GlobeNewswire Inc | Apr 1, 2021 09:37AM EDT

April 01, 2021

BASSETT, Va., April 01, 2021 (GLOBE NEWSWIRE) -- Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today its results of operations for its first quarter ended February 27, 2021.

Fiscal 2021 First Quarter Highlights(Dollars in millions)

Sales Operating Income (Loss) 1st Qtr Dollar % 1st % of 1st % of Qtr Qtr 2021 2020 Change Change 2021 Sales 2020 Sales Consolidated $ 113.7 $ 112.1 $ 1.6 1.4 % $ 6.0 5.3 % $ 2.2 2.0 %^(1) Wholesale $ 70.3 $ 65.0 $ 5.2 8.3 % $ 4.8 6.8 % $ 2.7 4.2 % Retail $ 60.4 $ 65.8 $ (5.5 ) -8.3 % $ 1.1 1.8 % $ (1.2 ) -1.9 % Logistical $ 20.1 $ 21.3 $ (1.2 ) -5.8 % $ 0.5 2.3 % $ 0.8 3.9 %Services (1) Our consolidated results include certain intercompany eliminations. See the?Segment Information? table below for an illustration of the effects of these intercompany eliminations on our consolidatedsales and operating income.

Incoming orders continued at a torrid pace during the first quarter of fiscal 2021. All sales channels recorded written business increases, resulting in a 44% year over year spike in net orders. We are battling every day with the broken supply chain that is affecting the entire industrys ability to produce and ship furniture and with rampant inflation that is permeating virtually every form of raw material in our manufactured and imported goods. Despite the headwinds, consolidated revenue grew by 1.4% in the period and operating income increased by 172% to $6.0 million. As a result, EPS advanced to $0.40 per share as compared to $0.12 in the prior year.

Our sell, then make model has put us at somewhat of a disadvantage during the COVID months of 2020 and early 2021. Expanding on that thought, 80% of our furniture products are selected by our consumers before they have been manufactured. This is in stark contrast to the vast majority of U.S. furniture retailers that derive most of their revenue from goods that have already been made and reside in their warehouses ready for delivery. Upon receipt of the sales order, our merchandise is scheduled and entered into production. Prior to the outbreak of the pandemic, our production cycle on these custom-made goods was generally 2-3 weeks. Unfortunately, the combination of surging orders and the inability of our long-time suppliers to reliably provide us with fabric, foam, birch plywood, etc. has ballooned our wholesale backlog to $67.5 million at quarter end, or 362% more than last year at this time. Continued strong orders have elevated the backlog by another 8% through four weeks of March.

Reinforcing our commitment to a Made in America strategy, we unveiled an expansion of our Bench Made sub-brand in late February. The Bench Made label will now be affixed to all of our domestically manufactured premium products; bedroom, dining, occasional, entertainment, stationary upholstery, and motion upholstery products that are crafted with our best materials and artisanship. Our thinking is driven by the viscerally positive reaction that we have seen from our customers and retail designers to our authentic story of a 119 year old American manufacturer that survived the devastating effects of globalization and recommitted to Made in America. Our makers who actually craft our products are the stars of the marketing campaign, which will ultimately encompass other tenets of the Bench Made brand including environmental stewardship and sustainability. The expanded Bench Made first appeared on our website on February 25th, was featured in March in our Makers Sale, and will be showcased in a consumer catalog in early May.

To address our growing backlog, we have made the commitment to open another upholstery manufacturing facility in Newton, NC, adjacent to our existing 500,000 square foot complex. Production from this additional 123,000 square foot facility should begin by June 1 and will be dedicated to our successful Everyday Value product range that features the opening price points in our assortment. The added space will also allow us to expand our thriving Bench Made motion program, previously referred to as Magnificent Motion, that has exceeded our sales projections since its debut in early 2020. I am very grateful for the hard work that our associates have put in and the many weeks of extended work schedules that they have been willing to undertake in order for us to service our customers as best we can under these unprecedented circumstances. We believe that a significant amount of sold orders will break free and begin to ship in late May as long-awaited componentry begins to arrive and is put into production.

Despite generating strong written sales growth for the period, our delivered sales in our corporate store network declined by 8.3% due to the aforementioned industry supply chain situation coupled with six fewer stores in operation compared to last year. Pandemic related cost reductions and this quarters gross margin expansion combined to produce $1.1 million of retail operating profit, significant in what has historically been our toughest quarter of the year. As is the case in our wholesale segment, there is significant operating profit embedded in our large unfulfilled retail backlog that will begin to bleed out late in the second quarter and throughout the back half of the year. Noteworthy in the period is the acceleration of our customer acquisition efforts, which contributed an additional one million visitors to our website. Eschewing most of the traditional media used in the past, our digital media strategy took off in the pandemic and drove double digit increases in keyword impressions in the first quarter.

Combining our corporate retail stores, the licensed store network, and the 100 strong Bassett Design Centers located within traditional furniture stores, our dedicated distribution strategy accounted for 74% of Bassett-branded quarterly wholesale orders. The shared synergies of our marketing efforts and our website are combining to make our advertising calendar and our merchandising programs universal. All told, wholesale orders from our open market customers grew by 98% in the quarter. In addition to the Bassett Design Centers, the momentum generated by our Bassett Club Level motion program was a major factor in this tremendous growth.

Our entry into the outdoor furniture space has gathered steam over the past two years, culminating in a combined written sales increase of 81% for our Lane Venture and Bassett Outdoor lines. Although the disruptions caused by tariffs on our Chinese woven frames and the delivery problems that we have experienced with our largest outdoor fabric supplier have compressed margins and slowed production, we believe that our quality and service have helped us capture market share and we look forward to doing more in the future.

On the whole, we got off to a promising start in 2021 over the first 90 days. Our margins suffered somewhat as a result of rampant material increases. In December and January our manufacturing facilities battled high rates of COVID related absenteeism. The inability to reliably obtain the necessary raw materials for furniture production made each day unpredictable. Nevertheless, our backlogs are very strong and our incoming business has remained substantial in March. Therefore, we are optimistic about our business for the remainder of 2021.

Robert H. Spilman, Jr., Chairman and CEO

About Bassett Furniture Industries, Inc. Bassett Furniture Industries, Inc. (NASDAQ:BSET), is a leading manufacturer and marketer of high quality home furnishings. With 97 company- and licensee-owned stores at the time of this release, Bassett has leveraged its strong brand name in furniture into a network of corporate and licensed stores that focus on providing consumers with a friendly environment for buying furniture and accessories. Bassetts retail strategy includes stylish, custom-built furniture that features the latest on-trend furniture styles, free in-home design visits, and coordinated decorating accessories. Bassett also has a traditional wholesale business with more than 700 accounts on the open market, across the United States and internationally and a logistics business specializing in home furnishings. For more information, visit the Companys website at bassettfurniture.com. (BSET-E)

Certain of the statements in this release, particularly those preceded by, followed by or including the words believes, plans, expects, anticipates, intends, should, estimates, or similar expressions, or those relating to or anticipating financial results or changes in operations for periods beyond the end of the first fiscal quarter of 2021, constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause actual results to differ materially from those indicated in the forward looking statements: the effects of national and global economic or other conditions (including, without limitation, the effects on revenue, supply and demand resulting from the duration and extent of the COVID-19 pandemic) and future events on the retail demand for home furnishings and the ability of Bassetts customers and consumers to obtain credit; the success of marketing, logistics, retail and other initiatives; and the economic, competitive, governmental and other factors identified in Bassetts filings with the Securities and Exchange Commission. Any forward-looking statement that Bassett makes speaks only as of the date of such statement, and Bassett undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indication of future performance, unless expressed as such, and should only be viewed as historical data.

Table 1BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESCondensed Consolidated Statements of Operations - unaudited(In thousands, except for per share data) Quarter Ended February 27, 2021 February 29, 2020 Percent Percent of of Amount Net Amount Net Sales Sales Sales revenue: Furniture and accessories $ 101,655 $ 98,942 Logistics 12,018 13,178 Total sales revenue 113,673 100.0 % 112,120 100.0 % Cost of furniture and 48,252 42.4 % 45,270 40.4 %accessories sold Selling, general and 59,400 52.3 % 64,640 57.7 %administrative expensesIncome from operations 6,021 5.3 % 2,210 2.0 % Other loss, net (337 ) -0.3 % (362 ) -0.3 %Income before income taxes 5,684 5.0 % 1,848 1.6 % Income tax provision 1,673 1.5 % 638 0.6 %Net income (loss) $ 4,011 3.5 % $ 1,210 1.1 % Basic earnings per share $ 0.40 $ 0.12 Diluted earnings per share $ 0.40 $ 0.12

Table 2BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets(In thousands) (Unaudited) Assets February 27, November 28, 2021 2020Current assets Cash and cash equivalents $ 45,033 $ 45,799 Short-term investments 17,715 17,715 Accounts receivable, net 24,720 22,340 Inventories, net 62,936 54,886 Recoverable income taxes 8,831 9,666 Other current assets 11,798 10,272 Total current assets 171,033 160,678 Property and equipment, net 92,772 90,917 Other long-term assets Deferred income taxes, net 3,749 4,587 Goodwill and other intangible assets 23,732 23,827 Right of use assets under operating leases 111,700 116,903 Other 5,975 5,637 Total long-term assets 145,156 150,954 Total assets $ 408,961 $ 402,549 Liabilities and Stockholders? Equity Current liabilities Accounts payable $ 28,172 $ 23,426 Accrued compensation and benefits 14,418 16,964 Customer deposits 44,674 39,762 Current portion of operating lease 27,088 27,078 obligationsOther current liabilities and accrued 13,088 11,141 expensesTotal current liabilities 127,440 118,371 Long-term liabilities Post employment benefit obligations 12,347 12,089 Long-term portion of operating lease 105,990 111,972 obligationsOther long-term liabilities 5,483 2,087 Total long-term liabilities 123,820 126,148 Stockholders? equity Common stock 49,567 49,714 Retained earnings 109,493 109,710 Accumulated other comprehensive loss (1,359 ) (1,394 )Total stockholders' equity 157,701 158,030 Total liabilities and stockholders? equity $ 408,961 $ 402,549

Table 3BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESConsolidated Statements of Cash Flows - unaudited(In thousands) Quarter Ended February 27, February 29, 2021 2020Operating activities: Net income $ 4,011 $ 1,210 Adjustments to reconcile net income to net cash provided by (used in)operating activities: Depreciation and amortization 3,331 3,623 Gain on lease modification - (152 )Net (gain) loss on disposals of property and (4 ) (58 )equipmentDeferred income taxes 826 (125 )Other, net 274 321 Changes in operating assets and liabilities Accounts receivable (2,380 ) (1,873 )Inventories (8,050 ) (1,213 )Other current and long-term assets (788 ) (536 )Right of use assets under operating leases 6,340 6,721 Customer deposits 4,912 (1,292 )Accounts payable and other liabilities 3,584 (2,266 )Obligations under operating leases (7,072 ) (9,603 )Net cash provided by (used in) operating 4,984 (5,243 )activities Investing activities: Purchases of property and equipment (895 ) (1,340 )Proceeds from sale of property and equipment 8 1,697 Purchase of investments - (241 )Other (302 ) (193 )Net cash used in investing activities (1,189 ) (77 ) Financing activities: Cash dividends (3,718 ) (1,260 )Other issuance of common stock 83 75 Repurchases of common stock (534 ) (766 )Taxes paid related to net share settlement of (219 ) (215 )equity awardsRepayments of finance lease obligations (173 ) (12 )Net cash used in financing activities (4,561 ) (2,178 )Change in cash and cash equivalents (766 ) (7,498 )Cash and cash equivalents - beginning of period 45,799 19,687 Cash and cash equivalents - end of period $ 45,033 $ 12,189

Table 4BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESSegment Information - unaudited(In thousands) Quarter Ended February 27, 2021 February 29, 2020Net Sales Wholesale $ 70,264 $ 65,017 Retail - Company-owned stores 60,395 65,846 Logistical services 20,081 21,315 Inter-company eliminations: Furniture and accessories (29,004 ) (31,921 )Logistical services (8,063 ) (8,137 )Consolidated $ 113,673 $ 112,120 Operating Income (Loss) Wholesale $ 4,797 $ 2,713 Retail 1,094 (1,249 )Logistical services 459 835 Inter-company elimination (329 ) (89 )Consolidated $ 6,021 $ 2,210

Table 5BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIESRollforward of BHF Store Count November 28, February 27, 2020 Opened* Closed* Transfers 2021 Company-owned stores 63 - - - 63Licensee-owned stores 34 - - - 34 Total 97 - - - 97 * Does not include openings and closures due to relocation of existing stores within a market.

J. Michael DanielSenior Vice President andChief Financial Officer(276) 629-6614 Investors mdaniel@bassettfurniture.com

Peter D. MorrisonVice President of Communications(276) 629-6450 Media