by Double-digit gains in retail, upholstery sales drive business during the quarter
BASSETT, Va. — Bassett Furniture Industries reported consolidated net sales of $118 million for its third fiscal quarter ended Aug. 27, up 12.5% from the $104.9 million reported during the same period last year, fueled by upholstery sales and a particularly strong retail segment.
Net income totaled $7.6 million, or 84 cents per share, more than double the $3 million, or 35 cents per share, reported during the same period last year.
Operating profits totaled $6.1 million, up 22%, which excluded a $4.6 million gain from the sale of the company’s Southway Freeway store in Houston. This brought income from operations to $10.7 million, the company said, compared to nearly $5 million the year before.
Wholesale revenues totaled $47.1 million, up 1.7% from the $46.3 million reported the same period last year. Operating income in the segment was $1.6 million, down from $4.46 million reported during last year’s third quarter.
The company said upholstery sales were particularly strong, with a 12.5% increase, compared to a 1.3% increase on the wood side of the business.
“Said another way, shipments of domestically produced merchandise grew by 18.1% while imported product shipments declined by 15.7%,” company Chairman and CEO Robert H. Spilman Jr. “Significant for the period was the resurgent performance of our Newton, North Carolina, upholstery complex where combined shipments grew by 21.5% and divisional profitability returned to pre-Covid levels.
“We are now producing goods with material costs that are fully reflected in the price for which they are invoiced as the rampant price increases that we have absorbed over the past two years have subsided. Further, we are excited by the early retail success of the new “Modern Casual” product range that hit stores in time for Labor Day, which we are counting on to help keep our production schedules on track moving forward. Fabric outages have improved significantly from the depths of the pandemic related chaos of 2021, and our lead times have markedly improved in the past few months. Shipments of our outdoor seating product continued its sizzling growth – this time at a rate of 30.3%.”
Sales in the company’s retail segment totaled $70.9 million, up 21% from the $58.6 million reported last year, while operating income in the segment totaled $4.5 million, up from $917,000 for the same period last year. This, combined with the full nine-month performance, marked what Spilman called the company’s “best ever” third quarter in the retail segment.
“For the nine months, corporate retail revenue of $210.6 million represents an increase of 16.1% over 2021, and the $15.8 million of operating profit brought forth exceeds any full year bottom line performance to date,” Spilman added. “Delivered gross margins of 51.8% remained near our target range despite the headwinds that four store closings presented.”
He said that due to construction-related supply chain issues, the opening of one of the company’s planned replacement stores in Dallas was delayed from the original late August date. The new opening date is set for early November.
“In conjunction with the Dallas opening, we are remodeling two other Metroplex stores – Southlake and Frisco,” Spilman noted. “There we are testing a “take with” strategy for certain accessory items and have designed a supporting fixturing package for all three Dallas area stores. Looking ahead to next year, we will incorporate these elements into the Austin, Texas, remodel project as well as into new stores that will open in Tampa, Florida, and in Houston. We are also considering another Florida location as well.”
In conclusion, Spilman said, high inflation, rising mortgage rates and a slowdown in the housing market “have taken a toll on the equity values of publicly traded furniture companies this year.”
“We are definitely in the mode of “focusing on what we can control” as there are currently forces at work greater than Bassett in a macro sense,” he added. “To that end, we invested in a robust marketing program for the recent three-week Labor Day promotion and the results were quite gratifying as our corporate retail stores recorded sales volumes better than both 2020 and 2021, which were, of course, very strong. We do believe that although our customer is being more judicious with their disposable income today than two years ago, their personal balance sheets are strong. So, there will be folks in the marketplace and we have to win them over. Meanwhile, Bassett has the financial strength to weather a downturn and an integrated strategy designed to provide multiple paths for growth in the future.”
