Bassett Reports 4Q, 2006 Results

January 21, 2007  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on January 2007 Bassett Furniture Inds. announced sales of $76.5 million in the fourth quarter, and $328.2 million for fiscal 2006, respective decreases of 13 percent and 2 percent from prior-year performance.

Fourth-quarter net income of $400,000 was off 81 percent from the same period in 2005. For fiscal 2006, which ended Nov. 25, Bassett made $5.4 million, down 44.9 percent.

“The fourth quarter was tough for our industry and Bassett was no exception,” said Robert H. Spilman Jr., president and chief executive officer in a release reporting Bassett’s results. “Although retail conditions continue to be challenging, we are committed to investing in the future of the Bassett store program and the Bassett brand. Examples are the ongoing addition of new retail talent and a commitment to increased distribution of our consumer catalog. Furthermore, we are in the process of preparing to unveil a new store prototype later in 2007. We will, however, continue to examine our cost structure in light of the cost of our new initiatives and the current retail environment.” Two unusual items impacted 2006 earnings: a fourth quarter goodwill impairment charge of $1.4 million and the receipt during 2006 of $1.5 million in duties on wood bedroom furniture from China.

The decline in sales along with retail segment operating losses among company-owned Bassett Furniture Direct stores were the primary factors in the quarter over quarter and year over year decrease in earnings from 2005 to 2006.

In Bassett’s retail segment, fourth-quarter sales of $21.5 million fell 10 percent from the prior year; but were up 19.7 percent for the entire year to $84.4 million due to the acquisition of of additional BFD stores from retail licensees. Bassett now has 27 company-owned stores.

As of the end of fiscal 2006, BFD store count stood at 134 (107 licensed). In the fourth quarter, Bassett opened one store and closed two licensed locations. Soft retail conditions and the development of a new store prototype have temporarily slowed store-count growth. Bassett expects to open between four and six BFD stores in fiscal 2007.

Net wholesale sales were down 14 percent in the fourth quarter to $65.9 million, while for the year, net wholesale sales of $284.4 million were off 5 percent compared to 2005. BFD stores’ share of shipments rose from 67 percent in 2005 to 72 percent in 2006. The wholesale segment’s gross margin increased a percentage point in 2006, primarily from the upholstery division’s performance; and an improved mix of imported goods, which represented 44 percent of shipments in fourth-quarter 2006 compared to 35 percent in the prior-year period.