Bassett Furniture Industries (BSET) Q3 2024 earnings summary

Executive summary

• Third quarter sales declined 13% year-over-year to $75.6 million, with both wholesale and retail revenues down and a net loss of $4.5 million compared to a $2.6 million loss last year.

• Memorial Day and July 4th events saw sales increases, but the rest of the quarter was soft, compounded by a cyberattack and operational shutdowns.

• The company is winding down Noa Home operations due to continued losses and recognized $5.5 million in asset impairment charges.

• Restructuring efforts are underway, including cost reductions, plant consolidations, and a focus on new product launches and omni-channel growth, targeting $5.5–$6.5 million in annual savings.

• The company is optimistic about reaching a bottom in demand and is positioning for a turnaround as market conditions improve.

Financial highlights

• Consolidated revenues declined $11.6 million or 13% year-over-year, with wholesale down 16% and retail down 10%.

• Gross margin improved to 53.0%, and adjusted gross margin excluding cyber costs was 53.8%, up from 52.7% last year.

• Operating loss was $6.4 million, including $1.2 million from contract abandonment and cyber incident costs.

• Net loss for the quarter was $4.5 million, compared to $2.6 million loss in Q3 2023.

• Cash and short-term investments at quarter-end were $56.2 million.

Outlook and guidance

• Restructuring plan is on track to complete by end of Q4, targeting $5.5–$6.5 million in annual cost savings starting in fiscal 2025.

• Capital expenditures for fiscal 2024 are projected at $6–8 million, down from $10 million previously planned.

• Management expects housing market improvement heading into 2025 and believes liquidity is sufficient to fund operations.