Bassett Furniture Industries (BSET) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues declined 17% year-over-year to $83.4 million, with a net loss of $7.2 million compared to net income of $2.1 million in Q2 FY23.

• The company launched a restructuring plan to drive organic growth, optimize costs, and streamline operations, including closing the Noa Home e-commerce business.

• Gross margin was 52.5% for the quarter; adjusted gross margin would have been 55.7%.

• Memorial Day and July 4th sales events outperformed prior year, aided by new product introductions and digital engagement.

• Stronger sales were noted in regions with robust housing markets, such as the Southeast and Texas.

Financial highlights

• Total revenues decreased by $17.1 million, or 17%, year-over-year, with net loss of $7.2 million and operating loss of $8.5 million.

• Six-month net sales fell 18% year-over-year to $170.0 million; net loss was $8.4 million versus net income of $3.5 million last year.

• Consolidated gross margin, excluding unusual inventory reserves, was 55.7% versus 53.6% last year.

• Average retail ticket increased 9% to $3,960.

• Inventory levels dropped by $28.6 million (33%) since fiscal 2022.

Outlook and guidance

• Annual cost savings from restructuring are expected to be $5.5–$6.5 million starting in fiscal 2025.

• All restructuring actions are targeted for completion by year-end, with full savings realized in 2025.

• Management expects the back half of 2024 to be a reset period, with optimism for improved consumer demand and market share gains, but remains cautious due to ongoing weak housing market and consumer preference shifts.

• Capital expenditures for the full year are expected to range from $8 million to $10 million.

• Management believes liquidity is sufficient to fund operations for the foreseeable future.