8-K
BASSETT FURNITURE INDUSTRIES INC (BSET)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 1, 2021
BASSETT FURNITURE INDUSTRIES, INCORPORATED
(Exact name of registrant as specified in its charter)
| virginia | 000-00209 | 54-0135270 |
|---|---|---|
| (State or other jurisdiction of<br><br> <br>incorporation or organization) | (Commission File No.) | (I.R.S. Employer<br><br> <br>Identification No.) |
| 3525 FAIRYSTONE PARK HIGHWAY<br><br> <br>BASSETT , virginia | 24055 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (276) 629-6000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered |
|---|---|---|
| Common Stock ($5.00 par value) | BSET | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On April 1, 2021 Bassett Furniture Industries issued a news release relating to the first quarter financial results for the fiscal year ending November 27, 2021. A copy of the news release announcing this information is attached to this report as Exhibit 99.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| 99 | News Release issued by Bassett Furniture Industries, Inc. on April 1, 2021 |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |
| --- | --- |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BASSETT FURNITURE INDUSTRIES, INCORPORATED | ||
|---|---|---|
| Date: April 1, 2021 | By: | /s/J. Michael Daniel |
| J. Michael Daniel | ||
| Title: Senior Vice President – Chief Financial Officer |
ex_238422.htm
Exhibit 99
| Bassett Furniture Industries, Inc. | J. Michael Daniel |
|---|---|
| P.O. Box 626 | Senior Vice President and **** |
| Bassett, VA 24055 | Chief Financial Officer |
| (276) 629-6614 – Investors | |
| mdaniel@bassettfurniture.com | |
| Peter D. Morrison | |
| Vice President of Communications | |
| For Immediate Release | (276) 629-6450 – Media |
Bassett Furniture News Release
Bassett Announces Fiscal First Quarter Results
(Bassett, Va.) – April 1, 2021 – 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 Qtr | % of | 1st Qtr | % of | |||||||||||||||
| 2021 | 2020 | Change | Change | 2021 | Sales | 2020 | Sales | ||||||||||||||
| Consolidated ^(1)^ | $ | 113.7 | $ | 112.1 | $ | 1.6 | 1.4 | % | $ | 6.0 | 5.3 | % | $ | 2.2 | 2.0 | % | |||||
| 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 Services | $ | 20.1 | $ | 21.3 | $ | (1.2 | ) | -5.8 | % | $ | 0.5 | 2.3 | % | $ | 0.8 | 3.9 | % |
(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 consolidated sales 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 industry’s 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 quarter’s 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. Bassett’s 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 Company’s 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 Bassett’s 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 Bassett’s 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 1 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES | ||||||||||||
| Condensed Consolidated Statements of Operations - unaudited | ||||||||||||
| (In thousands, except for per share data) | ||||||||||||
| Quarter Ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| February 27, 2021 | February 29, 2020 | |||||||||||
| Percent of | Percent of | |||||||||||
| Amount | Net Sales | Amount | Net 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 accessories sold | 48,252 | 42.4 | % | 45,270 | 40.4 | % | ||||||
| Selling, general and administrative expenses | 59,400 | 52.3 | % | 64,640 | 57.7 | % | ||||||
| Income 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 2 | ||||||
|---|---|---|---|---|---|---|
| BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Assets | February 27, 2021 | November 28, 2020 | ||||
| Current 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 obligations | 27,088 | 27,078 | ||||
| Other current liabilities and accrued expenses | 13,088 | 11,141 | ||||
| Total current liabilities | 127,440 | 118,371 | ||||
| Long-term liabilities | **** | **** | **** | **** | **** | **** |
| Post employment benefit obligations | 12,347 | 12,089 | ||||
| Long-term portion of operating lease obligations | 105,990 | 111,972 | ||||
| Other 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 3 | ||||||
|---|---|---|---|---|---|---|
| BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES | ||||||
| Consolidated Statements of Cash Flows - unaudited | ||||||
| (In thousands) | ||||||
| Quarter Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| February 27, 2021 | February 29, 2020 | |||||
| Operating 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 equipment | (4 | ) | (58 | ) | ||
| Deferred 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 activities | 4,984 | (5,243 | ) | |||
| 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 equity awards | (219 | ) | (215 | ) | ||
| Repayments 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 4 | ||||||
|---|---|---|---|---|---|---|
| BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES | ||||||
| Segment Information - unaudited | ||||||
| (In thousands) | ||||||
| Quarter Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| February 27, 2021 | February 29, 2020 | |||||
| Net 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 5 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES | ||||||||||
| Rollforward of BHF Store Count | ||||||||||
| November 28, | February 27, | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | Opened* | Closed* | Transfers | 2021 | ||||||
| Company-owned stores | 63 | - | - | - | 63 | |||||
| Licensee-owned stores | 34 | - | - | - | 34 | |||||
| Total | 97 | - | - | - | 97 | |||||
| * Does not include openings and closures due to relocation of existing stores within a market. | ||||||||||
| --- |