Release Details

BASSETT, Va., Jan. 10, 2013 (GLOBE NEWSWIRE) -- Bassett Furniture Industries, Inc. (Nasdaq:BSET) announced today its results of operations for its fiscal quarter ended November 24, 2012.

Fiscal 2012 Fourth Quarter Highlights

• Consolidated sales for the fourth quarter 2012 increased 21% as compared to the fourth quarter 2011
• Operating profit for the fourth quarter was $2.5 million versus $1.1 million for the fourth quarter last year
• Wholesale sales increased 18% compared to the fourth quarter 2011
• Company-owned store delivered sales increased 24% overall compared to the fourth quarter 2011 which included a 15% increase from the 48 comparable stores
• Repurchased 128,000 shares using $1.4 million of cash
• Declared a regular quarterly dividend totaling $0.6 million or $0.05 per share
• Paid a special dividend of $13.7 million or $1.25 per share

On a consolidated basis, the Company reported net sales for the fourth quarter of 2012 of $76.8 million, an increase of $13.5 million, or 21%, from sales levels attained in the fourth quarter of 2011. Operating income increased to $2.5 million from $1.1 million driven primarily by higher sales in both the wholesale and retail segments. This was offset by higher selling, general and administrative expenses due primarily to the increased number of Company-owned stores, higher marketing and advertising costs associated with the introduction of the new HGTV Design Studios at the retail stores, and increased health care costs due to higher than normal claim activity. Included in the Company's net income is a net tax benefit of $14.2 million which was primarily due to a $16.0 million reduction of certain valuation reserves against the Company's deferred tax assets. As a result, the Company recorded net income of $16.9 million or $1.55 per diluted share for the fourth quarter of 2012 compared to $0.6 million or $0.06 per diluted share in the fourth quarter of 2011.

"We were pleased to post a 21% increase in consolidated revenue for the fourth quarter of 2012," said Robert H. Spilman, Jr., President and Chief Executive Officer. "A very strong showing by our corporate retail unit coupled with significant gains in our open market sales efforts drove the top line improvement. And, despite incurring a large unfavorable employee health insurance adjustment, quarterly operating income increased 127% to $2.5 million."

"As 2012 unfolded, our revenue improved, ultimately ending with a 6.5% sales gain for the year," continued Spilman. "Several factors behind this trend continue to provide momentum as we head into 2013. First, we are operating a much healthier retail network that is no longer plagued by the store closings of the past few years. Second, recent Bassett product line introductions have been very successful at retail. Third, our effort to grow our business outside of the store footprint continues to take hold as sales grew 38% in this channel in the quarter. Finally, we are encouraged by the initial sales results of the HGTV Design Studio at Bassett products in our Bassett Home Furnishings (BHF) store network. This assortment of custom upholstery was a major driver behind our 15% fourth quarter comparable store increase. Both the HGTV Design Studio at Bassett and the HGTV Home open market product lines will be aggressively promoted in 2013 and we look forward to fully realizing the sales that the investment in this partnership will generate."

Wholesale Segment                                                                         

Net sales for the wholesale segment were $51.8 million for the fourth quarter of 2012 as compared to $43.7 million for the fourth quarter of 2011, an increase of 18%. Wholesale shipments increased due to a 38% increase in wholesale sales outside the BHF store network and an 11% increase in shipments to the BHF store network. Gross margins for the wholesale segment were 32.7% for the fourth quarter of 2012 as compared to 33.7% for the fourth quarter of 2011. This decrease was due primarily to greater discounts on certain discontinued products and increased health care costs due to higher than normal claim activity, partially offset by improvements from greater leverage of fixed costs. Wholesale SG&A increased $2.5 million to $15.1 million for the fourth quarter of 2012 as compared to $12.6 million for the fourth quarter of 2011. SG&A costs as a percentage of sales were flat at 29% for the fourth quarter of 2012 as compared to the fourth quarter of 2011 as the profit improvement from leveraging fixed SG&A costs was offset by increased marketing and advertising costs associated with the rollout of the HGTV product lines.

"Overall wholesale sales increased 18% to $51.8 million, with upholstery sales growing by 19% for the quarter while our wood division posted a 16% gain," added Spilman. "The increase in volume and resulting efficiencies enabled both our upholstery and wood operations to post improved levels of profitability at the divisional level in spite of the aforementioned health care charges. However, increases in SG&A spending from increased promotional allowances and new HGTV national advertising expense resulted in a 9% decline in wholesale operating income to $1.9 million. We plan to better leverage these marketing costs in 2013 with growth generated from five to seven new Bassett stores, continued gains in open market sales, and increased revenues from the full rollout of the HGTV partnership."

Retail Segment

Company-owned stores had sales of $48.8 million for the fourth quarter of 2012 as compared to $39.4 million for the fourth quarter of 2011, an increase of 24%. The increase was comprised of a $5.9 million or 15% increase in comparable store sales along with a $3.5 million increase in non-comparable store sales. 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 14% for the fourth quarter of 2012 as compared to the fourth quarter of 2011. 

Operating income for the Company-owned stores improved to $0.4 million in the fourth quarter of 2012 as compared to a loss of $0.6 million for the fourth quarter of 2011. This improvement was primarily driven by the sales increases noted above. Gross margins were essentially flat at 48.0% for the fourth quarter of 2012 as compared to 47.9% for the fourth quarter of 2011. SG&A expense increased $3.6 million, primarily due to increased store count. As a percentage of sales, SG&A decreased to 47% for the fourth quarter of 2012 compared to 49% for the same quarter last year, primarily due to greater leverage of fixed costs from higher sales. 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 year ended November 24, 2012:

"The fourth quarter was the best ever in our corporate retail division as we generated sales of $48.8 million, an overall increase of 24%," said Spilman. "The strong gain in comparable store sales helped produce a retail operating profit of $0.4 million, a $1.0 million improvement from last year. 2012 marked another year of solid improvement for our corporate retail division as witnessed by our year-over-year 9% comparable store sales increase and the 54% decrease in corporate store losses. The combination of a strong product assortment, good looking stores, highly trained designers, effective marketing programs, and superior levels of customer service has matured our proposition into a unique experience in our industry that is resonating with consumers. In 2013, we look forward to opening five to seven new stores and repositioning two others into better retail locations. Finally, we will test a new small store concept designed to better highlight our industry leading custom upholstery capabilities."

Balance Sheet and Cash Flow

The Company generated $1.0 million in cash from operating activities for the three months ended November 24, 2012 as compared with cash generated in operations of $6.9 million for the three months ended November 26, 2011. This decrease was primarily due to increases in accounts receivable and inventory as a result of increased volume and operating activity in the fourth quarter of 2012. Capital expenditures for the fourth quarter of 2012 were $2.1 million primarily related to the expansion and remodeling in the Company-owned store network. The Company also repurchased 128,000 shares of common stock using $1.4 million in cash and paid $0.6 million in regular dividends and $13.7 million in special dividends during the quarter. 

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 86 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. 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 fourth 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.

CONTACT: J. Michael Daniel, Vice-President

         and Chief Accounting Officer

         (276) 629-6614 - Investors



         Jay S. Moore, Director of

         Communications

         (276) 629-6450 - Media

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