Bassett Furniture posts $117k profit in 2Q

Margins improve as sales rise 0.2%

Larry Thomas -- Kids Today, 7/12/2010 11:39:59 AM

BASSETT, Va. - Bassett Furniture Inds. eked out a $117,000 profit in the quarter ended May 29 due largely to higher gross margins in its wholesale and retail segments.

The quarterly profit, which equals 1 cent per share, reversed a net loss of $9.9 million or 86 cents per share in the same quarter in 2009.

Sales for the quarter totaled $57.85 million, up 0.2% from $57.72 million in the comparable period last year.

"Our focus on strengthening our balance sheet and improving our operations showed more progress in the second quarter," said Rob Spilman, president and CEO. "Gross margins improved substantially in both our retail and wholesale segments. And, for the fifth consecutive quarter, we were able to generate positive operating cash flow, this time in the amount of $1.8 million."

The quarterly profit would have been higher had it not been for one-time charges of $604,000 or 5 cents per share stemming from some of its closed stores.

Gross margin for the wholesale segment was 32.4%, up 3.9 percentage points from the same quarter in 2009. For company-owned stores, gross margin rose 0.9 percentage points despite a 1.7% drop in same-store sales.

"The economy has not shown a meaningful turnaround for the furniture industry overall," Spilman said. "Therefore, we will continue to conservatively manage the business while being as aggressive as we can in our efforts to grow the company."

Bassett ended the quarter with 45 company-owned and 59 licensed Bassett Furniture Direct stores. The company has acquired eight stores from licensees since the start of its fiscal year on Nov. 29, and said two single-store licensees will be converting their locations to multi-brand furniture stores during the current quarter.

Spilman said sales at the wholesale and retail levels were hampered by delays in shipments from several of its Asian suppliers.

For the six months ended May 29, sales fell 4.1% to $110.7 million.

The six-month net loss totaled $1.58 million, or 14 cents per share. That was well below the loss in the first six months of the last fiscal year, which totaled $21.8 million, or $1.91 per share.