BASSETT, Va. -- Bassett Furniture Industries, Inc. (Nasdaq:BSET) announced today its results of operations for its fiscal quarter ended November 26, 2011.
Fiscal 2011 Fourth Quarter
Consolidated sales for the fourth quarter decreased 4.1% to $63.3 million as compared to the fourth quarter of 2010.
Company-owned store delivered sales increased 13% to $39.4 million with a 4.9% comparable store increase (locations that have been open and operated for all of each comparable reporting period).
Wholesale sales declined 11% to $43.7 million.
Gross margins increased to 52.6% of sales for Q4 2011 from 48.3% for Q4 2010.
Operating profit increased by $0.6 million to 3% of sales.
Pretax income decreased by $0.4 million as Q4 2010 included $1.4 million of income from our previous investment in the International Home Furnishings Center.
Net income declined to $0.6 million from $1.9 million partly attributable to a $0.9 million increase in income tax expense.
Generated $6.9 million of cash from operations during the quarter.
Repurchased 112,500 shares using $0.9 million and paid $0.4 million in dividends during the quarter.
"As the Company grappled with the negative effects of the housing related downturn over the past several years, management's focus has been largely concentrated on stabilizing the health of its store network and on limiting balance sheet exposure," said Robert H. Spilman Jr., President and Chief Executive Officer. "The emphasis has now squarely shifted to fine tuning the Company's operating performance. We made progress this quarter by improving corporate retail results, increasing wholesale margins, and reducing bad debt charges. The improvement in operating results was tempered by increased SG&A spending primarily related to next fall's launch of the new HGTV Home Division and restructuring charges related to closed plant demolition and store closure and relocation costs."
Fiscal 2011 Fourth Quarter
Wholesale shipments declined 11% to $43.7 million as compared to the fourth quarter of 2010 due primarily to fewer stores in the dedicated retail network in 2011 and shipping in the fourth quarter of 2010 of a backlog built in the second and third quarters of 2010. This decline was partially offset by increased shipments in the traditional and export channels in 2011.
Wholesale operating margins increased to 4.8% from 3.2% 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 Division.
Both wood and upholstery sales down 12% for the quarter; both essentially flat for the year.
Traditional and export sales channels increased 8.4% for the quarter, resulting from increased market share.
"In order to reduce accounts receivable exposure from underperforming retail licensees, the Company ultimately ended 2011 with 15 fewer licensed stores than at year end 2010," commented Mr. Spilman. "This reduction in store count was responsible for 97% of the quarter's decline in wholesale sales. Conversely, the wholesale volume derived from corporate retail stores and from independent retail furniture store sales grew by 9%. Despite the reduced volume, wholesale operating margins increased by 50% in 2011. For several years we have been dealing with the business challenges presented by the deteriorating health of our weaker licensed store operations. We made the decision to aggressively deal with most of the remaining delinquent licensee exposure in 2011, primarily through closures or takeovers. Although we definitely believe that this was the right decision for the Company, we are now dealing with the decline in wholesale sales that is a by-product of this process. Nevertheless, we were pleased that we were able to post improved wholesale margins for the quarter. We are focused on increasing our wholesale market share through our remaining store operations and with independent furniture retailers in both the Bassett and soon to be introduced HGTV Home Furniture Collection product assortments."
Fiscal 2011 Fourth Quarter
Company-owned store delivered sales increased 13% to $39.4 million with a 4.9% comparable store sales increase.
Written sales for comparable stores increased 7.2% compared to Q4 2010.
Operating margins improved from a 2.5% loss in Q4 2010 to a 1.5% loss in Q4 2011 due to increasing leverage of fixed costs from higher comparable store sales and greater operating efficiencies.
Comparable stores generated $0.1 million operating profit.
Opened a new store in Torrance, California on December 26, 2011.
The following table summarizes the changes in store count during the year ended November 26, 2011:
November 27, New Stores Stores November 26,
2010 Stores Acquired Closed 2011
Company-owned stores 47 -- 9 (7) 49
Licensee-owned stores 54 -- (9) (6) 39
Total 101 -- -- (13) 88
"The year over year improvement in operating performance accomplished by the Company's retail division continued in 2011, marking the fifth consecutive year of improved results," Mr. Spilman continued. "Once again, there was tremendous activity in our corporate retail division in 2011 as we acquired nine licensee stores and closed seven of our own. Against that backdrop, the 39% improvement in year over year operating results was impressive. Our team continues to streamline costs, upgrade the caliber of our design staff, and offer a high level of service to our consumers. We are excited about our new Torrance, California location and look forward to opening a repositioned store in Richmond, Virginia in February."
The Company also announced today that its Board of Directors has declared a regular quarterly dividend of $0.05 per share on outstanding common stock payable on March 1, 2012, to shareholders of record at the close of business February 15, 2012. This represents an increase of $0.015 over the regular dividend paid on December 1, 2011.
About Bassett Furniture Industries, Inc.
Bassett Furniture Industries, Inc. (Nasdaq:BSET) 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)
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