Bassett Furniture Industries
Apr 4, 2013
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Bassett Announces Fiscal First Quarter Results

BASSETT, Va., April 4, 2013 (GLOBE NEWSWIRE) -- Bassett Furniture Industries, Inc. (Nasdaq:BSET) announced today its results of operations for its fiscal quarter ended March 2, 2013.

Fiscal 2013 First Quarter Highlights

On a consolidated basis, the Company reported net sales for the first quarter of 2013 of $79.8 million, an increase of $18.9 million, or 31%, over the first quarter of 2012. As noted above, the first quarter of 2013 consisted of 14 weeks while the first quarter of 2012 consisted of 13 weeks. On an average weekly basis, consolidated net sales increased 22%. Operating income increased to $2.4 million from $0.2 million driven primarily by higher sales in both the wholesale and retail segments. This was partially offset by higher selling, general and administrative expenses due primarily to the increased number of Company-owned stores, planned higher marketing and advertising costs to drive continued sales growth, and increased health care costs due to higher claim experience. The Company recorded net income of $1.0 million or $0.09 per diluted share for the first quarter of 2013 compared to a net loss of $(0.6) million or $(0.05) per diluted share in the first quarter of 2012.

"The sales momentum that we enjoyed at the end of 2012 continued during the first quarter of 2013 as we posted an exciting 31% increase in consolidated revenue," commented Robert H. Spilman, Jr., President and Chief Executive Officer. "Allowing for the extra week in this year's fiscal calendar, the Company grew revenue by 22% on a normalized basis. The same factors that propelled our business during the second half of last year drove this quarter's increase — improving sales in our Bassett Home Furnishings stores and market share gains with independent retailers. Operating profit continued to improve as both our wholesale and retail segments posted markedly better results than a year ago. These positive trends combined with our financial strength make us well positioned to continue to grow our top line and further enhance operating performance in the future."

Wholesale Segment

Net sales for the wholesale segment were $54.0 million for the first quarter of 2013 as compared to $42.6 million for the first quarter of 2012, an increase of $11.4 million or 27%. On an average weekly basis (normalizing for the extra week in the first quarter of 2013), wholesale net sales increased 18%. Wholesale shipments increased due to a 47% increase in wholesale sales outside the BHF store network and a 17% increase in shipments to the BHF store network. Gross margins for the wholesale segment were 33.4% for the first quarter of 2013 as compared to 31.8% for the first quarter of 2012. This increase was primarily due to higher margins in the upholstery operations as increased sales volumes provided greater leverage of fixed costs, partially offset by increased health care costs due to higher claim experience. Wholesale SG&A increased $3.3 million to $15.0 million for the first quarter of 2013 as compared to $11.7 million for the first quarter of 2012. SG&A costs as a percentage of sales increased to 27.8% as compared to 27.5% for the first quarter of 2012. Profit improvement from leveraging fixed SG&A costs through higher sales volumes was offset by planned increased marketing and advertising costs to drive continued sales growth.

"Both our upholstery and wood operations grew nicely in the quarter as a number of our recent product introductions are selling well at retail," added Spilman. "To drive volume and increase consumer awareness, we spent more heavily on sales promotions and on national advertising in association with our partnership with the HGTV television network. We believe that these investments in marketing are bearing fruit in the form of increasing market share. On a normalized basis, our upholstery and wood operations grew at the rate of 18% and 14% respectively in the quarter. As a result, wholesale operating income was 64% greater than the same period a year ago. Continued growth in our domestic custom assortment as well as our offshore cut and sew program were the major contributors to our gains in upholstery. And despite the industry wide challenges that the casegoods segment has experienced in recent years, we were gratified to see our new wood product introductions drive a double digit sales increase for the second consecutive quarter."

Retail Segment

Net sales for Company-owned stores were $50.0 million for the first quarter of 2013 as compared to $38.8 million for the first quarter of 2012, an increase of $11.2 million or 29%. The increase was comprised of a $6.1 million or 16% increase in comparable store sales along with a $5.1 million increase in non-comparable store sales. On an average weekly basis (normalizing for the extra week in the first quarter of 2013), comparable store sales increased 7.6%.

While the Company does not recognize sales until goods are delivered to the customer, management tracks written sales (the dollar value of sales orders taken, rather than delivered) as a key store performance indicator. Written sales for comparable stores increased by 20% for the first quarter of 2013 as compared to the first quarter of 2012. On an average weekly basis, written sales for comparable stores increased by 12%.

Operating results for the Company-owned stores improved from a loss of $1.0 million in the first quarter of 2012 to a loss of $0.6 million in the first quarter of 2013. This improvement was primarily driven by the increased sales noted above. Gross margins were slightly lower at 47.8% for the quarter as compared to 48.1% for the prior year quarter. SG&A expense increased $4.8 million, primarily due to increased store count and higher sales volumes. As a percentage of sales, SG&A decreased to 48.9% for the quarter as compared to 50.7% for the same quarter last year, primarily due to greater leverage of fixed costs from higher sales. This improvement was partially offset by increased health care costs due to higher claim experience and incremental management and overhead costs as the Company-owned network continues to grow. Refer to the accompanying schedule of Supplemental Retail Information for results of operations for the Company's retail segment by comparable and all other stores.

The following table summarizes the changes in store count during the first quarter of 2013:

  November 24, New Stores Stores March 2,
  2012 Stores Acquired Closed 2013
           
Company-owned stores  53  1  --   --   54
Licensee-owned stores  33  1  --   (1)  33
           
Total  86  2  --   (1)  87

"The progress that our corporate retail group has exhibited over the past several reporting periods continued during the first quarter as our operating loss was reduced by 43%," continued Spilman. "The conversion of our in store design centers to the HGTV Design Studio at Bassett played a large part in our 7.6% same store sales increase, which comes on top of a 9.1% same store sales increase last year. Consumers are responding to our HGTV marketing campaign and are buying more with each transaction, signifying growth in our in home "makeover" capability, a key point of differentiation for Bassett stores. The quarter ended with the opening of a new store in a fashionable home furnishings shopping district in Dallas. The second quarter will see a repositioned Hartford, CT location come on line as well as the opening of a new small store in Raleigh, NC. We are also at the front end of the relocation process of several of our first generation stores. We look forward to moving these stores to locations that are more suitable to the Bassett of 2013. We believe that our new generation stores in better situated real estate will garner improved financial performance in these individual locations."

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 87 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 1,000 upholstery fabrics, free in-home design visits, and coordinated decorating accessories. Bassett is also growing its traditional wholesale business with more than 500 accounts on the open market, across the United States and internationally. 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 2013, 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 Income - unaudited
(In thousands, except for per share data)
         
     
  14 Weeks Ended 13 Weeks Ended
  March 2, 2013 February 25, 2012
    Percent of   Percent of
  Amount Net Sales Amount Net Sales
         
Net sales  $ 79,849 100.0%  $ 60,968 100.0%
         
Cost of sales  38,489 48.2%  29,297 48.1%
         
Gross profit  41,360 51.8%  31,671 51.9%
         
Selling, general and administrative expense  38,996 48.8%  31,028 50.9%
Restructuring and asset impairment charges  -- 0.0%  236 0.4%
Lease exit costs  -- 0.0%  228 0.4%
         
Operating income  2,364 3.0%  179 0.3%
         
Other loss, net  668 0.8%  1,247 2.0%
Income (loss) before income taxes  1,696 2.1%  (1,068) -1.8%
         
Income tax expense (benefit)  716 0.9%  (472) -0.8%
Net income (loss)  $ 980 1.2%  $ (596) -1.0%
         
Basic earnings (loss) per share  $ 0.09    $ (0.05)  
         
Diluted earnings (loss) per share  $ 0.09    $ (0.05)  
 
 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets - Unaudited
(In thousands)
     
Assets March 2, 2013 November 24, 2012
Current assets    
Cash and cash equivalents  $ 47,159  $ 45,566
Accounts receivable, net  14,838  15,755
Inventories  57,807  57,916
Deferred income taxes, net  6,952  6,832
Other current assets  5,251  6,439
Total current assets  132,007  132,508
     
Property and equipment, net  56,738  56,624
     
Other long-term assets    
Retail real estate  12,610  12,736
Deferred income taxes, net  10,280  10,485
Other  15,352  14,827
Total long-term assets  38,242  38,048
Total assets  $ 226,987  $ 227,180
     
Liabilities and Stockholders' Equity    
Current liabilities    
Accounts payable  $ 18,427  $ 22,405
Accrued compensation and benefits  6,742  6,926
Customer deposits  15,955  12,253
Dividends payable  --  542
Other accrued liabilities  11,107  10,454
Total current liabilities  52,231  52,580
     
Long-term liabilities    
Post employment benefit obligations  11,501  11,577
Real estate notes payable  2,991  3,053
Other long-term liabilities  2,291  2,690
Total long-term liabilities  16,783  17,320
     
     
Stockholders' equity    
Common stock  54,236  54,184
Retained earnings  104,757  104,319
Additional paid-in-capital  184  --
Accumulated other comprehensive loss  (1,204)  (1,223)
Total stockholders' equity  157,973  157,280
Total liabilities and stockholders' equity  $ 226,987  $ 227,180
 
 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - unaudited
(In thousands)
     
  14 Weeks Ended 13 Weeks Ended
  March 2, 2013 February 25, 2012
Operating activities:    
Net income (loss)  $ 980  $ (596)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization  1,434  1,316
Equity in undistributed income of investments and unconsolidated affiliated companies  (114)  (16)
Provision for restructuring and asset impairment charges  --  236
Non-cash portion of lease exit costs  --  228
Other than temporary impairment of investments  --  806
Deferred income taxes  171  20
Other, net  (102)  (341)
Changes in operating assets and liabilities    
Accounts receivable  860  894
Inventories  109  (930)
Other current assets  (1,120)  (439)
Accounts payable and accrued liabilities  (250)  (2,472)
Net cash provided by (used in) operating activities  1,968  (1,294)
     
Investing activities:    
Purchases of property and equipment  (2,621)  (1,918)
Proceeds from sale of property and equipment  955  5
Proceeds from sale of interest in affiliate  2,348  1,410
Proceeds from sales of investments  --  398
Purchases of investments  --  (396)
Other  2  2
Net cash provided by (used in) investing activities  684  (499)
     
Financing activities:    
Repayments of real estate notes payable  (59)  (49)
Issuance of common stock  320  39
Repurchases of common stock  (236)  (646)
Cash dividends  (1,084)  (6,063)
Net cash used in financing activities  (1,059)  (6,719)
Change in cash and cash equivalents  1,593  (8,512)
Cash and cash equivalents - beginning of period  45,566  69,601
Cash and cash equivalents - end of period  $ 47,159  $ 61,089
 
 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES 
Segment Information - unaudited
(In thousands)
     
  14 Weeks Ended 13 Weeks Ended
  March 2, 2013 February 25, 2012
Net Sales    
Wholesale  $ 53,960  $ 42,611
Retail  49,957  38,816
Inter-company elimination  (24,068)  (20,459)
Consolidated  $ 79,849  $ 60,968
     
Operating Income (Loss)    
Wholesale  $ 3,001  $ 1,831
Retail  (571)  (999)
Inter-company elimination  (66)  (189)
Restructuring and asset impairment charges  --  (236)
Lease exit costs  --  (228)
Consolidated  $ 2,364  $ 179
 
 
 
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Supplemental Retail Information---unaudited
(In thousands)
         
   48 Comparable Stores
  14 Weeks Ended 13 Weeks Ended
  March 2, 2013 February 25, 2012
    Percent of   Percent of
  Amount Net Sales Amount Net Sales
         
Net sales  $ 44,353 100.0%  $ 38,270 100.0%
         
Cost of sales  23,146 52.2%  19,846 51.9%
         
Gross profit  21,207 47.8%  18,424 48.1%
         
Selling, general and administrative expense*  21,315 48.1%  19,083 49.9%
         
Income (loss) from operations  $ (108) -0.3%  $ (659) -1.8%
         
         
  All Other Stores
  14 Weeks Ended 13 Weeks Ended
  March 2, 2013 February 25, 2012
    Percent of   Percent of
  Amount Net Sales Amount Net Sales
         
Net sales  $ 5,604 100.0%  $ 546 100.0%
         
Cost of sales  2,937 52.4%  301 55.1%
         
Gross profit  2,667 47.6%  245 44.9%
         
Selling, general and administrative expense  3,130 55.9%  585 107.1%
         
Loss from operations  $ (463) -8.3%  $ (340) -62.2%
         
*Comparable store SG&A includes retail corporate overhead and administrative costs.
CONTACT: J. Michael Daniel

         Senior Vice President and

         Chief Financial Officer

         (276) 629-6614 - Investors



         Jay S. Moore

         Director of Communications

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

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