Bassett earnings decline 82.6% in 4Q
By Furniture Today Staff -- Furniture Today, February 12, 2007
Bassett, Va. — Bassett Furniture Inds. said its sales declined 13.7% in its fourth quarter ended Nov. 25 and earnings tumbled 82.6%.
For the fiscal year, the full-line manufacturer, importer and retailer reported sales were down 2.1% and earnings fell 44.7% below 2005.
"The fourth quarter was tough for our industry and Bassett was no exception," said President and CEO Rob Spilman Jr.
Sales in the quarter came to $76.5 million and earnings were $359,000 or 3 cents per share, compared with sales of $88.6 million and earnings of $2.1 million or 18 cents per share a year earlier.
The latest quarter's earnings were affected by a $1.4 million charge the company took for impairment of goodwill associated with its retail segment, and $1.5 million in additional income from the U.S. antidumping duties paid by importers of Chinese wood bedroom furniture.
The company said the sales decline, along with retail segment operating losses at company-owned Bassett Furniture Direct stores, were the main factors in the earnings decline.
For the quarter, the company said wholesale sales declined 14.6% from a year earlier to $65.9 million and retail segment sales were down 9.8% to $21.5 million. For the year, wholesale sales were down 5.5% to $284.8 million and retail was up 19.8% to $84.4 million, reflecting acquisition of stores.
"Although retail conditions continue to be challenging, we are committed to investing in the future of the Bassett store program and the Bassett brand," said Spilman.
"Examples are the ongoing addition of new retail talent and a commitment to increased distribution of our consumer catalog. Furthermore, we are in the process of preparing to unveil a new store prototype later in 2007. We will, however, continue to examine our cost structure in light of the cost of our new initiatives and the current retail environment," he said.
As it previously announced, Bassett has restated its 2005 earnings, recognizing pretax charges of $4.2 million to change the accounting treatment in connection with retail acquisitions, a move that was recommended by the Securities and Exchange Commission.
In the fourth quarter of 2006, 72% of wholesale shipments were to Bassett Furniture Direct stores, compared with 67% in 2005. About 44% of wholesale shipments in the quarter were imported products, up from 35% a year earlier.
The wholesale segment's gross margin rose by 1 percentage point in the latest quarter from a year earlier, with operating earnings up $2.5 million, mainly because of an improved mix of imported products and the performance of the upholstery division. Upholstery shipments and operating earnings continued to improve due to the retail acceptance of its custom programs and the new imported leather products introduced over the past several years, Bassett said.
At the end of the quarter, the Bassett Furniture Direct store program had 134 stores, 107 licensed and 27 corporately owned. The company opened one store and two licensed stores were closed during the fourth quarter.
Bassett said that retail conditions and its initiative to develop a new store prototype have temporarily slowed store count growth. The company expects licensees to open four to six stores in fiscal 2007.
The company reported $947,000 in "other income" in the fourth quarter, down 51.3% from a year earlier. The category mainly reflects income from investments, including its stake in High Point's International Home Furnishings Center. For the year, other income was down 14.1% to $6.9 million.
Bassett also said its board has declared a quarterly dividend of 20 cents per share, payable March 1 to shareholders of record on Feb. 12.
| Bassett Furniture Inds. | |||
|---|---|---|---|
| Owns Bassett Glass, Bassett Motion and Bassett Supply | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 11/25 | 2006 | 2005 | Change |
| (a) Includes pretax income from the Continued Dumping and Subsidiary Offset Act of $1.5 million in both 2006 periods, pretax restructuring and impaired asset charges of $1.4 million in both 2006 periods and pretax non-operating income of $947,000 in the 2006 quarter and $6.9 million in the 2006 year. The 2006 year also includes a $379,000 income tax benefit. (b) Includes pretax restructuring and impaired asset charges of $2 million in both 2005 periods and pretax non-operating income of $1.9 million in the 2005 quarter and $8.1 million in the 2005 year. | |||
| Sales | $76,502,000 | $88,649,000 | (13.7%) |
| Operating income | (1,157,000) | 2,307,000 | — |
| Net income | (a)359,000 | (b)2,067,000 | (82.6%) |
| Earnings per share | 0.03 | 0.18 | (83.3%) |
| Year ended 11/25 | 2006 | 2005 | Change |
| Sales | $328,214,000 | $335,207,000 | (2.1%) |
| Operating income | (656,000) | 7,094,000 | — |
| Net income | (a)5,429,000 | (b)9,814,000 | (44.7%) |
| Earnings per share | 0.46 | 0.82 | (43.9%) |
