Bassett 1Q Sales off 8.5%

April 7, 2010  by in UnCategorized   

By Home Furnishings Business in Financial Reports on April 8, 2010

Bassett Furniture Industries, Inc. (Nasdaq:BSET) announced on Thursday that first-quarter 2010 sales fell 8.5 percent from the prior-year period to $52.9 million.

For the quarter ended February 27, Bassett reported a net loss of $1.7 million compared with a net loss of $12 million for first-quarter 2009.

Bassett's store network included 61 licensee-owned stores and 43 company-owned and operated stores at the end of the first quarter, during which Bassett acquired the operations of seven licensee stores. The total store count was unchanged from fourth-quarter 2009. The company plans to open two more stores in the second quarter of 2010, one new and the other a store that was closed in 2008 by a former licensee. In addition, two licensed stores are converting to multi-brand furniture stores. The company does not have any real estate exposure with respect to these two stores. Also, the company closed its Mt. Pleasant, S.C., store in March 2010 as the result of an eminent domain condemnation.

"Although we were not satisfied with the ultimate outcome of our first quarter in 2010, we remain encouraged by the continuing strengthening of our balance sheet and the improving margins in our wholesale and retail segments," said Robert H. Spilman Jr., president and chief executive officer. "For the fourth consecutive quarter, we generated significant positive operating cash flow, this time in the amount of $6.7 million. We plan to stay committed to strong balance sheet management in order to generate positive operating cash flow.

"As previously reported, the housing related furniture slump of the past three years has taken an unfortunate toll on the general health of our licensee store network. Once again, this quarter was negatively affected by the financial fallout from licensee store acquisitions (a total of seven during the period) and related bad debt expenses. This trend has overshadowed the progress the company has made in improving its financial performance over the past few months. Nevertheless, management will maintain a strong focus on evaluating the financial health of the handful of store licensees that have suffered the most during the recession. And, when appropriate, the company will either acquire or close the dealer in question. As has been the case recently, these events adversely affect the company's income statement but do not generally require additional capital."

The total company-owned store network had net sales of $27 million for the first quarter of 2010, an increase of 13.9 percent over the prior-year period. The increase was comprised of a $5.4 million increase from stores acquired after Nov, 29, 2008 (end of fiscal 2008), partially offset by a $1.3 million decrease from stores closed after Feb. 28, 2009 and a $0.8 million decrease from a decline in comparable store sales of 3.4 percent. While the company-owned stores recorded declines in comparable store delivered sales, they experienced an increase of 6.7 percent for written sales driven by a stronger retail environment in February 2010.