bset20230124_8k.htm
false 0000010329 0000010329 2023-01-24 2023-01-24


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported) January 24, 2023
 

 
BASSETT FURNITURE INDUSTRIES, INCORPORATED
(Exact name of registrant as specified in its charter)
 

 
Virginia
 
000-00209
 
54-0135270
(State or other jurisdiction of
incorporation or organization)
 
(Commission File No.)
 
(I.R.S. Employer
Identification No.)
 
3525 Fairystone Park Highway
Bassett, Virginia
 
24055
(Address of principal executive offices)
 
(Zip Code)
 
Registrants telephone number, including area code (276) 629-6000
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol
 
Name of exchange on which registered
Common Stock ($5.00 par value)
 
BSET
 
NASDAQ
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 


 
 

 
Item 2.02.
Results of Operations and Financial Condition.
 
On January 24, 2023, Bassett Furniture Industries issued a news release relating to the fourth quarter financial results for the fiscal year ended November 26, 2022. A copy of the news release announcing this information is attached to this report as Exhibit 99.1.
 
 
Item 9.01.
Financial Statements and Exhibits.
 
(d) Exhibits
 
99.1
 
104
Cover Page Interactive Data File (embedded within the inline XBRL document).
 
 

 
Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
BASSETT FURNITURE INDUSTRIES, INCORPORATED
Date: January 24, 2023 
By:
/s/ J. Michael Daniel
J. Michael Daniel
Title:  Senior Vice President – Chief Financial Officer
 
 
 
ex_467219.htm

 

Exhibit 99.1

 

https://cdn.kscope.io/ecfa76173710a02615eda593291ff8f7-a01.jpg

 

Bassett Furniture Industries, Inc. J. Michael Daniel
P.O. Box 626 Senior Vice President and
Bassett, VA 24055 Chief Financial Officer
  (276) 629-6614 – Investors
  mdaniel@bassettfurniture.com
   
  Peter D. Morrison
  Vice President of Communications
For Immediate Release (276) 629-6450 – Media

                                    

      

                                  

Bassett Furniture News Release

Bassett Announces Fiscal Fourth Quarter Results


 

(Bassett, Va.) – January 24, 2023 – Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today its results of operations for its fourth quarter ended November 26, 2022.

 

Fiscal 2022 Fourth Quarter Highlights of Continuing Operations

(Dollars in millions)

 

   

Sales

   

Operating Income

 
   

4th Qtr

   

Dollar

   

%

   

4th Qtr

   

% of

   

4th Qtr

   

% of

 
   

2022

   

2021

   

Change

   

Change

   

2022

   

Sales

   

2021

   

Sales

 

Consolidated (1)

  $ 121.0     $ 114.4     $ 6.6       5.8 %   $ 6.7       5.6 %   $ 6.6       5.8 %
                                                                 

Wholesale

  $ 74.6     $ 76.0     $ (1.4 )     -1.6 %   $ 0.9       1.2 %   $ 2.9       3.8 %
                                                                 

Retail

  $ 76.3     $ 66.4     $ 9.9       14.9 %   $ 5.8       7.6 %   $ 3.4       5.1 %

 

(1) Our consolidated results include certain intercompany eliminations as well as a gain on the sale of real estate in Q4 2022 which is not included in our segment results.  See Table 4, “Segment Information” below for an illustration of the effects of these items on our  consolidated sales and operating income.

 

We posted revenue of $121.0 million in our fourth quarter, a 5.8% increase against the backdrop of an increasingly difficult macroeconomic environment as we head into another year. Operating profit of $6.7 million was slightly ahead of last year even though we made selected price adjustments designed to reduce inventory that were detrimental to our margins. We also invested more digital marketing dollars to drive our top line. Our Company is stronger than when we entered the pandemic three years ago. We have trimmed our underperforming stores, properly adjusted our retail cost structure, gained wholesale market share with independent furniture dealers, and further fortified our strong balance sheet. Still, we acknowledge that fiscal 2023 has started off slowly from a wholesale order standpoint with quarter-to-date written sales off 20% compared to the robust pace we experienced last year. However, quarter-to-date shipments are down 10% as fourth-quarter orders were off modestly. Despite the uncertainty around the current pace of orders, we will concentrate on running our business with financial discipline and operational excellence while executing our growth strategies that are designed to create long term value for our shareholders.

 

 

 

Service levels in our wholesale operations are almost back to the best-in-class standard that was our hallmark prior to the breakdown of the global supply chain. Backlogs are now comparable with pre-pandemic equivalents. Combined wholesale shipments declined 1.6% for the quarter with increases in wood and outdoor furniture products being offset by declines in domestic upholstery and Club Level. As previously discussed, the “right sizing” of our Club Level inventory is negatively affecting our wholesale margins, and, in the case of the fourth quarter, constitutes more than 100% of the year over year wholesale margin shortfall. On a positive note, wholesale inventories declined by $4.0 million in the quarter with Club Level again representing essentially all of the reduction. So, we are making good progress on this front. Also, our domestic upholstery operating margins returned to their historical levels by improving 670 basis points as we are through the period of misalignment between inflated raw materials and our ability to pass those costs along. In fact, we have recently begun to receive several price decreases from various suppliers. Looking ahead, we have returned to a more normalized wholesale operating environment in terms of supply chain. Our challenge now is to efficiently operate while we assess how the economy will affect order flow and our work schedules.

 

Meanwhile, corporate retail produced its fourth record quarter for the year as the fourth quarter was more profitable than any previous comparable period on record. The year was characterized by a gross margin improvement of 40 basis points to 52.6% and operating profit that more than tripled compared to last year. Our retail backlog remained healthy heading into the new fiscal year as our Black Friday event was relatively strong. 2023 will mark the opening of three new Bassett stores and an extensive remodeling of our Austin, Texas location.

 

Coming in the second quarter of 2023 is the debut of our new website platform featuring better navigation and architecture designed to drive more consumers to our stores and significantly enhance our ecommerce capabilities. While this will represent the culmination of a multi-year digital transformation plan, it will also provide a platform for greater integration of the website with our store network and better overall customer and product data that will lead to better decision making.

 

In that vein, we acquired Canadian online furniture retailer Noa Home Inc. in early September to begin our fourth quarter. As expected, the Noa results, now included in our corporate retail segment, were not profitable for the quarter. We spent the three months scaling the business for growth as we worked to get best sellers in stock, opened a new 3PL warehouse in western Canada, and integrated the first Bassett designed product into their lineup. Our focus for this year is to continue to expand their lean assortment and to prepare to open the U.S. market by the fall selling season.

 

Our partnership with JB Hunt, who purchased the Zenith logistics business from us last February, continues to offer great service to our stores and participating open market dealers. During the quarter, we opened our second Regional Fulfillment Center (“RFC”) with JB Hunt and will use the facility located in the Baltimore area to service our best sellers in the northeast markets. The RFC strategy is unfolding via daily collaboration with the JB Hunt team with three additional centers having been opened around the country in December.

 

Proceeds from the sale of Zenith were the catalyst for the $14.5 million special dividend that we distributed last April and, in addition, our regular quarterly dividend that we increased in July. Furthermore, in light of the historically low earnings multiples with which industry stocks have been trading and our belief in Bassett’s future, we retired $15.1 million of our common stock in 2022 including $4.9 million in the fourth quarter. After returning over $35 million to shareholders in 2022, we have the financial strength to pursue our long term growth strategies.

 

 

Robert H. Spilman, Jr., Chairman and CEO

 

 

 

About Bassett Furniture Industries, Inc.

Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer and marketer of high quality home furnishings. With 92 company- and licensee-owned stores at the time of this release, Bassett has leveraged its strong brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. Bassett’s retail strategy includes stylish, custom-built furniture that features the latest on-trend furniture styles, free in-home design visits, and coordinated decorating accessories. Bassett also has a traditional wholesale business with more than 700 accounts on the open market, across the United States and internationally and a logistics business specializing in home furnishings. For more information, visit the Company’s website at bassettfurniture.com. (BSET-E)

 

 

 

Certain of the statements in this release, particularly those preceded by, followed by or including the words believes, plans, expects, anticipates, intends, should, estimates, or similar expressions, or those relating to or anticipating financial results or changes in operations for periods beyond the end of the fourth fiscal quarter of 2022, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward-looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause actual results to differ materially from those indicated in the forward looking statements: the effects of national and global economic or other conditions (including, without limitation, the effects on revenue, supply and demand resulting from the duration and extent of the COVID-19 pandemic) and future events on the retail demand for home furnishings and the ability of Bassetts customers and consumers to obtain credit; the success of marketing, logistics, retail and other initiatives; and the economic, competitive, governmental and other factors identified in Bassetts filings with the Securities and Exchange Commission. Any forward-looking statement that Bassett makes speaks only as of the date of such statement, and Bassett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indication of future performance, unless expressed as such, and should only be viewed as historical data.

###

 

 

 

 

Table 1

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income - unaudited

(In thousands, except for per share data)

 

   

Quarter Ended

   

Year Ended

 
   

November 26, 2022

   

November 27, 2021

   

November 26, 2022

   

November 27, 2021

 
           

Percent of

           

Percent of

           

Percent of

           

Percent of

 
   

Amount

   

Net Sales

   

Amount

   

Net Sales

   

Amount

   

Net Sales

   

Amount

   

Net Sales

 
                                                                 

Net sales of furniture and accessories

  $ 121,019       100.0 %   $ 114,364       100.0 %   $ 485,601       100.0 %   $ 430,886       100.0 %

Cost of furniture and accessories sold

    56,784       46.9 %     56,373       49.3 %     237,262       48.9 %     209,799       48.7 %

Gross profit

    64,235       53.1 %     57,991       50.7 %     248,339       51.1 %     221,087       51.3 %
                                                                 

Selling, general and administrative expenses

    57,532       47.5 %     51,357       44.9 %     218,069       44.9 %     196,830       45.7 %

Gain on sale of retail real estate

    -       0.0 %     -       0.0 %     4,595       0.9 %     -       0.0 %

Income from operations

    6,703       5.5 %     6,634       5.8 %     34,865       7.2 %     24,257       5.6 %
                                                                 

Other income (loss), net

    1,047       0.9 %     (672 )     -0.6 %     (803 )     -0.2 %     (1,500 )     -0.3 %

Income from continuing operations before income taxes

    7,750       6.4 %     5,962       5.2 %     34,062       7.0 %     22,757       5.3 %
                                                                 

Income tax expense

    2,197       1.8 %     1,257       1.1 %     8,702       1.8 %     5,836       1.4 %

Income from continuing operations

    5,553       4.6 %     4,705       4.1 %     25,360       5.2 %     16,921       3.9 %
                                                                 

Income (loss) from discontinued operations - net of tax

    (527 )             336               39,985               1,121          
                                                                 

Net income

  $ 5,026             $ 5,041             $ 65,345             $ 18,042          
                                                                 

Basic earnings per share:

                                                               

Income from continuing operations

  $ 0.61             $ 0.49             $ 2.70             $ 1.72          

Income (loss) from discontinued operations

    (0.06 )             0.03               4.26               0.11          

Basic earnings per share

  $ 0.55             $ 0.52             $ 6.96             $ 1.83          
                                                                 

Diluted earnings per share:

                                                               

Income from continuing operations

  $ 0.61             $ 0.49             $ 2.70             $ 1.72          

Income (loss) from discontinued operations

    (0.06 )             0.03               4.26               0.11          

Diluted earnings per share

  $ 0.55             $ 0.52             $ 6.96             $ 1.83          

 

 

 

Table 2

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

 

   

(Unaudited)

         

 

 

November 26, 2022

   

November 27, 2021

 
Assets                

Current assets

               

Cash and cash equivalents

  $ 61,625     $ 34,374  

Short-term investments

    17,715       17,715  

Accounts receivable, net

    17,838       20,567  

Inventories, net

    85,477       78,004  

Recoverable income taxes

    2,353       8,379  

Current assets of discontinued operations held for sale

    -       11,064  

Other current assets

    11,487       10,181  

Total current assets

    196,495       180,284  
                 

Property and equipment, net

    77,001       69,168  
                 

Other long-term assets

               

Deferred income taxes, net

    5,528       3,189  

Goodwill and other intangible assets

    21,727       14,354  

Right of use assets under operating leases

    99,472       95,955  

Long-term assets of discontinued operations held for sale

    -       52,757  

Other

    6,050       5,953  

Total long-term assets

    132,777       172,208  

Total assets

  $ 406,273     $ 421,660  
                 

Liabilities and Stockholders Equity

               

Current liabilities

               

Accounts payable

  $ 20,359     $ 23,988  

Accrued compensation and benefits

    12,921       12,639  

Customer deposits

    35,963       51,492  

Current portion of operating lease obligations

    18,819       20,235  

Current liabilities of discontinued operations held for sale

    -       16,095  

Other current liabilities and accrued expenses

    12,765       9,770  

Total current liabilities

    100,827       134,219  
                 

Long-term liabilities

               

Post employment benefit obligations

    9,954       12,968  

Long-term portion of operating lease obligations

    97,477       94,845  

Long-term liabilities of discontinued operations held for sale

    -       16,210  

Other long-term liabilities

    2,406       686  

Total long-term liabilities

    109,837       124,709  
                 
                 

Stockholders equity

               

Common stock

    44,759       48,811  

Retained earnings

    150,800       115,631  

Additional paid-in-capital

    -       113  

Accumulated other comprehensive loss

    50       (1,823 )

Total stockholders' equity

    195,609       162,732  

Total liabilities and stockholders equity

  $ 406,273     $ 421,660  

 

 

 

Table 3

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows - unaudited

(In thousands)

 

   

Year Ended

 
   

November 26, 2022

   

November 27, 2021

 

Operating activities:

               

Net income

  $ 65,345     $ 18,042  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

               

Depreciation and amortization

    11,309       14,597  

Gain on disposal of discontinued operations

    (52,534 )     -  

Gain on sale of property and equipment

    (4,595 )     (367 )

Inventory valuation charges

    3,648       2,969  

Deferred income taxes

    (2,339 )     1,545  

Other, net

    (302 )     728  

Changes in operating assets and liabilities

               

Accounts receivable

    3,169       (5,828 )

Inventories

    (9,536 )     (26,087 )

Other current and long-term assets

    5,944       (2,241 )

Right of use assets under operating leases

    20,531       26,243  

Customer deposits

    (16,588 )     11,730  

Accounts payable and other liabilities

    (4,073 )     2,153  

Obligations under operating leases

    (22,949 )     (28,921 )

Net cash provided by (used in) operating activities

    (2,970 )     14,563  
                 

Investing activities:

               

Purchases of property and equipment

    (21,296 )     (10,750 )

Proceeds from sale of property and equipment

    8,226       382  

Proceeds from disposal of discontined operations, net

    84,534       -  

Cash paid for business acquisition, net of cash acquired

    (5,582 )     -  

Other

    (40 )     (1,203 )

Net cash provided by (used in) investing activities

    65,842       (11,571 )
                 

Financing activities:

               

Cash dividends

    (20,162 )     (7,689 )

Proceeds from the exercise of stock options

    -       42  

Other issuance of common stock

    424       363  

Repurchases of common stock

    (15,122 )     (5,566 )

Taxes paid related to net share settlement of equity awards

    (19 )     (219 )

Repayments of finance lease obligations

    (684 )     (1,348 )

Net cash used in financing activities

    (35,563 )     (14,417 )

Effect of exchenge rate changes on cash and cash equivalents

    (58 )     -  

Change in cash and cash equivalents

    27,251       (11,425 )

Cash and cash equivalents - beginning of period

    34,374       45,799  
                 

Cash and cash equivalents - end of period

  $ 61,625     $ 34,374  

 

 

 

Table 4

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES 

Segment Information - unaudited

(In thousands)

 

   

Quarter Ended

   

Year Ended

 
   

November 26, 2022

   

November 27, 2021

   

November 26, 2022

   

November 27, 2021

 

Sales Revenue

                               

Wholesale sales of furniture and accessories

  $ 74,624     $ 75,958     $ 324,569     $ 295,329  

Less: Sales to retail segment

    (29,913 )     (27,967 )     (125,889 )     (112,270 )

Wholesale sales to external customers

    44,711       47,991       198,680       183,059  

Retail sales of furniture and accessories

    76,308       66,373       286,921       247,827  

Consolidated net sales of furniture and accessories

  $ 121,019     $ 114,364     $ 485,601     $ 430,886  
                                 
                                 

Operating Income

                               

Wholesale

  $ 856     $ 2,868     $ 9,286     $ 17,490  

Retail

    5,754       3,381       21,508       7,044  

Inter-company elimination

    93       385       (524 )     (277 )

Gain on sale of real estate

    -       -       4,595       -  

Consolidated

  $ 6,703     $ 6,634     $ 34,865     $ 24,257