bset20210629_8k.htm
false 0000010329 0000010329 2021-07-01 2021-07-01
 
 


 
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)
 
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 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
 
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 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 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 )