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Upholstery margins improves slightly in Q2, Bassett

09
Oct '09
Bassett Furniture Industries, Inc. announced its results of operations for its fiscal quarter ended August 29, 2009.

Sales for the quarter ended August 29, 2009 were $57.7 million as compared to $70.2 million for the quarter ended August 30, 2008, a decrease of 18%. Gross margins for the third quarter of 2009 and 2008 were 45.1% and 40.0%, respectively.

The margin increase over 2008 results primarily from a greater mix of the Company's sales being through the retail segment. Selling, general and administrative expenses excluding bad debt and notes receivable valuation charges decreased $2.2 million for the third quarter of 2009 as compared to 2008 primarily due to lower spending.

The Company also recorded $1.2 million of bad debt and notes valuation charges during the third quarter of 2009 as compared to $4.1 million for the third quarter of 2008, a $2.9 million decrease. The Company reported a net loss of $3.4 million, or $0.30 per share for the quarter ended August 29, 2009, as compared to a net loss of $2.7 million, or $0.23 per share, for the quarter ended August 30, 2008.

The loss for the quarter ended August 29, 2009 included unusual pretax charges of $1.8 million associated with lease exit costs for two closed retail locations. The results for the quarter ended August 30, 2008 included two unusual pretax items consisting of a $0.2 million impairment charge associated with the write-off of leasehold improvements for a closed store and $0.6 million associated with lease exit costs for a closed store. Excluding these unusual items, the net loss for the quarters ended August 29, 2009 and August 30, 2008 would have been net losses of $1.7 million and $1.8 million, respectively. Please refer to the attached schedule which reconciles net loss as reported to net loss as adjusted.

"We continued to experience weak order demand during the June through August quarter, historically our slowest period of the year," said Robert H. Spilman Jr., president and chief executive officer. "Recognizing that the current environment will likely persist for some time, we are focused on cash management and improving our wholesale and retail operations. We have now generated positive operating cash flow for two consecutive quarters, and continuing this trend will be our primary objective until we can see tangible signs of an economic turnaround."

Wholesale Segment
Net sales for the wholesale segment were $41.8 million for the third quarter of 2009 as compared to $59.5 million for the third quarter of 2008, a decrease of 30%. Approximately 51% of wholesale shipments during the third quarter of 2009 were imported products compared to 53% for the third quarter of 2008. Gross margins for the wholesale segment were 30.3% for the third quarter of 2009 as compared to 29.7% for the third quarter of 2008.

This increase is primarily due to lower material costs as a result of negotiated price decreases from our vendors in addition to lower freight costs. Wholesale SG&A excluding bad debt and notes receivable valuation charges decreased $3.5 million during the third quarter of 2009 as compared to 2008 due primarily to lower sales and continued cost cutting measures.


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