Bassett returns to profitability in Q4, beats expectations

Bassett Furniture reported revenue of $84.3 million in the fourth quarter, an 11% decrease from last year, on Wednesday. However, a positive operating income of $900,000 means the company has returned to profitability after five consecutive quarters in the red.

The Henry County home furniture manufacturer and retailer beat expectations by a long shot, with earnings per share of 38 cents, well above analysts’ expectations of 1 cent per share.

Gains in operating income included a $1 million charge related to the wind-down of Noa Home, as well as a $400,000 restructuring charge related to workforce reductions announced last quarter.

Gross margin improved again, this time hitting 56.6%, driven primarily by wholesale gains. Wholesale sales totaled $52.3 million, a 13.7% decline from last year, but a $5 million gain from last quarter. Retail sales fell 8.3% to $53.1 million, a $6 million gain from last quarter.

The company generated $6.4 million in operating cash flow. It ended the quarter with $59.9 million in cash and short-term investments with no outstanding debt.

“The steps we took in our restructuring plan helped right-size our business, and we returned to profitability in the fourth quarter,” Bassett CEO Rob Spilman said in a statement. “We delivered strong consolidated gross margins and 38 cents in diluted earnings per share. Our team remains focused on operating efficiency, leveraging our cost structure and running a leaner business.

“We’re driving newness and innovation into Bassett’s product lines, e-commerce and marketing to deliver price and value for customers,” he added. “We are well-positioned for the eventual housing industry turnaround and will focus on growth and productivity until it does.”

Bassett detailed a five-point cost-saving plan in the second quarter of last year. The points were: drive organic growth, consolidate U.S. wood manufacturing, optimize inventory and drop unproductive lines, reduce costs in both wholesale and retail, and close the e-commerce platform Noa Home.

Last quarter, the company laid off 40 workers. It laid off 150 workers last year in total.