by BASSETT, Va. — Bassett Furniture Industries got the year off to a strong start with a nearly 16% increase in first quarter sales and a 39% increase in net income.
The company reported Thursday that consolidated sales for the quarter ended Feb. 26 totaled $117.9 million, up 15.9% from the $101.7 million reported the same period last year. Net income was $5.6 million, up from just over $4 million last year. It reported diluted earnings per share of $.44, up 19% from the $.37 reported during the same period last year.
The company said that sales in its wholesale segment rose 19%, while sales in its retail segment grew at a slower pace of 6.1%.
The company also noted that incoming wholesale orders were down 6.8% compared to 2021, yet remained robust compared to the past few years. Some 90% of the order shortfall, the company said, occurred in the Club Level motion segment which still has a high backlog. The line also has been most affected by rising container prices.
Bassett reported that orders for its domestic upholstery and outdoor products grew compared to 2021 and remain strong.
Meanwhile, wood orders fell slightly, due largely to Covid-related factory shutdowns in Vietnam that affected the imported wood segment.
In addition, company Chairman and CEO Robert H. Spilman Jr. said that the company’s inability to keep pace with “the incessant inflationary pressures that we are experiencing cost us between 150 to 200 basis points in our consolidated margins for the quarter.”
He noted that materials costs in the upholstery operations “was the biggest culprit as every raw material involved with manufacturing a sofa, chair or sectional has continued to escalate in price over the past 18 months.”
Due to the pricing pressures, the company is implementing its sixth wholesale price increase “in the new inflationary world of the last 15 months,” Spilman said.
Spilman noted, however, that corporate retail profits tripled to $3.4 million during the period as higher gross margins and leverage from “delivering our order backlog combined to produce better results.”
He added that the company had a strong President’s Day sales period, which he believes will fuel continued strong retail deliveries for the foreseeable future.
In addition, he said, the company is now evaluating its real estate portfolio of owned and leased locations, with plans calling for the remodeling of three stores in 2022, and the opening of one location and the closing of another. Plans also call for the selling of real estate and building in one of its locations this year while purchasing another in a new market.
“On the whole, we were pleased with the quarter, although the aforementioned vulnerability that we have experienced regarding cost pressures remains frustrating,” Spilman said. “As we wind down our backlog over the upcoming months, the relationship between our invoice price and our production costs will more closely align. Concurrently, we plan to capitalize on the market share that we have gained in the open market and the improved operating model in our retail stores to make 2022 another strong year for Bassett.
