Bassett Furniture Reports Second Quarter & Restructuring Plan

July 11, 2024  by Karen Parrish in Business Strategy, Industry   

Quarter Two  Consolidated Business Highlights: [FY 24 vs. FY 23, unless otherwise specified]

• Revenues decreased 17%.
• When comparing to the first quarter of 2024, revenues increased 3.8%, normalizing the first quarter for the extra week due to our fiscal calendar.
• Operating loss of $8.5 million which included asset impairment charges of $5.5 million and additional inventory valuation charges of $2.7 million.
• Gross margin of 52.5%, which included the increased inventory valuation charges noted above. Excluding the inventory valuation charges, gross profit margin would have been 55.7% (see Table 5).
• Loss per share of $0.82 vs. diluted earnings per share $0.24.
• Generated $5.8 million of operating cash flow for the quarter.

“Excluding the additional inventory valuation charges that we recorded, we were pleased with another quarter of strong gross margins, despite lower sales,” said Robert H. Spilman, Jr., Bassett Chairman and Chief Executive Officer. “The environment for housing remains challenging and consumers are choosing to invest in experiences over their homes, a change from the Covid period. We continue to be disciplined on expenses to improve operating efficiency.”

Restructuring Plan

The Company also announced a restructuring plan to more right-size its cost structure and to prepare it for topline growth. The comprehensive strategy builds on the strength of Bassett’s brand quality, design expertise and service, and focuses on driving revenue growth and profitability long-term. The five-point plan includes:

• Drive organic growth through Bassett-branded retail locations, omni-channel capabilities, and enhanced customization positioning to expand dedicated distribution footprint.
• Rationalize US wood manufacturing from two locations into one primary location, supported by a small satellite operation.
• Optimize inventory and drop unproductive lines.
• Improve overall cost structure and invest capital in refurbishment of current retail locations.
• Close the Noa Home e-commerce business.

“Bassett Furniture has a long history of weathering economic cycles, such as the inflationary environment and slow housing market we’re experiencing in 2024 – factors that led to soft demand in our second quarter,” explained Spilman. “The business climate has remained difficult through the first six months of this year and may not improve in the near future. Accordingly, we are committed to returning to profitability by running a leaner operation, with priority focus on both our inventory position and the overall cost structure. We believe that our restructuring plan, expected to improve our bottom line between $5.5 million and $6.5 million on an annual basis, coupled with our solid balance sheet, puts us in a position to be a considerably stronger company when customer demand inevitably improves. I’m particularly pleased that our Board believes in our ability to improve operations and continue our strong cash generation by increasing our quarterly dividend by 11%.”

Conference Call and Webcast
A replay and transcript of the conference call will be available on demand on the investor relations site, https://investors.bassettfurniture.com/