SEC Filing | Bassett Furniture Industries

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bset20210629_8k.htm

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) July 1, 2021

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)

Registrant’s 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 July 1, 2021 Bassett Furniture Industries issued a news release relating to the second quarter financial results for the fiscal year ending November 27, 2021. A copy of the news release announcing this information is attached to this report as Exhibit 99.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

99	News Release issued by Bassett Furniture Industries, Inc. on July 1, 2021

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: July 1, 2021	By: /s/ J. Michael Daniel
	J. Michael Daniel
	Title: Senior Vice President – Chief Financial Officer

ex_260700.htm

Exhibit 99

https://cdn.kscope.io/c4cd3f8d21b507c654ae242a21b5b861-img01.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 Second Quarter Results

(Bassett, Va.) – July 1, 2021 – Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today its results of operations for its second quarter ended May 29, 2021.

Fiscal 2021 Second Quarter Highlights

(Dollars in millions)

	Sales									Operating Income (Loss)
	2nd Qtr				Dollar		%			2nd Qtr		% of			2nd Qtr			% of
	2021		2020		Change		Change			2021		Sales			2020			Sales
Consolidated ⁽¹⁾	$	124.1	$	63.8	$	60.3		94.4	%	$	8.4		6.8	%	$	(31.2	)		-48.9	%

Wholesale	$	76.0	$	33.1	$	42.9		129.7	%	$	5.4		7.0	%	$	(7.4	)		-22.3	%

Retail	$	62.5	$	33.2	$	29.3		88.4	%	$	1.7		2.6	%	$	(9.2	)		-27.6	%

Logistical Services	$	22.2	$	15.3	$	7.0		45.8	%	$	1.3		5.8	%	$	(1.8	)		-12.1	%

(1) Our consolidated results include certain intercompany eliminations. See Table 4, “Segment Information” below for an illustration of the effects of these intercompany eliminations on our consolidated sales and operating income (loss).

Consolidated revenue of $124.1 million for our second quarter represented a 94% increase as compared to the pandemic impacted quarter in 2020 and 15% as compared to 2019. Similarly, strong wholesale orders of $96.0 million for the period increased by 172% versus 2020 and by 51% compared to the pre-pandemic 2019 second quarter. As we battle an extremely tight labor market and continued supply chain disruptions, we strive to chip away at our huge order backlog that grew by another $19 million over the three months. Adding to the complexity is the inflationary raw material spiral that we have confronted this year, leading to our unprecedented action of levying three general price increases since our fiscal year began in December. Amidst this unsettled environment, we were pleased to record an $8.4 million operating profit compared to last year’s loss. EPS advanced to $0.60 per share for the quarter against the COVID-19 affected loss of ($2.04) in 2020.

Again, our obvious focus is centered on the reduction of our backlog and returning to a semblance of normalcy in our service levels as soon as possible. Although our cancellation rate has not spiked significantly to date, it is a natural concern. At the recent High Point Furniture Market, we were actually thanked several times for our ability to deliver goods more quickly than the apparent current industry standard, which underscores just how compromised lead times actually are today. Aside from working massive amounts of overtime, the early June opening of our new upholstery production facility in Newton, NC will provide some immediate relief to a portion of the situation. With the polyurethane foam shortage largely behind us, our current raw material bottlenecks lie in the thousands of yards of decorative fabrics that our suppliers owe us. Our production managers have done a great job in shuffling our daily schedules to produce what they can based on the materials that they actually possess. Notwithstanding all the complications of the post-pandemic economy, our wholesale team produced a 7.0% operating margin for the period as our wood, upholstery, and outdoor divisions turned in performances significantly better than 2020 and 2019.

Another aspect of the current disorder is the state of the industry’s logistics model. The strong business that has characterized the past 13 months has overwhelmed the furniture trucking segment. There is currently a dearth of warehouse space, warehouse labor, and over the road trailers to handle shipping backlogs. Consequently, even after the goods have been manufactured, there are accompanying lags in logistics service that could represent several weeks of further delay. Exacerbating this state of affairs is the global shortage of shipping containers that continues to plague our sector. Our Zenith Logistics team has performed at a high level in dealing with the cumulative effect of these daily challenges by generating $1.3 million of operating profit for the quarter despite spiraling warehousing labor costs and procuring over 400 trailers on short term leases to combat the equipment shortage. Longer term we are motivated by prospects of our recent regional warehouse model that is showing great promise. Over the past six months we have experimented with keeping some of our best sellers closer to the U.S. population centers for quicker delivery. When we have been able to have these goods in inventory, we have seen significant upticks in rates of sale, which bodes well for our plan to expand this model as product availability becomes normalized.

As mentioned, wholesale orders increased dramatically during the quarter with all channels showing growth. Leading the way was our Bassett Design Center (BDC) network, part of our open market wholesale business, with increases of 212% and 87%, respectively, compared to 2020 and 2019. Another big part of the overall open market increase was the continuing rise of the Bassett Club Level program, which grew by 328% versus 2019. Dedicated Bassett-branded distribution in the form of the Bassett Home Furnishings network and BDC’s represented 67% of wholesale sales for the period. Once again, our corporate retail division was not able to deliver goods to the home at the rate that they were sold in the stores. Our digital outreach strategies continued to bear fruit as visitors to our website grew by 51% in the quarter. Store traffic, which has declined for the past few years, has held steady since business returned after the stores reopened last May. Still, our corporate retail turned in a profit of $1.6 million while continuing to add to its already large order backlog. Finally, we are excited by the combined results of the Lane Venture and Bassett Outdoor sales strategies as they combined for a 122% increase to 2020 and 124% to 2019. Much of the new business came from our Alabama metal facility that we purchased in 2019.

Summing it all up for the quarter, we wrote more wholesale business than we had in many years, back to when we operated a much larger domestic manufacturing footprint in the pre-globalization days. While retiring $2.4 million of stock and paying our quarterly dividend, we ended May with $63.5 million of cash and short-term investments and no debt. There are many cost pressures and raw material lead times remain long. But we have a very large backlog and our most recent big sales event around Memorial Day was very strong. Taking all of those positives and negatives into account, we remain encouraged concerning our prospects for the remainder of 2021.

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 97 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 second fiscal quarter of 2021, 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 Bassett’s 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 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.

###

Table 1
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations - unaudited
(In thousands, except for per share data)

	Quarter Ended												Six Months Ended
	May 29, 2021						May 30, 2020						May 29, 2021						May 30, 2020
				Percent of						Percent of						Percent of						Percent of
	Amount			Net Sales			Amount			Net Sales			Amount			Net Sales			Amount			Net Sales

Sales revenue:
Furniture and accessories	$	109,997					$	53,000					$	211,652					$	151,942
Logistical services		14,062						10,801						26,080						23,979
Total sales revenue		124,059			100.0	%		63,801			100.0	%		237,732			100.0	%		175,921			100.0	%

Cost of furniture and accessories sold		52,911			42.6	%		29,452			46.2	%		101,163			42.6	%		74,722			42.5	%

Selling, general and administrative expenses		50,001			40.3	%		37,730			59.1	%		97,843			41.2	%		90,027			51.2	%
Cost of logistical services		12,768			10.3	%		12,643			19.8	%		24,326			10.2	%		24,986			14.2	%
Asset impairment charges		-			0.0	%		12,184			19.1	%		-			0.0	%		12,184			6.9	%
Goodwill impairment charge		-			0.0	%		1,971			3.1	%		-			0.0	%		1,971			1.1	%
Litigation expense		-			0.0	%		1,050			1.6	%		-			0.0	%		1,050			0.6	%
Income (loss) from operations		8,379			6.8	%		(31,229	)		-48.9	%		14,400			6.1	%		(29,019	)		-16.5	%

Other loss, net		(332	)		-0.3	%		(765	)		-1.2	%		(669	)		-0.3	%		(1,127	)		-0.6	%
Income (loss) before income taxes		8,047			6.5	%		(31,994	)		-50.1	%		13,731			5.8	%		(30,146	)		-17.1	%

Income tax provision (benefit)		2,073			1.7	%		(11,642	)		-18.2	%		3,746			1.6	%		(11,004	)		-6.3	%
Net income (loss)	$	5,974			4.8	%	$	(20,352	)		-31.9	%	$	9,985			4.2	%	$	(19,142	)		-10.9	%

Basic earnings (loss) per share	$	0.60					$	(2.04	)				$	1.01					$	(1.92	)

Diluted earnings (loss) per share	$	0.60					$	(2.04	)				$	1.01					$	(1.92	)

Table 2
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)

	(Unaudited)
Assets	May 29, 2021			November 28, 2020
Current assets
Cash and cash equivalents	$	45,776		$	45,799
Short-term investments		17,715			17,715
Accounts receivable, net		25,882			22,340
Inventories, net		67,301			54,886
Recoverable income taxes		7,789			9,666
Other current assets		12,008			10,272
Total current assets		176,471			160,678

Property and equipment, net		92,581			90,917

Other long-term assets
Deferred income taxes, net		3,362			4,587
Goodwill and other intangible assets		23,637			23,827
Right of use assets under operating leases		116,357			116,903
Other		6,071			5,637
Total long-term assets		149,427			150,954
Total assets	$	418,479		$	402,549

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	28,522		$	23,426
Accrued compensation and benefits		14,124			16,964
Customer deposits		47,911			39,762
Current portion of operating lease obligations		27,358			27,078
Other current liabilities and accrued expenses		12,534			11,141
Total current liabilities		130,449			118,371

Long-term liabilities
Post employment benefit obligations		12,398			12,089
Long-term portion of operating lease obligations		109,832			111,972
Other long-term liabilities		5,538			2,087
Total long-term liabilities		127,768			126,148


Stockholders’ equity
Common stock		49,262			49,714
Retained earnings		112,325			109,710
Accumulated other comprehensive loss		(1,325	)		(1,394	)
Total stockholders' equity		160,262			158,030
Total liabilities and stockholders’ equity	$	418,479		$	402,549

Table 3
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - unaudited
(In thousands)

	Six Months Ended
	May 29, 2021			May 30, 2020
Operating activities:
Net income (loss)	$	9,985		$	(19,142	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		6,893			7,239
Gain on lease modification		-			(152	)
Asset impairment charges		-			12,184
Goodwill impairment charges		-			1,971
Inventory valuation charges		1,100			2,936
Bad debt valuation charges (recoveries)		(43	)		1,074
Deferred income taxes		1,201			(521	)
Other, net		255			673
Changes in operating assets and liabilities
Accounts receivable		(3,399	)		2,483
Inventories		(13,515	)		883
Other current and long-term assets		25			(9,091	)
Right of use assets under operating leases		12,558			14,810
Customer deposits		8,149			(2,150	)
Accounts payable and other liabilities		2,775			(2,670	)
Obligations under operating leases		(13,934	)		(16,274	)
Net cash provided by (used in) operating activities		12,050			(5,747	)

Investing activities:
Purchases of property and equipment		(3,483	)		(1,791	)
Proceeds from sale of property and equipment		96			2,345
Purchase of investments		-			(241	)
Other		(335	)		(211	)
Net cash provided by (used in) investing activities		(3,722	)		102

Financing activities:
Cash dividends		(4,954	)		(1,258	)
Proceeds from the exercise of stock options		42			-
Other issuance of common stock		172			157
Repurchases of common stock		(2,925	)		(1,241	)
Taxes paid related to net share settlement of equity awards		(219	)		(215	)
Repayments of finance lease obligations		(467	)		(50	)
Net cash used in financing activities		(8,351	)		(2,607	)
Change in cash and cash equivalents		(23	)		(8,252	)
Cash and cash equivalents - beginning of period		45,799			19,687

Cash and cash equivalents - end of period	$	45,776		$	11,435

Table 4
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Segment Information - unaudited
(In thousands)

	Quarter Ended						Six Months Ended
	May 29, 2021			May 30, 2020			May 29, 2021			May 30, 2020
Sales Revenue
Wholesale sales of furniture and accessories	$	76,034		$	33,128		$	146,298		$	98,145
Less: Sales to retail segment		(28,520	)		(13,299	)		(57,524	)		(45,220	)
Wholesale sales to external customers		47,514			19,829			88,774			52,925
Retail sales of furniture and accessories		62,483			33,171			122,878			99,017
Consolidated net sales of furniture and accessories		109,997			53,000			211,652			151,942

Logistical services revenue		22,244			15,259			42,325			36,574
Less: Services to wholesale segment		(8,182	)		(4,458	)		(16,245	)		(12,595	)
Logistical services to external customers		14,062			10,801			26,080			23,979
Total sales revenue	$	124,059		$	63,801		$	237,732		$	175,921

Operating Income (Loss)
Wholesale	$	5,359		$	(7,381	)	$	10,156		$	(4,668	)
Retail		1,652			(9,170	)		2,746			(10,419	)
Logistical services		1,294			(1,842	)		1,753			(1,007	)
Inter-company elimination		74			2,369			(255	)		2,280
Asset impairment charges		-			(12,184	)		-			(12,184	)
Goodwill impairment charge		-			(1,971	)		-			(1,971	)
Litigation expense		-			(1,050	)		-			(1,050	)
Consolidated	$	8,379		$	(31,229	)	$	14,400		$	(29,019	)