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Upholstery margins improves slightly in Q2, Bassett
09 Oct '09
5 min read
The Company recorded $1.2 million of bad debt and notes receivable valuation charges for the third quarter of 2009 as compared to $4.1 million for the third quarter of 2008. This significant decrease in charges is primarily due to the Company working diligently with its licensees to control increases in accounts receivable exposure.
"Prior to bad debt charges in the quarter, wholesale operating margins were 3.6% compared to 5.1% last year, despite a $17.7 million sales decrease in the segment," Mr. Spilman further stated. "Upholstery margins improved slightly in the quarter while wood margins remained under pressure. For the first time ever, upholstery shipments outpaced wood shipments for the period. As previously discussed, we are concentrating on reducing wood inventory levels on our best sellers. To this end, wholesale wood inventory decreased by $2.2 million in the quarter."
Retail Segment
During the nine month period ended August 29, 2009, the Company acquired an additional eight stores from its licensees, one of which was acquired during the third quarter of 2009. In addition, the Company closed four under-performing stores. Total Company-owned store count as of August 29, 2009 was 35, of which 26 were comparable stores (stores open longer than one year).
The total Company-owned store network had net sales of $28.5 million for the third quarter 2009, as compared to $24.0 million in the third quarter of 2008, an increase of 18.7%. Comparable store sales decreased 2.8%. These sales decreases have primarily resulted from the continued weak economic environment and corresponding weak consumer spending.
Gross margins for the entire Company-owned fleet were essentially flat at 45.1% as compared to the third quarter of 2008. Gross margins as compared to the second quarter of 2009 decreased by 2.1 percentage points as the Company performed a fleet-wide inventory reduction sale which resulted in lower gross margins. As a percentage of sales, SG&A decreased 4.6 percentage points to 52.1% due to continued cost containment efforts during the quarter.
Total retail operating losses decreased 29% from $2.9 million for the third quarter of 2008 to $2.0 million for the third quarter of 2009. On a comparable store basis, retail operating losses were reduced by 33% to $1.5 million, primarily due to cost containment efforts.
"We remain encouraged by our efforts to stem corporate retail losses as evidenced by further improvement in our comparable store operating performance," Mr. Spilman continued. "Despite our decision to reduce retail inventories in the quarter through a system-wide inventory reduction event, our 26 comparable stores reduced their aggregate loss by 33%. Furthermore, we believe that adjustments to our retail pricing strategy will further enhance corporate store results in future quarters."
"Prior to bad debt charges in the quarter, wholesale operating margins were 3.6% compared to 5.1% last year, despite a $17.7 million sales decrease in the segment," Mr. Spilman further stated. "Upholstery margins improved slightly in the quarter while wood margins remained under pressure. For the first time ever, upholstery shipments outpaced wood shipments for the period. As previously discussed, we are concentrating on reducing wood inventory levels on our best sellers. To this end, wholesale wood inventory decreased by $2.2 million in the quarter."
Retail Segment
During the nine month period ended August 29, 2009, the Company acquired an additional eight stores from its licensees, one of which was acquired during the third quarter of 2009. In addition, the Company closed four under-performing stores. Total Company-owned store count as of August 29, 2009 was 35, of which 26 were comparable stores (stores open longer than one year).
The total Company-owned store network had net sales of $28.5 million for the third quarter 2009, as compared to $24.0 million in the third quarter of 2008, an increase of 18.7%. Comparable store sales decreased 2.8%. These sales decreases have primarily resulted from the continued weak economic environment and corresponding weak consumer spending.
Gross margins for the entire Company-owned fleet were essentially flat at 45.1% as compared to the third quarter of 2008. Gross margins as compared to the second quarter of 2009 decreased by 2.1 percentage points as the Company performed a fleet-wide inventory reduction sale which resulted in lower gross margins. As a percentage of sales, SG&A decreased 4.6 percentage points to 52.1% due to continued cost containment efforts during the quarter.
Total retail operating losses decreased 29% from $2.9 million for the third quarter of 2008 to $2.0 million for the third quarter of 2009. On a comparable store basis, retail operating losses were reduced by 33% to $1.5 million, primarily due to cost containment efforts.
"We remain encouraged by our efforts to stem corporate retail losses as evidenced by further improvement in our comparable store operating performance," Mr. Spilman continued. "Despite our decision to reduce retail inventories in the quarter through a system-wide inventory reduction event, our 26 comparable stores reduced their aggregate loss by 33%. Furthermore, we believe that adjustments to our retail pricing strategy will further enhance corporate store results in future quarters."
Bassett Furniture Industries
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