Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced
today its results of operations for its fiscal quarter ended
November 30, 2019.
Fiscal 2019
Fourth Quarter Highlights(Dollars in millions) |
|
Sales |
|
Operating Income (Loss) |
|
4th Qtr |
|
Dollar |
|
% |
|
4th Qtr |
|
% of |
|
4th Qtr |
|
% of |
|
|
2019 |
2018 |
|
Change |
|
Change |
|
2019 |
|
Sales |
|
2018 |
|
Sales |
|
Consolidated (1) |
$ |
113.6 |
$ |
116.6 |
|
$ |
(3.0 |
) |
-2.6% |
|
$ |
(5.6 |
) |
-5.0% |
|
$ |
2.0 |
|
1.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
$ |
62.5 |
$ |
65.2 |
|
$ |
(2.7 |
) |
-4.0% |
|
$ |
1.1 |
|
1.7% |
|
$ |
2.9 |
|
4.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Retail |
$ |
70.0 |
$ |
70.1 |
|
$ |
(0.2 |
) |
-0.2% |
|
$ |
(0.6 |
) |
-0.8% |
|
$ |
(1.3 |
) |
-1.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62 Comparable Stores |
$ |
63.9 |
$ |
68.6 |
|
$ |
(4.7 |
) |
-6.8% |
|
$ |
0.3 |
|
0.5% |
|
$ |
0.2 |
|
0.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logistical Services (2) |
$ |
19.3 |
$ |
20.1 |
|
$ |
(0.8 |
) |
-3.8% |
|
$ |
0.3 |
|
1.5% |
|
$ |
0.6 |
|
3.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Our
consolidated results include certain intercompany
eliminations. See the “Segment Information” table below for
an illustration of the effects of these intercompany
eliminations on our consolidated sales and operating income. |
|
|
(2) Current and
prior period sales have been retrospectively restated to reflect
the transfer of intercompany home delivery services
from logistical services to retail. The effect of the transfer
on operating income was not material. |
Net loss for the fourth quarter of 2019 was $5.1
million or $0.51 per diluted share as compared to net income $1.9
million or $0.18 per diluted share for the prior year quarter.
Excluding certain charges related to asset impairments and
other items (see Table 7 of this press release), adjusted operating
income was $1.6 million and $2.8 million for the fourth quarters of
2019 and 2018 respectively. Adjusted net income and
diluted earnings per share was $0.7 million and $0.07 for the
quarter ended November 30, 2019 and $1.8 million and $0.17 for the
quarter ended November 24, 2018.
“There are several disruptive trends in the
marketplace today that threaten the traditional furniture industry
and retail in general,” observed Rob Spilman, Chairman and
CEO. “Ongoing deflation in key categories, the seismic shift
to digital marketing and online commerce, tariffs on Chinese made
goods, evolving generational consumption behavior, and the tight
labor market and the aging of the core baby boomer workforce are
factors that must be dealt with – both for today and for the
future. In fiscal 2019 and in our fourth quarter, across all
three of our business segments – wholesale, retail, and logistics,
we proactively executed our plan and developed new strategies to
address the changing environment in which we operate.
Generating growth is difficult and requires both operational and
capital investment. We remain vigilant of our strong balance
sheet, which featured $37 million in cash and investments at year
end with no long-term debt. We generated $11.8 million of
operating cash flow in the fourth quarter. For the year, we
purchased approximately 6% of the outstanding shares of the Company
and paid out $5.1 million of dividends to our shareholders.
As we forge ahead, we will continue to incorporate these principles
of conservative financial stewardship to provide a solid foundation
for Bassett in the years to come.”
“Achieving wholesale growth remains the heart of
our strategy as we seek to leverage our manufacturing and sourcing
assets,” continued Spilman. “We need to improve upon the 4.2%
quarterly decline in wholesale shipments for the quarter and the
2.0% increase for the year (53 weeks in 2019 vs. 52 weeks in
2018). Roughly half of the quarterly decline is attributable
to our orderly exit from the juvenile furniture business and the
structural change in our accessories model where our stores now buy
a Bassett-curated line directly from our vendors as opposed to
layering on another markup and then flowing accessory sales through
our wholesale income statement. Reviewing our 2019 divisional
performance, overall upholstery sales grew by 5% for the year (53
vs. 52) and were flat for the quarter. Going further
down, our domestic upholstery sales also grew by 5% for the year
and were flat for the quarter. Impeded by tariff-based
service disruptions, our imported upholstery shipments were down by
14% for the quarter and 10% for the year. Given that, we were
happy to hold our own with overall shipments. Upholstery
profitability slipped by 9% for the quarter, partially due to
startup costs associated with the launch of Bassett Outdoor and
lower volumes of Club Level motion. For the year, upholstery
profitability grew by 11%, led by our Newton, NC facility and the
Lane Venture division. Our core custom upholstery program,
formerly marketed as HGTV Home Design Studio, was re-invented and
debuted in January 2019. The results were pleasing as the new
version grew by 7% over the previous year’s number. Also
contributing to this year’s upholstery growth was our burgeoning
outdoor furniture footprint. We began the year with the new
and improved Lane Venture division on firm footing with a new
operational platform featuring imported woven wicker, teak, and
aluminum frames being supplemented with domestically produced
cushions and fully upholstered products. Dealers embraced the
assortment and the service levels and the division grew by
42%. In October, we completed the purchase of Crimson Casual,
a metal outdoor furniture manufacturer located in Haleyville,
Alabama. We can now provide the marketplace with tariff free,
quick response aluminum outdoor furniture in a variety of
finishes. We plan to use this product and others to enter the
outdoor hospitality and contract business under the Bassett Outdoor
Contract name in the next few weeks. Our third leg of the
outdoor strategy launches in February with the Bassett Outdoor line
that will be sold exclusively in Bassett Home Furnishings retail
stores. We believe that we have the brand, the domestic
manufacturing assets, and the service model to become a significant
player in the growing outdoor furniture category. Also worth
mention on the upholstery front is our new “Magnificent Motion”
domestically manufactured custom motion furniture program that was
introduced at the October High Point Furniture Market. We
began shipping this product in December and have been excited by
the retail sell through that we have seen over the past five
weeks. Similar to outdoor, the custom motion product
represents our foray into a largely untapped part of the market for
us and will provide incremental growth. Our imported Club
Level line is still important but is offered only in leather with
limited customizable options – albeit at a lower price.
Magnificent Motion offers choices of arm, base, and back treatments
in an array of fabrics and leathers. Motion in general has
been a winning category industry-wide for the past several years
and we plan to utilize the combination of capabilities that we now
have at our disposal to offer our dealers and stores a quality
alternative to the crowded commercial market of cheap Asian
imported motion upholstery.”
“Wood shipments declined 2.7% for the year, with
100% of the decline occurring in the fourth quarter,” added
Spilman. “The exit from the juvenile products business
comprised 100% of the yearly shortfall. Domestic shipments
from Martinsville Table Plant and Bench Made facilities were flat
with last year’s record pace (53 vs. 52) but were down 5% for the
quarter. Profitability declined by 14% for the fourth
quarter. Product highlights for the year include the Bench
Made Mid-Town Collection which offers a contemporary styling
alternative to the rustic feel for which Bench Made has become
known. Unfortunately, the growth in our domestic wood
programs over the past few years has been offset by declines in our
imported casegoods sales, exacerbated this year by the juvenile
exit. Exclusive of juvenile, imported casegoods sales were
flat for the year (53 vs. 52) and profits increased by 3%.
Quarterly casegoods sales were down 10% and profits were off by
13%. Imported wood product styling offers sensibilities that
we are not capable of producing domestically and is viewed as an
important component of our corporate merchandising mix. In
March, we will begin to test a new logistics and warehousing model
for 250 SKUs, or approximately 30% of our imported casegoods
lineup. By bringing containers directly to the population
centers, we will reduce transportation costs on those items and
maintain our existing margins while reducing retail prices by an
average of 15%. We will also be able to deliver these
products to our customers much more quickly. We believe that
we will become more competitive on these products and can improve
our fortunes in our imported casegoods business as a result.”
“Our blended distribution strategy resulted in
approximately 60% of our wholesale volume coming from our corporate
and licensed stores and 40% from all other channels in 2019,” said
Spilman. “Wholesale shipments to stores grew by 1% for the
year but declined by 6% in the fourth quarter. Foot traffic
to our stores has declined for three consecutive years and is an
area of concern for our management team. We have mitigated
the effects of this trend by converting more of the traffic that
does come in and by increasing the average value of a sale – now
around $3500. We view traffic to our website as being
fundamental to improving store footsteps and we were pleased to
generate double digit increases in web visits in the back half of
2019. In concert, we significantly improved the operating
results of our corporate stores over the final six months of 2019
compared to the start of the year. Converting growing web
traffic to transactions both in-store and online is our primary
objective for 2020. We have embarked upon a re-branding
effort that will soon appear online and in-store beginning in early
March. This effort will come to fruition in stages over the
course of the year. After a successful eight-year run, we
will no longer use the HGTV Home Design Studio mark on our custom
upholstery products in 2020. We will, however, continue to
advertise on the network and will remain the furniture sponsor for
the HGTV Smart Home Sweepstakes, which has provided tremendous
consumer engagement with our brand over the years. We plan on
using the savings from redefining the relationship with HGTV to
fund greater investments in digital marketing and the new Bassett
re-branding strategy. We have added and will continue to add
staff with digital marketing expertise to our team as we
re-allocate marketing dollars to digital strategies and away from
the traditional television medium.”
“Business generated through independent
furniture stores by our sales reps increased by 3% in the quarter
and for the year,” continued Spilman. "We sell 1000 open market
accounts across the country and have worked to add reps and improve
penetration in underperforming areas over the past few years.
We are particularly pleased to see the growth in our dedicated
Bassett Design Centers’ volume as our accounts commit to a
footprint of our bestselling custom products and receive training,
sales support, and marketing assistance from our reps and from
corporate. This program mirrors our Bassett retail
merchandising and marketing strategy closely including the annual
promotional calendar and the emphasis on custom products and
interior design. The new branding strategy that we will
unveil in 2020 has been embraced by our key open market dealer base
and we look forward to the efficiencies that this will provide as
we go to market with a consistent message across all channels.”
“Our Zenith Freight Lines division is a key
asset of the Company and is becoming increasingly fundamental to
our desire to warehouse products in more locations and improve the
speed-to-market proposition that we offer,” added Spilman.
“Zenith revenue actually declined in 2019 due to our exit from the
“final mile” home delivery business. Instead, we focused on a
new “middle mile” model that features point-to-point deliveries
from our large distribution centers to smaller, strategically
located warehouses with our fleet of over the road vehicles.
Upon receipt of the goods, we break the loads down and nimbly
deliver to our customers with a fleet of smaller trucks. This
has greatly improved our ability to deliver fast in our key markets
on the Eastern Seaboard, Mid-South, and Southwest U. S.
markets. The merits of this model are being recognized by
other furniture providers and we have signed on several new
logistics customers over the past few months as a result. Our
teams are working closely to further refine the new model to reduce
costs for our customers and improve our own efficiencies.
Along the way, Zenith was able to increase operating profit by 33%
in 2019.”
Wholesale
Segment
Net sales for the wholesale segment were $62.5
million for the fourth quarter of 2019 as compared to $65.2 million
for the fourth quarter of 2018, a decrease of $2.7 million or
4.0%. This decrease was primarily driven by a 6.3% decrease
in shipments to the Bassett Home Furnishings Network (BHF) and an
82% decrease in juvenile furniture shipments as the Company
continues to exit this furniture line. In addition, the
wholesale segment ceased selling accessories to the BHF network
beginning at the start of the third quarter of 2019. Both the
corporate and licensee owned stores now purchase accessories
directly from third-party accessory providers. Wholesale
sales of accessory items during the fourth quarter of 2018 were
$0.9 million. These decreases were partially offset by a $0.7
million increase in Lane Venture shipments. Gross margin for
the wholesale segment was 32.9% for the fourth quarter of 2019 as
compared to 33.8% for the prior year quarter. This decrease was
primarily due to the manufacturing startup of the Bassett Outdoor
product and the recently acquired facility in Haleyville, Alabama
as well as reduced leverage of fixed manufacturing costs from lower
sales volume. SG&A as a percentage of sales increased to
31.2% as compared to 29.4% for the fourth quarter of 2018.
This increase in SG&A as a percentage of sales was
primarily driven by reduced leverage of fixed costs from lower
sales volume, increased over-the-road freight and warehousing costs
and marketing expenses associated with the Bassett Outdoor product
introduction. Operating income was $1.1 million or 1.7% of
sales for the fourth quarter of 2019 as compared to $2.9 million or
4.4% of sales in the prior year.
Retail Segment
Net sales for the 70 Company-owned Bassett Home
Furnishings stores were $70.0 million for the fourth quarter of
2019 as compared to $70.1 million for the fourth quarter of 2018, a
decrease of $0.1 million or 0.2%. This decrease was due to a $4.7
million or 6.8% decrease in comparable store sales offset by an
increase of $4.6 million in non-comparable store sales as the
Company opened 8 stores over the last 18 months.
While the Company does not recognize sales until
goods are delivered to the consumer, management tracks written
sales (the retail dollar value of sales orders taken, rather than
delivered) as a key store performance indicator. Written
sales for comparable stores decreased by 10.6% for the fourth
quarter of 2019 as compared to the fourth quarter of
2018.
The consolidated retail operating loss for the
fourth quarter of 2019 was $0.6 million as compared to a loss of
$1.3 million for the fourth quarter of 2018, an improvement of $1.1
million. The 62 comparable stores generated operating income of
$0.3 million for the quarter, or 0.5% of sales, as compared to $0.2
million, or 0.3% of sales, for the prior year quarter. This
improvement was primarily driven by planned decreases in
advertising expense as the prior year spend was significantly
higher than the Company’s normal spending rate, along with cost
structure reductions implemented in the second half of the
year.
Non-comparable stores generated sales of $5.8
million with an operating loss of $0.9 million as compared to sales
of $1.3 million and an operating loss of $1.5 million in the prior
year quarter.
Logistical Services
Segment
Revenues for Zenith were $19.3 million for the
fourth quarter of 2019 as compared to $20.1 million for 2018, a
decrease of $0.8 million or 4.0%. This decrease was primarily
due to lower over the road trucking revenue from one significant
customer along with the previously announced discontinuation of
home delivery services to third-party customers, partially offset
by other revenue increases in over the road trucking and
warehousing operations. Zenith’s operating expenses were
$19.0 million or 98.5% of sales as compared to $19.5 million or
96.8% of sales for the prior year period. This increase as a
percent of sales was primarily due to increased employee health
care and workers compensation costs due to unfavorable claims
experience. About Bassett Furniture Industries,
Inc.Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading
manufacturer and marketer of high quality home furnishings. With
103 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. The most significant growth opportunity for Bassett
continues to be the Company’s dedicated retail store program.
Bassett’s retail strategy includes stylish, custom-built furniture
that is ready for delivery in the home within 30 days. The stores
also feature 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 fourth fiscal quarter of 2019,
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; 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.
J. Michael DanielSenior Vice President
and Chief Financial Officer(276)
629-6614 – Investors
Peter D. MorrisonVice President of
Communications(276) 629-6450 – Media
Table 1 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Operations - unaudited |
(In thousands, except for per share data) |
|
|
Quarter Ended |
|
Year Ended |
|
November 30, 2019 |
|
November 24, 2018 |
|
November 30, 2019 |
|
November 24, 2018 |
|
|
|
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 |
$ |
102,315 |
|
|
|
$ |
103,864 |
|
|
|
$ |
403,865 |
|
|
|
$ |
402,469 |
|
|
Logistics |
11,322 |
|
|
|
12,783 |
|
|
|
48,222 |
|
|
|
54,386 |
|
|
Total sales revenue |
113,637 |
|
100.0% |
|
116,647 |
|
100.0% |
|
452,087 |
|
100.0% |
|
456,855 |
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of furniture and
accessories sold |
45,291 |
|
39.9% |
|
45,831 |
|
39.3% |
|
179,244 |
|
39.6% |
|
179,581 |
|
39.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses excluding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
new store pre-opening costs |
66,785 |
|
58.8% |
|
67,353 |
|
57.7% |
|
264,280 |
|
58.5% |
|
260,339 |
|
57.0% |
New store pre-opening
costs |
- |
|
0.0% |
|
646 |
|
0.6% |
|
1,117 |
|
0.2% |
|
2,081 |
|
0.5% |
Asset impairment charges |
4,431 |
|
3.9% |
|
469 |
|
0.4% |
|
4,431 |
|
1.0% |
|
469 |
|
0.1% |
Goodwill impairment
charge |
1,926 |
|
1.7% |
|
- |
|
0.0% |
|
1,926 |
|
0.4% |
|
- |
|
0.0% |
Early retirement program |
- |
|
0.0% |
|
- |
|
0.0% |
|
835 |
|
0.2% |
|
- |
|
0.0% |
Litigation expense |
700 |
|
0.6% |
|
- |
|
0.0% |
|
700 |
|
0.2% |
|
- |
|
0.0% |
Lease exit costs |
149 |
|
0.1% |
|
301 |
|
0.3% |
|
149 |
|
0.0% |
|
301 |
|
0.1% |
Income from operations |
(5,645 |
) |
-5.0% |
|
2,047 |
|
1.8% |
|
(595 |
) |
-0.1% |
|
14,084 |
|
3.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loss, net |
(579 |
) |
-0.5% |
|
(526 |
) |
-0.5% |
|
(1,145 |
) |
-0.3% |
|
(1,878 |
) |
-0.4% |
Income (loss) before income
taxes |
(6,224 |
) |
-5.5% |
|
1,521 |
|
1.3% |
|
(1,740 |
) |
-0.4% |
|
12,206 |
|
2.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit) |
(1,086 |
) |
-1.0% |
|
(376 |
) |
-0.3% |
|
188 |
|
0.0% |
|
3,988 |
|
0.9% |
Net income (loss) |
$ |
(5,138 |
) |
-4.5% |
|
$ |
1,897 |
|
1.6% |
|
$ |
(1,928 |
) |
-0.4% |
|
$ |
8,218 |
|
1.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per
share |
$ |
(0.51 |
) |
|
|
$ |
0.18 |
|
|
|
$ |
(0,19 |
) |
|
|
$ |
0,77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
share |
$ |
(0.51 |
) |
|
|
$ |
0.18 |
|
|
|
$ |
(0,19 |
) |
|
|
$ |
0,77 |
|
|
Table 2 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
(In thousands) |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
November 30, 2019 |
|
|
|
November 24, 2018 |
|
Current
assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
19,687 |
|
|
$ |
33,468 |
|
Short-term investments |
|
17,436 |
|
|
|
22,643 |
|
Accounts receivable, net |
|
21,378 |
|
|
|
19,055 |
|
Inventories, net |
|
66,302 |
|
|
|
64,192 |
|
Other current assets |
|
11,983 |
|
|
|
9,189 |
|
Total current assets |
|
136,786 |
|
|
|
148,547 |
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
101,724 |
|
|
|
104,863 |
|
|
|
|
|
|
|
|
|
Other long-term
assets |
|
|
|
|
|
|
|
Deferred income taxes, net |
|
5,744 |
|
|
|
3,266 |
|
Goodwill and other intangible assets |
|
26,176 |
|
|
|
28,480 |
|
Other |
|
5,336 |
|
|
|
6,485 |
|
Total long-term assets |
|
37,256 |
|
|
|
38,231 |
|
Total
assets |
$ |
275,766 |
|
|
$ |
291,641 |
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
23,677 |
|
|
$ |
27 407 |
|
Accrued compensation and benefits |
|
11,308 |
|
|
|
12,994 |
|
Customer deposits |
|
25,341 |
|
|
|
27,157 |
|
Other accrued liabilities |
|
11,945 |
|
|
|
14,261 |
|
Total current liabilities |
|
72,271 |
|
|
|
81,819 |
|
|
|
|
|
|
|
|
|
Long-term
liabilities |
|
|
|
|
|
|
|
Post employment benefit obligations |
|
11,830 |
|
|
|
13,173 |
|
Other long-term liabilities |
|
12,995 |
|
|
|
6,340 |
|
Total long-term
liabilities |
|
24,825 |
|
|
|
19,513 |
|
|
|
|
|
|
|
|
|
Stockholders’
equity |
|
|
|
|
|
|
|
Common stock |
|
50,581 |
|
|
|
52,638 |
|
Retained earnings |
|
129,130 |
|
|
|
140,009 |
|
Additional paid-in-capital |
|
195 |
|
|
|
- |
|
Accumulated other comprehensive loss |
|
(1,236 |
) |
|
|
(2,338 |
) |
Total stockholders'
equity |
|
178,670 |
|
|
|
190,309 |
|
Total liabilities and
stockholders’ equity |
$ |
275,766 |
|
|
$ |
291,641 |
|
Table 3 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Consolidated Statements of Cash Flows - unaudited |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
November 30, 2019 |
|
|
|
November 24, 2018 |
|
Operating
activities: |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(1,928 |
) |
|
$ |
8,218 |
|
Adjustments to reconcile net
income (loss) to net cash provided by (used in) |
|
|
|
|
|
|
|
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
13,500 |
|
|
|
13,203 |
|
Non-cash goodwill impairment charge |
|
1,926 |
|
|
|
- |
|
Non-cash asset impairment charges |
|
4,431 |
|
|
|
469 |
|
Non-cash portion of lease exit costs |
|
149 |
|
|
|
301 |
|
Net (gain) loss on disposals of property and equipment |
|
515 |
|
|
|
(234 |
) |
Deferred income taxes |
|
(2,890 |
) |
|
|
4,663 |
|
Other, net |
|
1,498 |
|
|
|
2,607 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
(2,555 |
) |
|
|
1,732 |
|
Inventories |
|
(2,942 |
) |
|
|
(5,998 |
) |
Other current and long-term assets |
|
1,058 |
|
|
|
(961 |
) |
Customer deposits |
|
(1,816 |
) |
|
|
50 |
|
Accounts payable and other liabilities |
|
(1,137 |
) |
|
|
5,857 |
|
Net cash provided by operating activities |
|
9,809 |
|
|
|
29,907 |
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
Purchases of property and
equipment |
|
(17,375 |
) |
|
|
(18,301 |
) |
Proceeds from sale of property
and equipment |
|
1,643 |
|
|
|
2,689 |
|
Proceeds from maturities of
investments |
|
5,207 |
|
|
|
482 |
|
Cash paid for business
acquisition |
|
- |
|
|
|
(15,556 |
) |
Other |
|
(648 |
) |
|
|
(1,287 |
) |
Net cash used in investing activities |
|
(11,173 |
) |
|
|
(31,973 |
) |
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
Cash dividends |
|
(5,133 |
) |
|
|
(8,800 |
) |
Proceeds from the exercise of
stock options |
|
25 |
|
|
|
27 |
|
Other issuance of common
stock |
|
328 |
|
|
|
355 |
|
Repurchases of common
stock |
|
(7,345 |
) |
|
|
(5,946 |
) |
Taxes paid related to net
share settlement of equity awards |
|
- |
|
|
|
(674 |
) |
Repayments of notes
payable |
|
(292 |
) |
|
|
(3,377 |
) |
Net cash used in financing activities |
|
(12,417 |
) |
|
|
(18,415 |
) |
Change in cash and
cash equivalents |
|
(13,781 |
) |
|
|
(20,481 |
) |
Cash and cash
equivalents - beginning of period |
|
33,468 |
|
|
|
53,949 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period |
$ |
19,687 |
|
|
$ |
33,468 |
|
Table 4 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Segment Information - unaudited |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Year Ended |
|
|
November 30, 2019 |
|
|
|
November 24, 2018 |
|
|
|
November 30, 2019 |
|
|
|
November 24, 2018 |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
$ |
62,503 |
|
|
$ |
65,222 |
|
|
$ |
261,105 |
|
|
$ |
255,958 |
|
Retail - Company-owned stores |
|
69,957 |
|
|
|
70,110 |
|
|
|
268,693 |
|
|
|
268,883 |
|
Logistical services (1) |
|
19,331 |
|
|
|
20100 |
|
|
|
80,074 |
|
|
|
82,866 |
|
Inter-company eliminations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and accessories |
|
(30,144 |
) |
|
|
(31,468) |
|
|
|
(125,933 |
) |
|
|
(122,372 |
) |
Logistical services (1) |
|
(8,010 |
) |
|
|
(7,317 |
) |
|
|
(31,852 |
) |
|
|
(28,480 |
) |
Consolidated |
$ |
113,637 |
|
|
$ |
116,647 |
|
|
$ |
452,087 |
|
|
$ |
456,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
$ |
1,057 |
|
|
$ |
2,873 |
|
|
$ |
11,456 |
|
|
$ |
12,274 |
|
Retail |
|
(579 |
) |
|
|
(1,283 |
) |
|
|
(7,009 |
) |
|
|
(312 |
) |
Logistical services |
|
281 |
|
|
|
640 |
|
|
|
1,855 |
|
|
|
1,398 |
|
Inter-company elimination |
|
802 |
|
|
|
587 |
|
|
|
1,144 |
|
|
|
1,494 |
|
Asset impairment charges |
|
(4,431 |
) |
|
|
(469 |
) |
|
|
(4,431 |
) |
|
|
(469 |
) |
Goodwill impairment charge |
|
(1,926 |
) |
|
|
- |
|
|
|
(1,926 |
) |
|
|
- |
|
Early retirement program |
|
- |
|
|
|
- |
|
|
|
(835 |
) |
|
|
- |
|
Litigation expense |
|
(700 |
) |
|
|
- |
|
|
|
(700 |
) |
|
|
- |
|
Lease exit costs |
|
(149 |
) |
|
|
(301 |
) |
|
|
(149 |
) |
|
|
(301 |
) |
Consolidated |
$ |
(5,645 |
) |
|
$ |
2,047 |
|
|
$ |
(595 |
) |
|
$ |
14,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Prior period
sales have been retrospectively restated to reflect the transfer
of intercompany home delivery services from logistical
services to retail. The effect of the transfer on operating
income was not material. |
Table 5 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Rollforward of BHF Store Count |
|
|
|
|
|
|
|
|
|
|
|
|
November 24, |
|
|
|
November 30, |
|
2018 |
Opened* |
Closed* |
Transfers |
2019 |
|
|
|
|
|
|
|
|
|
|
|
Company-owned stores |
65 |
|
6 |
|
(1) |
|
- |
|
70 |
|
Licensee-owned stores |
32 |
|
1 |
|
- |
|
- |
|
33 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
97 |
|
7 |
|
(1) |
|
- |
|
103 |
|
|
|
|
|
|
|
|
|
|
|
|
* Does not include openings and closures due to relocation of
existing stores within a market. |
|
|
Table 6 |
BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES |
Supplemental Retail Information--unaudited |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62 Comparable Stores |
|
56 Comparable Stores |
|
Quarter Ended |
|
Quarter Ended |
|
Year Ended |
|
Year Ended |
|
November 30, 2019 |
|
November 24, 2018 |
|
November 30, 2019 |
|
November 24, 2018 |
|
|
|
|
Percent of |
|
|
|
|
Percent of |
|
|
|
|
Percent of |
|
|
|
|
Percent of |
|
|
Amount |
|
Net Sales |
|
|
Amount |
|
Net Sales |
|
|
Amount |
|
Net Sales |
|
|
Amount |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
63,900 |
|
100.0% |
|
$ |
68,572 |
|
100.0% |
|
$ |
234,401 |
|
100.0% |
|
$ |
252,353 |
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
30,986 |
|
48.5% |
|
|
33,358 |
|
48.6% |
|
|
114,615 |
|
48.9% |
|
|
122,251 |
|
48.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
32,914 |
|
51.5% |
|
|
35,214 |
|
51.4% |
|
|
119,786 |
|
51.1% |
|
|
130,102 |
|
51.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense* |
|
32,609 |
|
51.0% |
|
|
35,028 |
|
51.1% |
|
|
120,755 |
|
51.5% |
|
|
124,396 |
|
49.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
$ |
305 |
|
0.5% |
|
$ |
186 |
|
0.3% |
|
$ |
(969 |
) |
-0.4% |
|
$ |
5 706 |
|
2.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Stores |
|
All Other Stores |
|
Quarter Ended |
|
Quarter Ended |
|
Year Ended |
|
Year Ended |
|
November 30, 2019 |
|
November 24, 2018 |
|
November 30, 2019 |
|
November 24, 2018 |
|
|
|
|
Percent of |
|
|
|
|
Percent of |
|
|
|
|
Percent of |
|
|
|
|
Percent of |
|
|
Amount |
|
Net Sales |
|
|
Amount |
|
Net Sales |
|
|
Amount |
|
Net Sales |
|
|
Amount |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
5,757 |
|
100.0% |
|
$ |
1,251 |
|
100.0% |
|
$ |
34,292 |
|
100.0% |
|
$ |
16,530 |
|
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
2,664 |
|
46.3% |
|
|
673 |
|
53.8% |
|
|
16,913 |
|
49.3% |
|
|
8,340 |
|
50.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
3,093 |
|
53.7% |
|
|
578 |
|
46.2% |
|
|
17,379 |
|
50.7% |
|
|
8,190 |
|
49.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expense |
|
3,977 |
|
69.1% |
|
|
1,401 |
|
112.0% |
|
|
22,302 |
|
65.0% |
|
|
12,127 |
|
73.4% |
Pre-opening store costs** |
|
- |
|
0.0% |
|
|
646 |
|
51.6% |
|
|
1,117 |
|
3.3% |
|
|
2,081 |
|
12.6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
$ |
(884 |
) |
-15.4% |
|
$ |
(1,469 |
) |
-117.4% |
|
$ |
(6,040 |
) |
-17.6% |
|
$ |
(6,018 |
) |
-36.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Comparable store
SG&A includes retail corporate overhead and administrative
costs. |
**Pre-opening
store costs include the accrual for straight-line rent recorded
during the period between date of possession and store opening
date, employee payroll and training costs prior to store
opening and other various expenses incurred prior to store
opening. |
Table 7 |
Reconciliation of US GAAP to Adjusted Financial Measures |
(In thousands, except for per share data) |
|
Financial measures in accordance with U.S. GAAP including operating
income (loss), net income (loss), and diluted earnings per share
have been adjusted below. Bassett uses these adjusted financial
measures, both in presenting its results to stockholders and the
investment community, and in its internal evaluation and management
of the business. The Company believes that these adjusted financial
measures and the information they provide are useful to investors
because they permit investors to view the Company’s performance
using the same tools that management uses to gauge progress in
achieving its goals. Adjusted measures may also facilitate
comparisons to Bassett’s historical performance. |
|
|
Operating income (loss) |
|
Net income (loss) |
|
|
4th QTR 2019 |
|
|
4th QTR 2018 |
|
|
|
4th QTR 2019 |
|
|
4th QTR 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
$ |
(5,645 |
) |
$ |
2,047 |
|
|
$ |
(5,138 |
) |
$ |
1,897 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment charges |
|
4,431 |
|
|
469 |
|
|
|
3,301 |
|
|
349 |
|
Goodwill impairment charge |
|
1,926 |
|
|
- |
|
|
|
1,926 |
|
|
- |
|
Litigation expense |
|
700 |
|
|
- |
|
|
|
522 |
|
|
- |
|
Lease termination charge |
|
149 |
|
|
301 |
|
|
|
111 |
|
|
224 |
|
Final adjustment for tax reform |
|
- |
|
|
- |
|
|
|
- |
|
|
(704 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted |
$ |
1,561 |
|
$ |
2,817 |
|
|
$ |
722 |
|
$ |
1,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per
share |
|
|
|
|
|
|
|
$ |
0.07 |
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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