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From Home Furnishing Business

Bassett Reports 3.9% Sales Hike in Q4, but Net Income Slips

Bassett Furniture Inds. (NASDAQ: BSET) said sales rose 3.9% to $118.2 million in the fiscal fourth quarter, but net income slipped 1.4% as the company began an aggressive expansion of its retail store network.

Bassett, which currently has 60 company-owned stores, opened two locations during the quarter ended Nov. 25, and plans to open at least 10 more stores during the next 18 months.

Net income for the quarter totaled $4.97 million or 46 cents per share. That was down from $5.05 million or 47 cents per share in the final quarter of the previous fiscal year.

For the year ended Nov. 25, however, net income jumped 15.3% to $18.3 million or $1.70 per share.

Full-year sales totaled $452.5 million, an increase of 4.7% from $432 million the previous fiscal year.

“We were pleased to finish our fourth quarter with a 4% gain in consolidated revenue, thus capping fiscal 2017 as a solid year for Bassett,” said Rob Spilman, chairman and CEO. “Despite the sales gain, however, quarterly operating income decreased to $7.5 million, or 17% less than last year.”

He said the aggressive retail expansion plans will likely squeeze operating income and net income in the short term, but said the investments will benefit the company long term.

“We strongly believe that expanding our store network is the best way for us to grow and coupled with other planned initiatives, these investments will make Bassett a larger and more profitable enterprise as a result,” Spilman said. “Furthermore, we believe that increasing our store count, which will benefit our wholesale, retail and logistics segments in the long run, is an appropriate use of our strong balance sheet.”

He said a centerpiece of the expansion strategy is a “Generation 3” prototype store that will open in Frisco, Texas, during third quarter.

“Two years in the making, the new store will showcase Bassett’s interior design and customizable home furnishings competencies through a technology laden fixturing package designed to easily navigate the many options that we offer to create personalized space for our consumers,” Spilman said.

He said new store prototype highlights the company’s focus on blending the company’s brick-and-mortar experience, its custom manufacturing platform and its digital strategy.

In the fourth quarter, Bassett’s retail segment recorded a sales increase of 3.2%, but comparable-store sales fell 1.7%. The company said a big contributor to the drop in comps was the fact that its four stores in Houston were closed for nearly two weeks due to flooding from Hurricane Harvey.

Without the Houston stores, comparable-store sales fell just 0.4%, the company said.

Comparable-store written sales, which include merchandise sold but not delivered, rose 2.7% in the quarter.

On the wholesale side of its business, the company said the fourth quarter saw an 8.7% increase in shipments to retailers outside the Basset store network, but a 5.5% decrease in shipments to the store network.

The drop in shipments to Bassett retail stores was due largely to the effects of hurricanes in Puerto Rico and Houston and a drop in written sales by some of its licensees.

Revenues for the company’s Zenith Global Logistics business rose 6.1% to $25.7 million in the quarter.

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