Form 8-K BASSETT FURNITURE INDUST For: Jan 19

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM 8-K

 

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CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) January 19, 2017

 

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BASSETT FURNITURE INDUSTRIES, INCORPORATED

(Exact name of registrant as specified in its charter)

 

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VIRGINIA		0-209		54-0135270
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(I.R.S. Employer Identification No.)

 

3525 FAIRYSTONE PARK HIGHWAY 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)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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Item 2.02.

Results of Operations and Financial Condition.

 

On January 19, 2017 Bassett Furniture Industries issued a news release relating to, among other things, the fourth quarter financial results for the fiscal year ended November 26, 2016. A copy of the news release announcing this information is attached to this report as Exhibit 99.

  

Item 9.01.

Financial Statements and Exhibits.

 

 

Exhibit 99

News release issued by Bassett Furniture Industries, Inc. on January 19, 2017.

 

 

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: January 19, 2017	By:          /s/ J. Michael Daniel
	J. Michael Daniel Title:     Senior Vice President – Chief Financial Officer

 

 

EXHIBIT INDEX

 

 

 

 

Description   

 

Exhibit No. 99          News release issued by Bassett Furniture Industries on January 19, 2017.

 

 

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
	Jay S. Moore
	Director of Communications
For Immediate Release	(276) 629-6450 – Media

 

 

 

Bassett Furniture News Release

Bassett Announces Fiscal Fourth Quarter Results

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(Bassett, Va.) – January 19, 2017 – Bassett Furniture Industries, Inc. (Nasdaq: BSET) announced today its results of operations for its fiscal quarter ended November 26, 2016.

 

Fiscal 2016 Fourth Quarter Highlights

●

Consolidated sales were $113.8 million for the fourth quarter of 2016 compared to $115.6 million for the fourth quarter of 2015, a decrease of 1.5%.

●

Operating income for the quarter was $9.0 million or 7.9% of sales as compared to $8.7 million or 7.5% of sales for the prior year quarter.

●

Wholesale sales were $62.6 million for the fourth quarter of 2016 compared to $64.5 million for the fourth quarter of 2015, a decrease of 3.0%. Wholesale operating profit for the quarter was $4.3 million or 6.9% of sales as compared to $4.1 million or 6.4% of sales for the prior year quarter.

●

Company-owned store sales were $69.9 million for the fourth quarter of 2016 compared to $66.3 million for the fourth quarter of 2015, an increase of 5.5%. This included a comparable store sales increase of 4.3% compared to the prior year quarter. Comparable store operating income was $3.4 million or 5.2% of sales for the current year quarter as compared to $2.9 million or 4.6% of sales for the prior year quarter. Total retail operating income was $2.9 million or 4.1% of sales for the quarter as compared to $2.2 million or 3.3% of sales for the prior year quarter. Comparable store written sales for the quarter increased 3.3%.

●

Revenue for Zenith was $24.2 million for the fourth quarter of 2016 compared to $25.6 million for the fourth quarter of 2015, a 5.5% decrease. Zenith’s operating profit for the quarter was $1.4 million or 5.9% of sales as compared to $1.4 million or 5.6% of sales for the prior year quarter.

●

Net income for the quarter was $5.0 million or $0.47 per diluted share as compared to $5.7 million or $0.52 per diluted share for the prior year quarter.

 

“Led by a strong performance from our corporate retail segment, we closed the year on a high note,” commented Robert H. Spilman, Jr., Chairman and CEO. “After a sluggish start to the year, both our corporate and licensed retail store groups finished 2016 positively, largely due to the comparable store sales momentum that they generated during the second half of the year. We look ahead to a new year that will see us make significant investments in our store network, expand our digital presence, upgrade our manufacturing facilities and broaden our logistics platform.”

 

 

Wholesale Segment

 

Net sales for the wholesale segment were $62.6 million for the fourth quarter of 2016 as compared to $64.5 million for the fourth quarter of 2015, a decrease of $1.9 million or 3.0%. This decrease was driven by lower shipments to the open market (outside the Bassett Home Furnishings network) partially offset by a 5.7% increase in shipments to the Bassett Home Furnishings network as compared to the prior year period. The decrease in sales to the open market was primarily due to lower sales of imported product primarily from the discontinuation of our relationship with a significant customer and loss of sales from the HGTV Home Collection brand, exited late in 2015. Gross margins for the wholesale segment were 35.5% for the fourth quarter of 2016 as compared to 33.9% for the fourth quarter of 2015. This increase is due primarily to improved margins in the imported wood product as significant margin adjustments were necessary in the fourth quarter of 2015 as the Company was exiting the HGTV Home Collection brand. Wholesale SG&A for the fourth quarter of 2016 was $17.9 million as compared to $17.7 million for the prior year period. SG&A as a percentage of sales increased to 28.7% as compared to 27.5% for the fourth quarter of 2015. This increase in SG&A as a percentage of sales was primarily driven by higher marketing and advertising costs. Operating income was $4.3 million or 6.9% of sales as compared to $4.1 million or 6.4% of sales in the prior year.

 

“Our product assortment continues to undergo an important makeover as we seek more sales,” continued Spilman. “From our wood division, the Peninsula collection, the Wood Haven bedroom, the Bench Made bedroom, and several new occasional offerings hit our stores in December in advance of the key holiday selling weekends that start the year. In upholstery, the Designer Comfort and American Casual collections arrived in the stores on the same schedule. In addition to these assortment changes, two other new product offerings are significant as we look ahead. A revamped casual dining program was introduced at the October High Point Market which will begin shipping to our dealers and stores in February. This program has been a stalwart contributor to our wood sales for over 15 years and we have made capital investments in finishing technology in our Martinsville, Virginia manufacturing facility to produce the latest advancements in today’s marketplace. In addition to the work at the Martinsville facility, we will move our Zenith Logistics Texas distribution center and our Texas upholstery factory into a new 375,000 square foot building in mid-February. By housing both of these entities under one roof, we expect to gain efficiency and cut costs. The October show also included the debut of Club Level by Bassett, a major foray into the growing motion upholstery category. Primarily aimed at the open market channel but also featured in select Bassett stores, Club Level was met with enthusiasm by our independent dealer base and is already showing potential with the initial retail sell through results. Taken collectively, this new product effort will be a key determinant in the fortunes of Bassett in 2017 and our management will spend significant time in the field to make it successful.”

 

Retail Segment

 

Net sales for the 59 Company-owned Bassett Home Furnishings stores were $69.9 million for the fourth quarter of 2016 as compared to $66.3 million for the fourth quarter of 2015, an increase of $3.6 million or 5.5%. The increase was due to a $2.8 million or 4.3% increase in comparable store sales along with a $0.9 million increase in non-comparable store sales.

 

 

While the Company does not recognize sales until goods are delivered to the consumer, management tracks written sales (the retail dollar value of sales orders taken, rather than delivered) as a key store performance indicator. Written sales for comparable stores increased by 3.3% for the fourth quarter of 2016 as compared to the fourth quarter of 2015.

 

The consolidated retail operating profit for the fourth quarter of 2016 was $2.9 million as compared to $2.2 million for the fourth quarter of 2015, an increase of $0.7 million. The 56 comparable stores generated operating income of $3.4 million for the quarter, or 5.2% of sales, as compared to $2.9 million, or 4.6% of sales, for the prior year quarter. Gross margins for comparable stores were 50.2% for the fourth quarter of 2016 compared to 50.4% for the fourth quarter of 2015.  SG&A expenses for comparable stores increased $0.8 million to $30.0 million or 45.0% of sales as compared to 45.8% of sales for the fourth quarter of 2015. The decrease in SG&A as a percentage of sales was primarily due to greater leverage of fixed costs due to higher sales volumes for the comparable stores.

 

“We were pleased with the performance of our retail segment during the second half of the year and we look to the future with excitement as we work to expand our 59 store corporately owned network,” said Spilman. “2016 was foundational to our blueprint for store expansion in 2017 and beyond. This included repositioning one store, closing three, and opening two new ones in the year just ended. Furthermore, a tremendous amount of site selection and real estate negotiations took place during the year as we prepare to open six new stores and reposition two others over the course of 2017. Four of the new stores are expansions of existing markets and the other two are brand new. Therefore, 2017 will be a year of investment as we absorb in excess of $2 million more in preopening and startup costs than we experienced in 2016. In addition to these up front expenses, proper site selection, store economics, and staffing are major challenges that must be met in order to successfully execute store expansion and these factors cannot be compromised. While we do not provide financial forecasts externally, we do believe that we have the ability to open five to six new stores annually in addition to strategically repositioning stores when warranted. With a track record of six consecutive years of positive same store sales and our focus on store productivity, we are intent on taking our concept to new markets and consistently growing our overall store count in the years to come.”

 

 

About Bassett Furniture Industries, Inc.

Bassett Furniture Industries, Inc. (NASDAQ: BSET), is a leading manufacturer and marketer of high quality, mid-priced home furnishings. With 90 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. The most significant growth opportunity for Bassett continues to be the Company’s dedicated retail store program. Bassett’s retail strategy includes affordable custom-built furniture that is ready for delivery in the home within 30 days. The stores also feature 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. 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,” “expects,” “anticipates,” “intends,” “should,” “estimates,” or similar expressions, or those relating to or anticipating financial results for periods beyond the end of the fourth fiscal quarter of 2016, 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 and future events on the retail demand for home furnishings and the ability of Bassett’s customers and consumers to obtain credit; 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.

 

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BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income - unaudited

(In thousands, except for per share data)

 

 

 

		Quarter Ended																Year Ended
		November 26, 2016								November 28, 2015								November 26, 2016								November 28, 2015
						Percent of								Percent of								Percent of								Percent of
		Amount				Net Sales				Amount				Net Sales				Amount				Net Sales				Amount				Net Sales
Sales revenue:
Furniture and accessories		$	100,339							$	101,283							$	377,196							$	387,405
Logistics			13,447								14,272								54,842								43,522
Total sales revenue			113,786				100.0	%			115,555				100.0	%			432,038				100.0	%			430,927				100.0	%
Cost of furniture and accessories sold			43,023				37.8	%			45,615				39.5	%			167,519				38.8	%			179,291				41.6	%
Selling, general and administrative expenses excluding new store pre-opening costs			61,333				53.9	%			60,847				52.7	%			235,178				54.4	%			224,050				52.0	%
New store pre-opening costs			421				0.4	%			387				0.3	%			1,148				0.3	%			623				0.1	%
Lease exit costs			-				0.0	%			-				0.0	%			-				0.0	%			419				0.1	%
Asset impairment charges			-				0.0	%			-				0.0	%			-				0.0	%			106				0.0	%
Management restructuring costs			-				0.0	%			-				0.0	%			-				0.0	%			449				0.1	%
Income from operations			9,009				7.9	%			8,706				7.5	%			28,193				6.5	%			25,989				6.0	%
Remeasurement gain on acquisition of affiliate			-				0.0	%			-				0.0	%			-				0.0	%			7,212				1.7	%
Income from Continued Dumping & Subsidy Offset Act			240				0.2	%			90				0.1	%			240				0.1	%			1,156				0.3	%
Other loss, net			(752	)			-0.7	%			(797	)			-0.7	%			(2,656	)			-0.6	%			(2,489	)			-0.6	%
Income before income taxes			8,497				7.5	%			7,999				6.9	%			25,777				6.0	%			31,868				7.4	%
Income tax provision			3,452				3.0	%			2,317				2.0	%			9,948				2.3	%			11,435				2.7	%
Net income		$	5,045				4.4	%		$	5,682				4.9	%		$	15,829				3.7	%		$	20,433				4.7	%
Basic earnings per share		$	0.47							$	0.53							$	1.47							$	1.91
Diluted earnings per share		$	0.47							$	0.52							$	1.46							$	1.88

 

 

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands) 

		(Unaudited)
		November 26, 2016				November 28, 2015
Assets
Current assets
Cash and cash equivalents		$	35,144			$	36,268
Short-term investments			23,125				23,125
Accounts receivable, net			18,358				21,197
Inventories, net			53,215				59,896
Other current assets			10,727				6,798
Total current assets			140,569				147,284
Property and equipment, net			104,655				96,104
Other long-term assets
Deferred income taxes, net			8,071				13,471
Goodwill and other intangible assets			17,360				17,682
Other			7,612				8,002
Total long-term assets			33,043				39,155
Total assets		$	278,267			$	282,543
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		$	21,281			$	20,916
Accrued compensation and benefits			13,602				14,345
Customer deposits			25,181				23,999
Dividends payable			3,218				2,184
Current portion of long-term debt			3,290				5,273
Other accrued liabilities			10,441				13,133
Total current liabilities			77,013				79,850
Long-term liabilities
Post employment benefit obligations			12,760				12,694
Long-term debt			3,821				8,500
Other long-term liabilities			3,968				4,133
Total long-term liabilities			20,549				25,327
Stockholders’ equity
Common stock			53,615				54,580
Retained earnings			129,388				120,904
Additional paid-in-capital			255				4,560
Accumulated other comprehensive loss			(2,553	)			(2,678	)
Total stockholders' equity			180,705				177,366
Total liabilities and stockholders’ equity		$	278,267			$	282,543

 

 

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows - unaudited

(In thousands)

 

		Year Ended
		November 26, 2016				November 28, 2015
Operating activities:
Net income		$	15,829			$	20,433
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			12,249				10,137
Equity in undistributed income of investments and unconsolidated affiliated companies			-				(220	)
Non-cash asset impairment charges			-				106
Non-cash portion of lease exit costs			-				419
Remeasurement gain on acquisition of affiliate			-				(7,212	)
Tenant improvement allowances received from lessors			914				1,283
Deferred income taxes			5,324				1,930
Collateral deposited with insurance carrier			(300	)			-
Excess tax benefits from stock-based compensation			87				1,998
Other, net			1,055				2,082
Changes in operating assets and liabilities
Accounts receivable			3,228				(2,354	)
Inventories			6,681				(2,624	)
Other current and long-term assets			(3,629	)			1,494
Customer deposits			1,182				1,796
Accounts payable and accrued liabilities			(3,558	)			5,128
Net cash provided by operating activities			39,062				34,396
Investing activities:
Purchases of property and equipment			(21,501	)			(13,974	)
Proceeds from sale of retail real estate and property and equipment			667				2,981
Cash paid for business acquisition, net of cash acquired			-				(7,323	)
Capital contribution to affiliate			-				(1,345	)
Net cash used in investing activities			(20,834	)			(19,661	)
Financing activities:
Cash dividends			(6,311	)			(5,786	)
Proceeds from the exercise of stock options			114				4,031
Other issuance of common stock			182				325
Repurchases of common stock			(6,393	)			(2,071	)
Taxes paid related to net share settlement of equity awards			(77	)			(178	)
Repayments of notes payable			(14,251	)			(2,768	)
Proceeds from equipment loans			7,384				1,307
Net cash used in financing activities			(19,352	)			(5,140	)
Change in cash and cash equivalents			(1,124	)			9,595
Cash and cash equivalents - beginning of period			36,268				26,673
Cash and cash equivalents - end of period		$	35,144			$	36,268

 

 

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Segment Information - unaudited

(In thousands)

 

		Quarter Ended								Year Ended
		November 26, 2016				November 28, 2015				November 26, 2016				November 28, 2015
Net Sales
Wholesale		$	62,561			$	64,505			$	240,346			$	252,180
Retail - Company-owned stores			69,913				66,266				254,667				249,379
Logistical services			24,227				25,643				95,707				77,250
Inter-company eliminations:
Furniture and accessories			(32,135	)			(29,488	)			(117,817	)			(114,154	)
Logistical services			(10,780	)			(11,371	)			(40,865	)			(33,728	)
Consolidated		$	113,786			$	115,555			$	432,038			$	430,927
Operating Income
Wholesale		$	4,292			$	4,100			$	18,672			$	15,618
Retail			2,868				2,203				4,333				6,170
Logistical services			1,432				1,439				3,511				3,528
Inter-company elimination			417				964				1,677				1,647
Lease exit costs			-				-				-				(419	)
Asset impairment charges			-				-				-				(106	)
Management restructuring costs			-				-				-				(449	)
Consolidated		$	9,009			$	8,706			$	28,193			$	25,989

 

 

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Rollforward of BHF Store Count

 

 

		November 28,												November 26,
		2015				Opened*				Closed*				2016
Company-owned stores			60				2				(3	)			59
Licensee-owned stores			33				-				(2	)			31
Total			93				2				(5	)			90

 

 

* Does not include openings and closures due to relocation of existing stores within a market.

 

 

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES

Supplemental Retail Information--unaudited

(In thousands)

 

		56 Comparable Stores																56 Comparable Stores
		Quarter Ended								Quarter Ended								Year Ended								Year Ended
		November 26, 2016								November 28, 2015								November 26, 2016								November 28, 2015
						Percent of								Percent of								Percent of								Percent of
		Amount				Net Sales				Amount				Net Sales				Amount				Net Sales				Amount				Net Sales
Net sales		$	66,637				100.0	%		$	63,865				100.0	%		$	243,062				100.0	%		$	239,713				100.0	%
Cost of sales			33,190				49.8	%			31,688				49.6	%			121,735				50.1	%			119,178				49.7	%
Gross profit			33,447				50.2	%			32,177				50.4	%			121,327				49.9	%			120,535				50.3	%
Selling, general and administrative expense*			30,009				45.0	%			29,248				45.8	%			114,097				46.9	%			112,484				46.9	%
Income from operations		$	3,438				5.2	%		$	2,929				4.6	%		$	7,230				3.0	%		$	8,051				3.4	%

 

 

		All Other Stores																All Other Stores
		Quarter Ended								Quarter Ended								Year Ended								Year Ended
		November 26, 2016								November 28, 2015								November 26, 2016								November 28, 2015
						Percent of								Percent of								Percent of								Percent of
		Amount				Net Sales				Amount				Net Sales				Amount				Net Sales				Amount				Net Sales
Net sales		$	3,276				100.0	%		$	2,401				100.0	%		$	11,605				100.0	%		$	9,666				100.0	%
Cost of sales			1,584				48.4	%			1,257				52.4	%			6,473				55.8	%			5,198				53.8	%
Gross profit			1,692				51.6	%			1,144				47.6	%			5,132				44.2	%			4,468				46.2	%
Selling, general and administrative expense			1,841				56.2	%			1,483				61.8	%			6,881				59.3	%			5,726				59.2	%
Pre-opening store costs**			421				12.9	%			387				16.1	%			1,148				9.9	%			623				6.4	%
Loss from operations		$	(570	)			-17.4	%		$	(726	)			-30.2	%		$	(2,897	)			-25.0	%		$	(1,881	)			-19.5	%

 

*Comparable store SG&A includes retail corporate overhead and administrative costs.

**Pre-opening store costs include the accrual for straight-line rent recorded during the period between

date of possesion and store opening date, employee payroll and training costs prior to store opening

and other various expenses incurred prior to store opening.

 

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