by Company also reports net loss of $1.2 million, despite efforts to reduce costs
BASSETT, Va. — In the midst of a challenging retail sales environment, case goods and upholstery manufacturer Bassett Furniture reported a nearly 20% decline in revenues and a net loss of $1.2 million during its first quarter ended March 2.
For the quarter, consolidated sales totaled $86.6 million, down 19.6% from the $107.7 million reported the same period last year. The company said that the results of the latest quarter also were in comparison to a period of inflated sales during the year-earlier period.
The net loss of $1.19 million, or 14 cents per share compared to net income of $1.4 million, or 16 cents per share, during the first quarter of last year. The company said while its consolidated gross margin of 55.3% was an all-time high, spending reductions were not enough to create profitability based on sales.
“We continue to explore expense reduction strategies that will not be detrimental to gaining market share in the competitive furniture industry landscape,” said Robert H. Spilman, chairman and chief executive officer, adding that inventory levels “are stable and are appropriate for the current pace of business. Total headcount in our wholesale segment has been reduced by 26% since the peak of the pandemic booms in 2022. The corporate retail organization is 44% leaner than February 2020, the last month before the world changed. And the balance sheet is well built and provides stability as we focus on improving results in anticipation of a better macro-economic environment in the future.”
The company experienced decreases in revenue in both its wholesale and retail segments during the quarter. The wholesale segment reported $54.7 million in sales, down 21.7% from the $69.9 million reported last year. The retail part of its business saw sales fall 17.2%, to $53.8 million, from $65 million during the year-earlier period.
Spilman noted that the final two weeks of January were particularly challenging relating to written sales as “we lost the historically strong MLK holiday event due to storms across several regions of the country where we expect to write good business.”
During the quarter, the wholesale segment reported operating income of $6.8 million, down from nearly $9 million the same period last year.
Spilman said that despite the uncertainty of work schedules, “Our team produced a 200-basis-point gross margin improvement for the quarter. Embedded in the wholesale results is the return to profitability of the Club Level motion assortment which has been a drag on the bottom line in recent quarters. We expect further improvement in the Club Level results in the upcoming months.”
He added that 80% of the products that invoiced in the quarter were manufactured in the U.S. and were shipped from a domestic facility.
“We take pride in our made-in-America positioning and heritage, but balancing capacity with order backlogs has been an ongoing hurdle since the slowdown began,” he said, adding that the company’s domestic wood operation began production of the contemporary-styled solid maple Parkway bedroom and the more popularly priced Origins dining program. “These products hit our store floors during the quarter and the sell-through is encouraging.”
He added that the company’s Newton, North Carolina, upholstery plant has produced the first pieces of its Premier Custom Upholstery in leather, which he noted sold well at retail in the final weeks of the quarter.
He also noted that the company is now shipping some of the imported case goods and accent furniture products introduced last fall.
“Our move into sourcing from India has added new artistic design elements to our line, and we have been pleased with the initial response by our wholesale customers,” he said. “Unfortunately, the historic ocean freight lead times that have existed for most of the past two decades have once again been disrupted, this time by the geopolitical turmoil in the Middle East that has affected traffic through the Suez Canal.”
The retail segment reported an operating loss of $1.6 million, compared to a gain of $1.5 million last year.
Spilman said the company has recently opened new stores in Tampa and Houston, and while there are no plans for new corporately owned stores in 2024, it plans to refurbish existing locations starting this summer.
And with an average ticket of $3,800 and 41% of sales coming from design projects, he said that the company plans to “sharpen the value proposition of a portion of our assortment with the addition of several new products that we believe will complement the wide array of customizable furniture that currently dominates our stores. We have already seen success in the small number of transactional products that we have begun to integrate into the line, and we plan to unveil more pieces designed to increase unit velocity over the course of 2024.”
“Coming out of the pandemic, corporate retail posted 14 consecutive quarters of profitability; several quarters were at record levels, albeit admittedly fueled by an unsustainable tailwind of written business,” he added. “The pendulum of consumer preferences has since swung dramatically away from purchases surrounding the home, not to mention several quarters of a weak housing market. While our gross margin was at record levels, we were not able to generate enough sales to overcome the burden of our fixed costs to post a profit for the quarter. With our lean organization, we are committed to returning to a consistently profitable corporate retail network, no matter what the economy throws at us.”
