Bassett Announces Fiscal Third Quarter Results

Bassett Announces Fiscal Third Quarter Results

BASSETT, Va., Oct. 3, 2013 (GLOBE NEWSWIRE) -- Bassett Furniture Industries,
Inc. (Nasdaq:BSET) announced today its results of operations for its fiscal
quarter ended August 31, 2013.

Fiscal 2013 Third Quarter Highlights

  *Consolidated sales of $77.2 million for the third quarter of 2013
    increased 20% as compared to the third quarter of 2012;
  *Operating profit for the quarter was $0.8 million which was flat compared
    to the prior year quarter;
  *Wholesale sales increased 18% compared to the prior year quarter;
  *Company-owned store delivered sales increased 12% compared to the prior
    year quarter, which included a 3.9% increase from the 50 comparable
    stores; and
  *Pre-tax income for the quarter was $0.6 million versus $0.5 million for
    the prior year quarter.

On a consolidated basis, the Company reported net sales for the third quarter
of 2013 of $77.2 million as compared to $64.4 million for the third quarter of
2012, an increase of $12.7 million or 20%. Operating income for the quarter
was $0.8 million, or 1.1% of sales, which was flat as compared to the prior
year quarter. The Company reported net income of $0.6 million or $0.05 per
diluted share for the third quarter of 2013 compared to net income of $2.4
million or $0.21 per diluted share in the third quarter of 2012. The prior
year quarter included a $1.9 million tax benefit as a result of favorable
provision to return adjustments related to the 2011 Federal income tax return
and the release of a portion of the valuation allowance against certain
deferred tax assets.

"In reviewing our 2013 third quarter, we are pleased to have posted our fourth
consecutive quarter of double digit revenue growth," commented Robert H.
Spilman, Jr., President and CEO. "Our multi-pronged sales strategy continues
to bear fruit as we leverage our high level of service and logistics
competencies over a broader spectrum of distribution. While we experienced
modest increases in wholesale shipments to our retail network in the quarter,
we again gained share with independent furniture dealers and in our juvenile
products division. Also, shipments to our open market HGTV dealer network met
our internal goals for the period.

"Conversely, although our operating income increased marginally for the
quarter, we still have work to do in our efforts to bolster our bottom line,
particularly during our fiscal third quarter which is historically our
toughest reporting period," added Spilman. "The seasonality of summer retail
furniture sales continues to challenge our retail network. We incurred
additional operating expenses during the period in conjunction with the
ongoing migration to a new retail operating system. This large project ($3
million in capital) will be completed by the end of November 2013. Further,
our wholesale wood division suffered margin erosion as we continued to
discount certain wood inventories, as discussed at the end of the second
quarter. Finally, the final settlement of litigation associated with a vendor
surrounding a 2006 product recall did not end favorably, resulting in $400k of
expenses. Despite these factors, we remain focused and optimistic that we will
continue to further improve our operating results as we move forward."

Wholesale Segment

Net sales for the wholesale segment were $52.9 million for the third quarter
of 2013 as compared to $44.8 million for the third quarter of 2012, an
increase of $8.1 million or 18%. Wholesale shipments to the open market
(outside the Bassett Home Furnishings store network) increased 57% and
shipments to the Bassett Home Furnishings store network increased by 0.5%
compared to the prior year quarter. Gross margins for the wholesale segment
were 32.2% for the third quarter of 2013 as compared to 31.7% for the third
quarter of 2012. This increase was primarily due to increased margins in the
upholstery operations as increased sales volumes provided greater leverage of
fixed costs partially offset by lower wood margins due to product mix and
increased discounting of discontinued product. Wholesale SG&A increased $2.2
million to $14.7 million for the third quarter of 2013 as compared to $12.5
million for the third quarter of 2012. Included in wholesale SG&A is $0.4
million of increased legal costs due primarily to the unfavorable settlement
of litigation associated with a vendor surrounding a 2006 product recall. SG&A
as a percentage of sales decreased to 27.7% as compared to 27.9% for the third
quarter of 2012. Operating income was $2.4 million or 4.5% of sales as
compared to $1.7 million or 3.8% of sales in the prior year quarter.

"Once again, our wholesale segment was able to leverage strong growth to
improve profitability," continued Spilman. "Our upholstery and wood segments
both posted growth rates of 18% for the period. At the divisional level,
upholstery operating profit grew by 37% while inventory reductions in the wood
division limited divisional operating improvement to 2% compared to last
year's third quarter. Also noteworthy in our wholesale division for the
quarter was the change in our mix. This year 39% of our wholesale shipments
went to open market customers compared to 30% last year. Our focus on gaining
market share outside of our stores is gaining momentum through independent
Bassett dealers, our juvenile division, and our open market HGTV HOME
accounts."

Retail Segment

Net sales for the 55 Company-owned stores were $46.2 million for the third
quarter of 2013 as compared to $41.2 million for the third quarter of 2012, an
increase of $5.1 million or 12%. The increase was comprised of a $1.6 million
or 3.9% increase in comparable store sales and a $3.5 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 0.3% for the third quarter of
2013 as compared to the third quarter of 2012.

The consolidated retail operating loss for the third quarter of 2013 was $1.5
million, which was comparable to the loss recorded for the third quarter of
2012. The 50 comparable stores generated an operating loss of $0.8 million for
the quarter, or 1.9% of sales, as compared to $1.3 million or 3.3% of sales
for the prior year quarter. Gross margins improved to 48.3% compared to 47.5%
in the prior year quarter due primarily to improved pricing strategies and
lower levels of clearance sales. SG&A expenses increased $0.6 million due
primarily to higher sales volumes. SG&A expenses were 50.2% of sales for the
current year quarter compared to 50.8% of sales for the prior year as the
higher sales volumes leverage the fixed costs.

Included in the consolidated retail results are $0.2 million of pre-opening
costs associated with three stores that will open in the fourth quarter of
2013 and $0.1 million in losses associated with a store closing sale in
California. This store is being closed and subsequently moved to a smaller
location with lower rent. There were no such costs incurred in the third
quarter of 2012. As the Company expects to open or reposition up to 10 stores
over the next 12 months, retail operating results will continue to be impacted
by such costs.

The following table summarizes the changes in store count year to date through
the third quarter of 2013:

                     November 24, New    Stores   Stores August 31,
                     2012         Stores Acquired Closed 2013
                                                     
Company-owned stores  53          2     --     --   55
Licensee-owned stores 33          2     --     (1)   34
                                                     
Total                 86          4     --     (1)   89

"Although we are pleased to post our 12th consecutive quarter of comparable
store sales increase in our corporate retail division, we were disappointed to
post an operating loss that was identical to last year," said Spilman."Apart
from the normal tepid sales environment that we experience each summer at
retail, this year was especially challenging as we lay the foundation to
expand our store footprint over the next 12 months and beyond.As alluded to
earlier in this report, we are well on our way to implementing a new retail
operating system that will enable us to run our large platform of stores more
efficiently.After months of planning during 2012, we began the installation
this February and had 36 of our 55 corporate stores up and running on the new
system by the end of the August quarter.Although we are confident that all
stores will be online by our fiscal year end in November, the process has been
disruptive to the sales, administration, warehousing and delivery areas of our
retail business."

"Furthermore, we began to incur pre-opening costs related to new store
expansion this quarter", continued Spilman."Although we opened two new stores
and a replacement location earlier this year, the pace of new openings will
pick up significantly over the next three to four quarters as will the
pre-opening expenses that accompany these events.During this time period we
plan to open six new stores and relocate an additional four stores that will
replace older locations where the leases have expired.We have been encouraged
by the performance of the new stores that we have brought to market over the
past two years and look forward to adding to our fleet during the coming
months.Likewise, we believe that the replacement stores that we are planning
to open will be located in real estate that features attractive demographics
and improved store economics for today's Bassett."

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 89 company-
and licensee-owned stores, 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, more than 1,000 upholstery fabrics, free in-home design visits, and
coordinated decorating accessories. Bassett is also growing its traditional
wholesale business with more than 500 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 third
fiscal quarter of 2013, 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.

BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income - unaudited
(In thousands, except for per share data)
                                                                           
              Quarter Ended     Quarter Ended     Nine Months Ended  Nine Months Ended
              August 31, 2013   August 25, 2012   August 31, 2013    August 25, 2012
                       Percent          Percent           Percent           Percent
                         of                of                 of                 of
              Amount    Net     Amount    Net     Amount     Net     Amount     Net
                         Sales             Sales              Sales              Sales
                                                                         
Net sales      $77,152 100.0%  $64,438 100.0%  $238,224 100.0%  $192,860 100.0%
                                                                         
Cost of sales  38,429   49.8%   30,620   47.5%   116,315   48.8%   91,710    47.6%
                                                                         
Gross profit   38,723   50.2%   33,818   52.5%   121,909   51.2%   101,150   52.4%
                                                                         
Selling,
general and    37,900   49.1%   33,052   51.3%   115,312   48.4%   97,515    50.6%
administrative
expense
Restructuring
and asset      --       0.0%    --       0.0%    --        0.0%    711       0.4%
impairment
charges
Lease exit     --       0.0%    --       0.0%    --        0.0%    359       0.2%
costs
Operating      823      1.1%    766      1.2%    6,597     2.8%    2,565     1.3%
income
                                                                         
Income from
Continued
Dumping &               0.0%    --       0.0%              0.0%    9,010     4.7%
Subsidy Offset
Act
Other loss,    (229)    -0.3%   (315)    -0.5%   (1,026)   -0.4%   (2,239)   -1.2%
net
Income before  594      0.8%    451      0.7%    5,571     2.3%    9,336     4.8%
income taxes
                                                                         
Income tax
(expense)      (38)     0.0%    1,920    3.0%    (2,082)   -0.9%   481       0.2%
benefit
Net income     $556    0.7%    $2,371  3.7%    $3,489   1.5%    $9,817   5.1%
                                                                         
Basic earnings $0.05          $0.22          $0.33           $0.89    
per share
                                                                         
Diluted
earnings per   $0.05          $0.21          $0.32           $0.88    
share




BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
                                                         
                                          Unaudited       
Assets                                     August 31, 2013 November24, 2012
Current assets                                            
Cash and cash equivalents                  $8,904        $45,566
Short-term investments                     28,125         --
Accounts receivable, net                   16,219         15,755
Inventories, net                           58,475         57,916
Deferred income taxes, net                 6,687          6,832
Other current assets                       10,304         6,439
Total current assets                       128,714        132,508
                                                         
Property and equipment, net                60,809         56,624
                                                         
Other long-term assets                                    
Retail real estate                         12,368         12,736
Deferred income taxes, net                 9,565          10,485
Other                                      14,116         14,827
Total long-term assets                     36,049         38,048
Total assets                               $225,572      $227,180
                                                         
Liabilities and Stockholders' Equity                      
Current liabilities                                       
Accounts payable                           $19,048       $22,405
Accrued compensation and benefits          7,323          6,926
Customer deposits                          15,040         12,253
Dividends payable                          --             542
Other accrued liabilities                  8,613          10,454
Total current liabilities                  50,024         52,580
                                                         
Long-term liabilities                                     
Post employment benefit obligations        11,118         11,577
Real estate notes payable                  2,862          3,053
Other long-term liabilities                1,972          2,690
Total long-term liabilities                15,952         17,320
                                                         
                                                         
Stockholders' equity                                      
Common stock                               54,623         54,184
Retained earnings                          106,067        104,319
Additional paid-in-capital                 72             --
Accumulated other comprehensive loss       (1,166)        (1,223)
Total stockholders' equity                 159,596        157,280
Total liabilities and stockholders' equity $225,572      $227,180




BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - unaudited
(In thousands)
                                                           
                                          Nine Months Ended Nine Months Ended
                                          August 31, 2013   August 25, 2012
Operating activities:                                       
Net income                                 $3,489          $9,817
Adjustments to reconcile net income to net
cash provided by (used in) operating                        
activities:
Depreciation and amortization              4,445            3,931
Equity in undistributed income of
investments and unconsolidated affiliated  (466)            (157)
companies
Provision for restructuring and asset      --               711
impairment charges
Non-cash portion of lease exit costs       --               359
Other than temporary impairment of         --               806
investments
Deferred income taxes                      1,284            (658)
Other, net                                 (888)            1,655
Changes in operating assets and                             
liabilities
Accounts receivable                        (656)            (316)
Inventories                                (559)            (8,948)
Other current assets                       (3,864)          (1,122)
Accounts payable and accrued liabilities   (2,682)          853
Net cash provided by operating activities  103              6,931
                                                           
Investing activities:                                       
Purchases of property and equipment        (9,547)          (6,858)
Proceeds from sales of property and        958              17
equipment
Proceeds from sale of interest in          2,348            1,410
affiliate
Proceeds from sales of investments         --               1,186
Purchases of investments                   (28,125)         (1,303)
Acquisition of retail licensee store       --               (485)
Other, net                                 88               84
Net cash used in investing activities      (34,278)         (5,949)
                                                           
Financing activities:                                       
Repayments of real estate notes payable    (179)            (149)
Issuance of common stock                   643              295
Repurchases of common stock                (759)            (5,572)
Taxes paid related to net share            (226)            --
settlements of equity awards
Excess tax benefits from stock-based       317              --
compensation
Cash dividends                             (2,283)          (7,190)
Net cash used in financing activities      (2,487)          (12,616)
Change in cash and cash equivalents        (36,662)         (11,634)
Cash and cash equivalents - beginning of   45,566           69,601
period
Cash and cash equivalents - end of period  $8,904          $57,967




BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Segment Information - unaudited
(In thousands)
                                                               
                             Quarter ended Quarter    Nine months Nine months
                                            ended      ended       ended
                             August 31,    August 25, August 31,  August 25,
                              2013          2012       2013        2012
Net Sales                                                       
Wholesale                     $52,927     $44,805  $160,820  $133,355
Retail                        46,245       41,178    147,672    122,800
Inter-company elimination     (22,020)     (21,545)  (70,268)   (63,295)
Consolidated                  $77,152     $64,438  $238,224  $192,860
                                                               
Operating Income (Loss)                                         
Wholesale                     $2,367      $1,711   $8,218    $5,575
Retail                        (1,509)      (1,503)   (1,803)    (2,437)
Inter-company elimination     (35)         558       182        497
Restructuring and asset       --           --        --         (711)
impairment charges
Lease exit costs              --           --        --         (359)
Consolidated                  $823        $766     $6,597    $2,565




BASSETT FURNITURE INDUSTRIES, INC. AND SUBSIDIARIES
Supplemental Retail Information---unaudited
(In thousands)
                                                                          
              50 Comparable Stores                48 Comparable Stores
              Quarter Ended     Quarter Ended      Nine Months Ended  Nine Months Ended
              August 31, 2013   August 25, 2012    August 31, 2013    August 25, 2012
                       Percent           Percent           Percent           Percent
                         of                 of                 of                 of
              Amount    Net     Amount     Net     Amount     Net     Amount     Net
                         Sales              Sales              Sales              Sales
                                                                          
Net sales      $42,528 100.0%  $40,931  100.0%  $130,338 100.0%  $118,977 100.0%
                                                                          
Cost of sales  21,968   51.7%   21,492    52.5%   67,832    52.0%   61,479    51.7%
                                                                          
Gross profit   20,560   48.3%   19,439    47.5%   62,506    48.0%   57,498    48.3%
                                                                          
Selling,
general and    21,355   50.2%   20,776    50.8%   62,583    48.0%   58,559    49.2%
administrative
expense*
                                                                          
Income from    $(795)  -1.9%   $(1,337) -3.3%   $(77)    -0.1%   $(1,061) -0.9%
operations
                                                                          
                                                                          
              All Other Stores                     All Other Stores
              Quarter Ended     Quarter Ended      Nine Months Ended  Nine Months Ended
              August 31, 2013   August 25, 2012    August 31, 2013    August 25, 2012
                       Percent           Percent           Percent           Percent
                         of                 of                 of                 of
              Amount    Net     Amount     Net     Amount     Net     Amount     Net
                         Sales              Sales              Sales              Sales
                                                                          
Net sales      $3,717  100.0%  $247     100.0%  $17,334  100.0%  $3,823   100.0%
                                                                          
Cost of sales  2,086    56.1%   210       85.0%   9,362     54.0%   2,399     62.8%
                                                                          
Gross profit   1,631    43.9%   37        15.0%   7,972     46.0%   1,424     37.2%
                                                                          
Selling,
general and    2,123    57.1%   203       82.2%   9,136     52.7%   2,538     66.4%
administrative
expense
Pre-opening    222      6.0%    --        0.0%    562       3.2%    262       6.9%
store costs**
                                                                          
Loss from      $(714)  -19.2%  $(166)   -67.2%  $(1,726) -10.0%  $(1,376) -36.0%
operations
                                                                          
*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 possession and the store opening date, employee payroll and
training costs prior to store opening and other various expenses incurred prior to store
opening.

CONTACT: J. Michael Daniel
         Senior Vice President and
         Chief Financial Officer
         (276) 629-6614 - Investors
        
         Jay S. Moore
         Director of Communications
         (276) 629-6450 - Media
 
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