     (7,819)    (6,303)
                                                    ---------  ---------
          Change in cash and cash equivalents         (2,468)     58,841
          Cash and cash equivalents - beginning of
           period                                      69,601     11,071
                                                    ---------  ---------
                                                            .          .
          Cash and cash equivalents - end of
           period                                    $ 67,133   $ 69,912
                                                    =========  =========
        
        


        
        
                                           BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                                                     Segment Information - unaudited
                                                             (In thousands)
        
        
                                Quarter                 Quarter                Six months               Six months
                                 ended                   ended                    ended                   ended
                                May 26,                 May 28,                 May 26,                  May 28,
                                  2012                   2011                     2012                    2011
                               ---------              -----------              ----------              -----------
          Net Sales
          Wholesale             $ 45,940  (a)            $ 45,751  (a)           $ 88,550  (a)            $ 91,720  (a)
          Retail                  42,805                   38,009                  81,622                   74,988
          Inter-company
           elimination          (21,291)                 (17,499)                (41,750)                 (36,183)
                               ---------              -----------              ----------              -----------
        
          Consolidated          $ 67,454                 $ 66,261               $ 128,422                $ 130,525
                               =========              ===========              ==========              ===========
        
          Operating Income
           (Loss)
          Wholesale              $ 2,035  (b)           $ (4,153)  (b)            $ 3,863  (b)           $ (8,044)  (b)
          Retail                      66                    (343)                   (933)                  (2,135)
          Inter-company
           elimination               125                      614                    (61)                      810
          Licensee debt
           cancellation
           charge                     --                  (6,447)                      --                  (6,447)
          Restructuring and
           asset impairment
           charges                 (475)                  (1,080)                   (711)                  (1,959)
        
          Lease exit costs         (131)                  (2,844)                   (359)                  (3,727)
                               ---------              -----------              ----------              -----------
        
          Consolidated           $ 1,620               $ (14,253)                 $ 1,799               $ (21,502)
                               =========              ===========              ==========              ===========
        
        
          (a) Excludes wholesale shipments for dealers where collectibility is not reasonably assured at time of shipment as
           follows:
        
                                May 26,                 May 28,
                                  2012                   2011
                               ---------              -----------
            Quarter ended           $ --                     $ --
            Six Months                --                    1,254
          (b) Includes bad debt and notes receivable valuation
           charges as follows:
        
                                May 26,                 May 28,
                                  2012                   2011
                               ---------              -----------
            Quarter ended          $ 222                  $ 6,200
            Six Months               254                   13,026
        
        


        
        
                                      BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
                                           Supplemental Retail Information--unaudited
                                                         (In thousands)
        
        
                                               43 Comparable Stores                     40 Comparable Stores
                                    -----------------------------------------------------------------------------------
        
                                        Quarter Ended       Quarter Ended       Six Months Ended     Six Months Ended
                                         May 26, 2012        May 28, 2011         May 26, 2012         May 28, 2011
                                    -----------------------------------------------------------------------------------
        
                                                 Percent             Percent              Percent              Percent
                                                   of                  of                   of                   of
                                       Amount   Net Sales   Amount  Net Sales   Amount   Net Sales   Amount   Net Sales
                                    -----------------------------------------------------------------------------------
        
         Net sales                      $ 37,893   100.0%   $ 35,124   100.0%    $ 68,028   100.0%    $ 63,680   100.0%
        
        
         Cost of sales                    19,359    51.1%     18,210    51.8%      34,673    51.0%      32,824    51.5%
                                    -----------------------------------------------------------------------------------
        
        
          Gross profit                    18,534    48.9%     16,914    48.2%      33,355    49.0%      30,856    48.5%
                                    -----------------------------------------------------------------------------------
        
         Selling, general and
          administrative expense*         17,956    47.4%     17,070    48.6%      32,999    48.5%      32,174    50.5%
                                    -----------------------------------------------------------------------------------
        
          Income (loss) from
           operations                      $ 578     1.5%    $ (156)    -0.4%       $ 356     0.5%   $ (1,318)    -2.0%
                                    ===================================================================================
        
        
                                                 All Other Stores                         All Other Stores
                                    -----------------------------------------------------------------------------------
        
                                        Quarter Ended       Quarter Ended       Six Months Ended     Six Months Ended
                                         May 26, 2012        May 28, 2011         May 26, 2012         May 28, 2011
                                    -----------------------------------------------------------------------------------
        
                                                 Percent             Percent              Percent              Percent
                                                   of                  of                   of                   of
                                       Amount   Net Sales   Amount  Net Sales   Amount   Net Sales   Amount   Net Sales
                                    -----------------------------------------------------------------------------------
        
         Net sales                       $ 4,912   100.0%    $ 2,885   100.0%    $ 13,593   100.0%    $ 11,308   100.0%
        
        
         Cost of sales                     2,670    54.4%      1,932    67.0%       7,502    55.2%       7,158    63.3%
                                    -----------------------------------------------------------------------------------
        
        
          Gross profit                     2,242    45.6%        953    33.0%       6,091    44.8%       4,150    36.7%
                                    -----------------------------------------------------------------------------------
        
         Selling, general and
          administrative expense           2,754    56.2%      1,140    39.5%       7,380    54.4%       4,967    43.9%
                                    -----------------------------------------------------------------------------------
        
        
          Loss from operations           $ (512)   -10.6%    $ (187)    -6.5%   $ (1,289)    -9.6%     $ (817)    -7.2%
                                    ===================================================================================
        
         *Comparable store SG&A includes retail corporate overhead and administrative costs.
        
        


This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Bassett Furniture Industries, Inc.

        

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