Bassett Furniture Industries Reports Significant Declines in Revenue and Profitability for Q3 and 9M 2024

Bassett Furniture Industries Incorporated reported significant declines in both revenue and profitability for the quarter and nine months ended August 31, 2024, compared to the same periods in the previous fiscal year.

For the quarter, net sales of furniture and accessories totaled $75.6 million, down 13.3% from $87.2 million in the prior year. The nine-month figures reflected a more substantial decline, with sales of $245.6 million, a decrease of 16.9% from $295.4 million. The drop in sales was attributed to a 16% decline in wholesale sales and a 10% decrease in retail sales through company-owned stores. The wholesale segment reported sales of $47.8 million for the quarter, down from $56.7 million, while retail sales fell to $47.3 million from $52.3 million.

Gross profit also decreased, with the quarter's gross profit at $40.1 million, down 11% from $45.0 million, and for the nine months, gross profit was $131.7 million, down 15.1% from $155.1 million. Despite the decline in sales, gross margins improved, with a consolidated gross margin of 53.8% for the quarter, up from 51.6% in the previous year, and 55.0% for the nine months, compared to 52.5% previously.

The company reported a loss from operations of $6.4 million for the quarter, worsening from a loss of $3.8 million in the prior year. For the nine months, the loss from operations was $17.2 million, a significant decline from a profit of $1.4 million in the same period last year. Net losses for the quarter were $4.5 million, compared to a loss of $2.6 million in the previous year, and for the nine months, the net loss was $12.9 million, compared to a profit of $0.9 million.

Bassett's cash position also deteriorated, with cash and cash equivalents decreasing to $38.3 million from $52.4 million at the end of the previous fiscal year. The company incurred non-cash asset impairment charges totaling $5.5 million during the nine months, primarily related to the decision to cease operations of Noa Home, an e-commerce furniture retailer acquired in 2022.

Additionally, a cybersecurity incident in July 2024 led to temporary operational disruptions, with estimated sales losses between $1.0 million and $2.0 million. Legal and remediation costs related to this incident were approximately $98,000, included in selling, general, and administrative expenses.

Despite these challenges, Bassett declared regular dividends of $0.20 per share for the quarter, up from $0.18 in the previous year, and $0.54 per share for the nine months, compared to $0.50 previously. The company continues to navigate a challenging market environment while managing its operational and financial strategies.