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Bassett completes sale of International Home Furnishings Center
04 May '11
6 min read
In the short term, a portion of the funds will be used to settle selected ongoing obligations pertaining to closed store real estate in cases where these actions will result in substantial cash savings for the Company. Similarly, the Company will seek to reduce or eliminate other various debts that are subject to interest rates that are unfavorable in today's rate environment and can provide additional opportunities to improve ongoing cash flow. In considering potential scenarios for the allocation of this capital, Bassett has engaged financial advisors and also received input from many of its shareholders.
Regarding future investments in operations and growth, the Company plans to invest cautiously in the opening of 2 or 3 new stores over the next several months. "Because of the economic recession and capital restraints, we have been conservative with new store openings. Furthermore, bank financing for most U.S. furniture companies is limited to nonexistent in today's environment. To date, we have opened seven of the new prototype and have converted a similar number of our old ones.
“Accordingly, we will continue to analyze the return generated by our new store prototype on a location by location basis until we are satisfied that a larger number of openings is justified and can be internally financed. We have learned a lot about operating our stores through these very tough past several years. And we are also very excited by a new smaller version of our store and the increased sales per square foot and the greater returns that it is generating. We know that our updated design center staffed with the right personnel provides a much better presentation of our custom furniture capabilities, thereby offering a shopping experience that is truly unique at our price point anywhere in our industry," stated Spilman.
The past few years at Bassett have been characterized by the recession-related stress that severely compromised many of its licensees' ability to pay Bassett for the furniture shipped to them. As a result, many stores have been either closed or moved into Bassett's corporate network. This has been an expensive but necessary process that is ongoing today. The Company believes, however, that the bulk of these decisions are behind us and that in late 2011 and beyond management can turn its full attention to running a stronger fleet of corporate and licensed stores. Again, a thorough analysis of remaining locations that identifies their performance potential and the capital upgrades that are necessary to reach that potential will be undertaken over the next few months. To date these retro-fits have consumed approximately $300-$600 thousand per updated location.
Once again, as a result of the IHFC transaction, Bassett's Board of Directors has discussed the merits of various mechanisms of returning capital to shareholders. One such vehicle, a stock buy back program, has been considered as part of these discussions. Although no short term targeted amounts of stock repurchase have been established to date, the Company's total share repurchase authorization currently stands at $23.3 million. Bassett plans to purchase shares on the open market in the coming months when the price of the stock provides economic justification in relation to the intrinsic value of the enterprise.
Regarding future investments in operations and growth, the Company plans to invest cautiously in the opening of 2 or 3 new stores over the next several months. "Because of the economic recession and capital restraints, we have been conservative with new store openings. Furthermore, bank financing for most U.S. furniture companies is limited to nonexistent in today's environment. To date, we have opened seven of the new prototype and have converted a similar number of our old ones.
“Accordingly, we will continue to analyze the return generated by our new store prototype on a location by location basis until we are satisfied that a larger number of openings is justified and can be internally financed. We have learned a lot about operating our stores through these very tough past several years. And we are also very excited by a new smaller version of our store and the increased sales per square foot and the greater returns that it is generating. We know that our updated design center staffed with the right personnel provides a much better presentation of our custom furniture capabilities, thereby offering a shopping experience that is truly unique at our price point anywhere in our industry," stated Spilman.
The past few years at Bassett have been characterized by the recession-related stress that severely compromised many of its licensees' ability to pay Bassett for the furniture shipped to them. As a result, many stores have been either closed or moved into Bassett's corporate network. This has been an expensive but necessary process that is ongoing today. The Company believes, however, that the bulk of these decisions are behind us and that in late 2011 and beyond management can turn its full attention to running a stronger fleet of corporate and licensed stores. Again, a thorough analysis of remaining locations that identifies their performance potential and the capital upgrades that are necessary to reach that potential will be undertaken over the next few months. To date these retro-fits have consumed approximately $300-$600 thousand per updated location.
Once again, as a result of the IHFC transaction, Bassett's Board of Directors has discussed the merits of various mechanisms of returning capital to shareholders. One such vehicle, a stock buy back program, has been considered as part of these discussions. Although no short term targeted amounts of stock repurchase have been established to date, the Company's total share repurchase authorization currently stands at $23.3 million. Bassett plans to purchase shares on the open market in the coming months when the price of the stock provides economic justification in relation to the intrinsic value of the enterprise.
Bassett Furniture Industries Inc
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