Bassett Furniture reports Q3 increases in revenue, net income

BASSETT, Va. — Bassett Furniture reports its revenue and net income were up by more than 9% for the third quarter ended Aug. 26.

Consolidated sales were $114.3 million for the period compared with $104.7 million for the same quarter last year, an increase of 9.1%.

Net income for the quarter was $4.6 million or 43 cents per diluted share compared with $4.2 million or 38 cents per diluted share for the prior year quarter.

Operating income, however, declined to $7.3 million as compared with $7.5 million for the prior year quarter. Adjusted operating income, excluding the $1.4 million for the settlement of the Polyurethane Foam Antitrust Litigation, was $6.5 million compared with $6.1 million for the 2016 period.

“We were pleased to post a 9.1% consolidated sales increase for the quarter,” said Robert H. Spilman Jr., chairman and CEO. “All three of our operating segments posted revenue gains led by our retail division’s 10% increase. Although there were a number of unusual year-over-year comparisons, quarterly operating income grew by 7% on an adjusted basis despite increasing expense related to investments in our digital platform.

“We look forward to opening two new stores in new markets in the current quarter and to entering fiscal 2018 with plans to open an additional six to eight new stores, while continuing our program to reposition older stores to better real estate when circumstances are appropriate.”

Company-owned store sales were $67.4 million for Q3 2017 compared with $61.2 million a year ago. This included a comparable store sales increase of 1.8% compared with the prior year quarter.

Comparable store operating income was $1.2 million or 2% of sales for the current year quarter compared with $1.5 million or 2.5% of sales for the prior year quarter. Included in the comparable store operating income for 2017 was a $500,000 loss for expenses related to settling employment claims.

Total retail operating income was $1.4 million for the quarter compared with $0.8 million for the prior year quarter. Also included in the 2017 retail operating income was a $1.2 million gain on the sale of the Las Vegas store building, which was closed during the quarter.

Net sales for the wholesale segment were $61.8 million for the third quarter of 2017 compared with $58.3 million for the third quarter of 2016, an increase of $3.5 million or 5.9%. This increase was driven by a 5.1% increase in furniture shipments to the Bassett Home Furnishings network compared with the prior year period and a 5.7% increase in furniture shipments to the open market (outside the Bassett Home Furnishings network).

Gross margins improved in both the Upholstery and Wood operations compared with the prior year driven by increased operating efficiencies in the domestic operations along with greater leverage of fixed costs from higher sales levels.

“Strong performances in our Wood and Upholstery divisions were largely offset at the comparable wholesale operating profit level by spending to enhance our website and e-commerce capabilities and by a favorable adjustment made to our executive compensation accrual last year,” said Spilman. “Nevertheless, the fundamentals around the domestic manufacturing and importing of our product line were solid. Domestic wood grew by 23% and profitability grew by 55% in the process. Thanks to a strong showing in our Juvenile division, imported wood sales declined at a smaller rate than experienced in recent quarters.”

Net sales for the 62 company-owned Bassett Home Furnishings stores were $67.4 million for the third quarter of 2017 compared with $61.2 million for the third quarter of 2016, an increase of $6.2 million or 10%.

“The third quarter in our corporate retail operation was relatively quiet as we prepared for a flurry of new store activity in the upcoming quarters,” said Spilman. “Delivered retail comps increased 1.8%, but written sales comped down 2.9% compared to last year’s 7.9% comparable store improvement.”

Spilman noted stores nearby the company Westbury, N.Y., and King of Prussia, Pa., locations had a negative impact, as did Hurricane Harvey on the south Texas market over the final three days of the quarter.

“While these factors contributed to our written sales shortfall, the decline in store sales that we began to see this summer have continued into the first four weeks of the current quarter,” he noted.

Bassett Furniture currently has 91 company-and licensee-owned stores.

Bassett Furniture
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 8/26 2017 2016 % change
Revenue $114,261,000 $104,712,000 9.1%
Operating income 7,260,000 7,540,000 (3.7%)
Net income 4,579,000 4,165,000 9.9%
Earnings per share 0.43 0.38 13.2%
Furniture Today Staff | Staff Editors

Furniture Today covers all the news concerning manufacturers, retailers and suppliers in the home furnishings sector.

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