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From Home Furnishing Business

Retail Stores Shine, But Bassett Reports Drop in Q4 Sales, Earnings

Despite a strong performance from its company-owned retail stores Bassett Furniture Inds. (NASDAQ:BSET) said sales slipped 1.5% in its fiscal fourth quarter, and net income fell 11.2%.

Bassett said sales at its 59 company-owned retail stores rose 5.5% in the quarter ended Nov. 26, but wholesale sales fell 3%.

Companywide net sales, which also include revenues from its Zenith Global Logistics subsidiary, totaled $113.8 million, down from $115.6 million in the previous year’s fourth fiscal quarter.

Net income totaled $5.05 million or 47 cents per share, down from $5.68 million or 52 cents per share in the comparable period.

"Led by a strong performance from our corporate retail segment, we closed the year on a high note," said Robert H. Spilman, Jr., chairman and CEO.  "After a sluggish start to the year, both our corporate and licensed retail store groups finished 2016 positively, largely due to the comparable store sales momentum that they generated during the second half of the year.

“We look ahead to a new year that will see us make significant investments in our store network, expand our digital presence, upgrade our manufacturing facilities and broaden our logistics platform.”

Spilman said the drop in wholesale shipments was caused by lower shipments to the open market, which consists of retailers outside the Bassett Home Furnishings store network. The lower shipments were due largely to the company’s decision to end its licensing agreement with HGTV in late 2015.

Shipments to the retail network rose 5.7%, he said.

The retail segment featured a 4.3% increase in comparable-store sales at company-owned stores, and the segment had an operating profit of $2.9 million, up from $2.2 million in the previous year’s fourth quarter.

"2016 was foundational to our blueprint for store expansion in 2017 and beyond,” said Spilman. “This included repositioning one store, closing three, and opening two new ones in the year just ended.  Furthermore, a tremendous amount of site selection and real estate negotiations took place during the year as we prepare to open six new stores and reposition two others over the course of 2017. Four of the new stores are expansions of existing markets and the other two are brand new. Therefore, 2017 will be a year of investment as we absorb in excess of $2 million more in preopening and startup costs than we experienced in 2016.”

For the fiscal year ended Nov. 26, sales totaled $432 million, up from $430.9 million the previous fiscal year.

Net income for the year was $15.8 million or $1.46 per share. That was down from $20.4 million or $1.88 per share the previous year.

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