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Jay McIntosh

Bassett rebounds to profit as sales soar 31% in 1Q

BASSETT, Va. - Sales climbed 31% for Bassett Furniture Inds. in the fiscal first quarter as the company reported volume gains with both its Bassett Home Furnishings dealers and independent retailers.
     Part of the gain was because this year's fiscal first quarter has 14 weeks compared with last year's 13-week quarter, the company said.
     "Allowing for the extra week in this year's fiscal calendar, the company grew revenue by 22% on a normalized basis," said Rob Spilman, president and CEO. "The same factors that propelled our business during the second half of last year drove this quarter's increase - improving sales in our Bassett Home Furnishings stores and market share gains with independent retailers. Operating profit continued to improve as both our wholesale and retail segments posted markedly better results than a year ago."
     Sales in the quarter ended March 2 were $79.8 million, up from $61 million in the comparable quarter a year earlier.
     Net income in the quarter was $980,000, reversing a loss of $596,000 a year earlier.
     Higher sales in the company's wholesale and retail segments drove the earnings gain, although it was offset by higher expenses with additional company- owned stores, a planned increase in marketing and advertising spending to drive sales growth, and higher health care costs due to claims experience.
     "To drive volume and increase consumer awareness, we spent more heavily on sales promotions and on national advertising in association with our partnership with the HGTV television network. We believe that these investments in marketing are bearing fruit in the form of increasing market share," Spilman said.
     Wholesale segment sales for the latest quarter were $54 million, up from $42.6 million a year earlier. On a normalized basis, adjusting for the extra week, the company's upholstery sales were up 18% and wood sales were up 14%, Spilman said.
     Sales at company-owned stores were $50 million, up 29% from $38.8 million a year ago. On an average weekly basis, normalizing for the latest period's extra week, same-store sales were up 7.6%.
     Company-owned stores had an operating loss of $571,000 in the quarter, compared with a loss of $1 million in the 2012 quarter.
     "The progress that our corporate retail group has exhibited over the past several reporting periods continued during the first quarter as our operating loss was reduced by 43%," said Spilman. "The conversion of our in-store design centers to the HGTV Design Studio at Bassett played a large part in our 7.6% same-store sales increase, which comes on top of a 9.1% same-store sales increase last year. Consumers are responding to our HGTV marketing campaign and are buying more with each transaction, signifying growth in our in home ‘makeover' capability, a key point of differentiation for Bassett stores."
     He said a new Bassett store opened in Dallas in the first quarter and that a relocated store in Hartford, Conn., and a small new store in Raleigh, N.C., will open in the current quarter.
     "We are also at the front end of the relocation process of several of our first generation stores. We look forward to moving these stores to locations that are more suitable to the Bassett of 2013," Spilman said.

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.

13 weeks ended 3/2 (a)

2013

2012

Change

Sales

$79,849,000

$60,968,000

31.0%

Operating income

2,364,000

643,000

267.7%

Net income

980,000

(596,000)

-

Earnings per share

0.09

(0.05)

-

(a) 2013 numbers are for 14 weeks ended March 2; 2012 numbers are for 13 weeks ended Feb. 25.

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