Bassett Furniture Industries
Apr 5, 2012
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Bassett Announces First Quarter Results

BASSETT, Va., April 5, 2012 (GLOBE NEWSWIRE) -- Bassett Furniture Industries, Inc. (Nasdaq:BSET) announced today its results of operations for its fiscal quarter ended February 25, 2012.

Fiscal 2012 First Quarter

"The Company's underlying performance improved in the first quarter despite our overall decline in sales and three distinct items that adversely affected our financial results," said Robert H. Spilman Jr., president and chief executive officer. "As previously noted, we will experience difficult consolidated top line comparisons year over year until we can make up the volume we lost from closing 13 underperforming stores in 2011. Our remaining network of Bassett Home Furnishings (BHF) corporate stores, however, turned in a strong 5.0% overall sales increase that included a 6.5% increase by comparable stores. We believe that continued improvement in our store sales coupled with the execution of several growth initiatives currently underway will allow us to recapture the sales that were lost in last year's store closings and begin to generate sales growth as a result.   We recorded in the quarter restructuring costs of $0.5 million in conjunction with relocating an existing store in Richmond, Va., to a better retail site, and demolishing a manufacturing facility in Bassett, Va., that closed in 2007. Also in the quarter, the Company recorded a $0.8 million impairment of a financial investment that we have held since 2005. This followed a write-down taken by the fund manager, who recently advised us of an adverse court ruling in Delaware affecting certain insurance-related investments in the fund. These losses were partially offset by tax benefits of approximately $0.5 million recognized for the quarter. Also in the quarter, the Company paid a special dividend to shareholders of $.50/share amounting to $5.7 million and announced an increase to our quarterly dividend from $.035/share to $.05/share. Subsequently, the Company paid the dividend at the new rate on March 1, 2012. And, finally, the Company acquired 82,545 shares of its common stock during the quarter for approximately $0.6 million."

Wholesale Segment                                                                         

Fiscal 2012 First Quarter

"Once again, the 7.3% decline in wholesale shipments for the quarter was attributable to fewer shipments to BHF licensees," commented Mr. Spilman. "On the other hand, wholesale shipments to furniture retailers outside of the Bassett store network grew by 11%. Future wholesale growth should result from continued improvement in comparable corporate retail performance, new store openings, and from the introduction of the HGTV Design Studio and HGTV Home Furniture Collection lines this fall. The strategic partnership with Home & Garden Television that was announced last September is an exciting opportunity for the Company. A tremendous amount of preparation has been underway for the past nine months as the Company has incurred the expense of opening a new HGTV dedicated showroom in High Point, additional sample costs, and added payroll expense to manage the HGTV opportunity. Additionally, the Company opened a new wholesale showroom at the World Market Center in Las Vegas. Even with the added costs of these investments in operations, wholesale operating income improved to $1.8 million. More significantly, bad debt expense was reduced by $6.8 million. After many quarters of significant bad debt expense, the Company has returned to a normalized level of delinquent account charges."

Retail Segment

Fiscal 2012 First Quarter

The following table summarizes the changes in store count during the quarter ended February 25, 2012:

  November 26, 2011 New Stores Stores Acquired Stores Closed February 25, 2012
           
Licensee-owned stores  39        39
Company-owned stores  49  2    (1)  50
           
Total  88  2  --   (1)  89

"Our corporate retail division continued to turn in improved operating results once again this quarter," Mr. Spilman continued. "This marks four consecutive quarters that corporate retail has been able to post better year over year performance. The visual merchandising in our corporate stores has markedly improved, our e-training platform is bearing fruit, and we are consistently attracting a higher caliber of design associate to sell our products. Furthermore, our investment in the 16 stores that we have remodeled over the past 4 years is producing solid returns as this group of stores is significantly more profitable than the remainder of the fleet. Also noteworthy is the fact that 30% of our operating loss was attributable to new store opening costs. We plan to open two more stores in 2012 — one in Paramus, New Jersey around Memorial Day and one in Dallas, Texas this fall. We continue to analyze all of our existing markets to assess the quality of our locations. As a result, we are closing a store on the south side of Austin, Texas later this month."

About Bassett Furniture Industries, Inc.

Bassett Furniture Industries, Inc. (Nasdaq:BSET), is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With 89 company- and licensee- owned stores, 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. The most significant growth opportunity for Bassett continues to be the Company's dedicated retail store program. Bassett's retail strategy includes affordable custom-built furniture that is ready for delivery in the home within 30 days. The stores also feature the latest on-trend furniture styles, more than 750 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. 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," "expects," "anticipates," "intends," "should," "estimates," or similar expressions, or those relating to or anticipating financial results for periods beyond the end of the first fiscal quarter of 2012, 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 and future events on the retail demand for home furnishings and the ability of Bassett's customers and consumers to obtain credit; and the economic, competitive, governmental and other factors identified in Bassett's 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.

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations - unaudited
(In thousands, except for per share data)
     
  Quarter Ended Quarter Ended
  February 25, 2012 February 26, 2011
    Percent of   Percent of
  Amount Net Sales Amount Net Sales
         
Net sales  $ 60,968 100.0%  $ 64,264 100.0%
         
Cost of sales  29,297 48.1%  32,416 50.4%
         
 Gross profit  31,671 51.9%  31,848 49.6%
         
Selling, general and administrative expense excluding bad debt and notes receivable valuation charges  30,996  50.8%  30,508  47.5%
Bad debt and notes receivable valuation charges  32  0.1%  6,826  10.6%
Restructuring and asset impairment charges  236 0.4%  879 1.4%
Lease exit costs  228 0.4%  884 1.4%
         
 Operating income (loss)  179 0.3%  (7,249) -11.3%
         
Other loss, net  (1,247) -2.0%  (959) -1.5%
         
Loss before income taxes  (1,068) -1.8%  (8,208) -12.8%
         
Income tax (expense) benefit  472 0.8%  (47) -0.1%
Net loss  $ (596) -1.0%  $ (8,255) -12.8%
         
Basic and diluted loss per share  $ (0.05)    $ (0.72)  
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets 
(In thousands)
     
  (unaudited)  
Assets February 25, 2012 November 27, 2011
Current assets    
 Cash and cash equivalents   $ 61,089  $ 69,601
 Accounts receivable, net  13,830  14,756
 Marketable securities  3,010  2,939
 Inventories  46,059  45,129
 Other current assets   6,808  7,778
Total current assets  130,796  140,203
     
Property and equipment    
 Cost  142,549  143,824
 Less accumulated depreciation  92,046  93,878
Property and equipment, net  50,503  49,946
     
Investments   --  806
Retail real estate  16,128  16,257
Notes receivable, net  1,792  1,802
Other  13,992  14,160
Total long-term assets  31,912  33,025
Total assets  $ 213,211  $ 223,174
     
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts payable  $ 15,763  $ 18,821
Accrued compensation and benefits  6,972  7,201
Customer deposits  10,776  9,238
Dividends payable  563  6,063
Other accrued liabilities  10,210  10,302
Current portion of real estate notes payable  205  202
Total current liabilities  44,489  51,827
     
Long-term liabilities    
 Post employment benefit obligations  11,118  11,226
 Real estate notes payable  3,610  3,662
 Other long-term liabilities  3,625  4,024
Total long-term liabilities  18,353  18,912
     
Commitments and Contingencies    
     
Stockholders' equity    
 Common stock  56,332  56,712
 Retained earnings  95,094  96,331
 Accumulated other comprehensive loss  (1,057)  (608)
Total stockholders' equity  150,369  152,435
Total liabilities and stockholders' equity  $ 213,211  $ 223,174
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - unaudited
(In thousands)
     
  Three Months Ended Three Months Ended
  February 25, 2012 February 26, 2011
Operating activities:    
Net loss  $ (596)  $ (8,255)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization  1,316  1,465
Equity in undistributed income of investments and unconsolidated affiliated companies  (16)  (940)
Provision for restructuring and asset impairment charges  236  879
Lease exit costs  228  884
Provision for lease and loan guarantees  (13)  1,282
Provision for losses on accounts and notes receivable  32  6,826
Gain on mortgage settlement  --  (436)
Other than temporary impairment on investments  806  --
Other, net  (342)  322
Changes in operating assets and liabilities     
 Accounts receivable  894  370
 Inventories  (930)  1,988
 Other current assets   (439)  760
 Accounts payable and accrued liabilities  (2,470)  (8,905)
 Net cash used in operating activities  (1,294)  (3,760)
     
Investing activities:    
Purchases of property and equipment  (1,918)  (486)
Proceeds from sales of property and equipment  5  26
Proceeds from sale of interest in affiliate, IHFC  1,410  --
Proceeds from sales of investments  398  1,369
Purchases of investments  (396)  (1,369)
Net cash received on notes  2  40
 Net cash provided by investing activities  (499)  (420)
     
Financing activities:     
Repayments of real estate notes payable  (49)  (223)
Issuance of common stock  39  35
Repurchases of common stock  (646)  --
Cash dividends   (6,063)  --
Payments on other notes  --  (362)
 Net cash used in financing activities  (6,719)  (550)
Change in cash and cash equivalents  (8,512)  (4,730)
Cash and cash equivalents - beginning of period  69,601  11,071
Cash and cash equivalents - end of period  $ 61,089  $ 6,341
     
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES 
Segment Information - unaudited
(In thousands)
         
  Quarter ended   Quarter ended  
  February 25, 2012   February 26, 2011  
Net Sales        
Wholesale  $ 42,611  (a)   $ 45,969  (a) 
Retail  38,816    36,980  
Inter-company elimination  (20,459)    (18,685)  
Consolidated  $ 60,968    $ 64,264  
         
Operating Income (Loss)        
Wholesale  $ 1,831  (b)   $ (3,891)  (b) 
Retail  (999)    (1,792)  
Inter-company elimination  (189)    197  
Restructuring and asset impairment charges  (236)    (879)  
Lease exit costs  (228)    (884)  
Consolidated  $ 179    $ (7,249)  
         
(a) Excludes wholesale shipments for dealers where collectibility is not reasonably assured at time of shipment as follows:
  February 25, 2012   February 26, 2011  
 Quarter ended  $ --    $ 1,257  
         
(b) Includes bad debt and notes receivable valuation charges as follows:
  February 25, 2012   February 26, 2011  
 Quarter ended  $ 32    $ 6,826  
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Supplemental Retail Information - unaudited
(In thousands)
         
   40 Comparable Stores
  Quarter Ended Quarter Ended
  February 25, 2012 February 26, 2011
    Percent of   Percent of
  Amount Net Sales Amount Net Sales
         
Net sales  $ 32,774 100.0%  $ 30,764 100.0%
         
Cost of sales  16,665 50.8%  15,786 51.3%
         
 Gross profit  16,109 49.2%  14,978 48.7%
         
Selling, general and administrative expense*  15,890 48.5%  15,764 51.2%
         
 Income (loss) from operations  $ 219 0.7%  $ (786) -2.6%
         
  All Other Stores
  Quarter Ended Quarter Ended
  February 25, 2012 February 26, 2011
    Percent of   Percent of
  Amount Net Sales Amount Net Sales
         
Net sales  $ 6,042 100.0%  $ 6,216 100.0%
         
Cost of sales  3,481 57.6%  4,058 65.3%
         
 Gross profit  2,561 42.4%  2,158 34.7%
         
Selling, general and administrative expense  3,779 62.6%  3,164 50.9%
         
 Loss from operations  $ (1,218) -20.2%  $ (1,006) -16.2%
         
*Comparable store SG&A includes retail corporate overhead and administrative costs.
CONTACT: J. Michael Daniel, Vice-President

         and Chief Accounting Officer

         (276) 629-6614 - Investors



         Jay S. Moore, Director of

         Communications

         (276) 629-6450 - Media
Source: Bassett Furniture Industries, Inc.

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