I love the furniture in the WSH catalog but can’t really afford it. I know that i could find it in North Carolina…at a discount…if i just knew which company actually made the furniture for WSH (specifically the Baxter Dining Chair). Knowingly paying the retail mark up just irks me.
Asked by: LC

Bassett Furniture Industries Inc. announced today its results of operations for its fiscal quarter and 40 week period ended August 30, 2008.

Sales for the quarter ended August 30, 2008 were $70.2 million as compared to $70.5 million for the quarter ended August 25, 2007. The 2008 and 2007 reported sales were increased by reported revenue of $4.0 million and $1.0 million, respectively, due to a change in the Company’s business practices with respect to freight for the delivery of wholesale furniture to its retail stores. In July of 2007, the Company began invoicing these customers on a fully landed basis such that the invoice price includes freight. Excluding the effects of the business change, sales would have been $66.2 million for the quarter ended August 30, 2008 as compared to $69.5 million for the quarter ended August 25, 2007, a 5% decrease due primarily to a further softening in the overall retail environment late in the third quarter (see also discussion in the Wholesale and Retail Segments below).

Gross margins for the third quarter of 2008 and 2007 were 40.0% and 35.0%, respectively. Excluding the effects of the above-mentioned business change, the gross margin for 2008 and 2007 would have been 36.4% and 34.0%, respectively. This increase over 2007 results from improved margins in both the wholesale and retail segments. Selling, general and administrative expenses, which exclude the effects of the above-mentioned business change, increased $2.2 million for the third quarter of 2008 as compared to 2007 primarily due to a $3.2 million increase in the provision for bad debts related to the impact that the prolonged weak retail environment is having on certain of the Company’s dealers. The Company reported a net loss of $(2.7) million, or $(0.23) per share for the quarter ended August 30, 2008, as compared to net income of $0.7 million, or $0.06 per share, for the quarter ended August 25, 2007.

Sales for the 40 weeks ended August 30, 2008 were $226.6 million as compared to $219.3 million for the 39 weeks ended August 25, 2007, an increase of 3%. The 2008 and 2007 reported sales were increased by reported revenue of $12.7 million and $1.0 million, respectively, due to the change in the Company’s business practices as described above. In addition, fiscal 2008 included an additional week of sales due to the Company’s fiscal calendar. Gross margins for the 40 weeks ended August 30, 2008 and 39 weeks ended August 25, 2007 were 39.8% and 32.3%, respectively. Excluding the effects of the above-mentioned business change, the gross margin for 2008 and 2007 would have been 36.2% and 32.0%, respectively. This significant increase over 2007 results from improved margins in both the wholesale and retail segments. Selling, general and administrative expenses increased $4.9 million for the nine months of 2008 as compared to 2007 primarily due to the increase in the provision for bad debts as described above. The Company reported a net loss of $(2.5) million or $(0.22) per share for the 40 weeks ended August 30, 2008, as compared to a net loss of $(5.9) million, or $(0.50) per share, for the 39 weeks ended August 25, 2007.

The Bassett Furniture retail store program had 120 stores in operation as of August 30, 2008. For the first nine months of 2008, three new stores were opened (two licensee- and one corporate-owned) and 13 stores were closed (10 licensee and three corporate-owned). Although management will continue to work closely with its licensee stores to ensure the success of both the licensee and Bassett, the Company expects that three to five additional underperforming stores will close during the remainder of 2008.

“Despite our overall disappointing results, we believe that progress was made in key areas of our operations,” said Robert H. Spilman, Bassett’s president and chief executive officer. “We continue to show improved gross margins in both the wholesale and retail divisions over 2007 and our new product introductions have been well-received. We also have been successful in reducing our overall cost structure through targeted spending reductions. We remain encouraged by the sales results from our new retail store prototype despite the ongoing difficult home furnishings environment. Sales per square foot in the new format continue to meet our expectations and to noticeably outperform our existing fleet average.

“Given the difficult and somewhat unprecedented environment, we have had no choice but to take several important actions aimed at improving our results in the short-term. These include:

* Aggressively working with certain licensees to close those
stores that are underperforming thereby limiting further
exposure in our accounts receivable.
* Reducing our inventory levels to improve working capital
and cash flow.
* Right-sizing our expense structure in both our wholesale
and corporate retail divisions.

“Although we have these short-term actions in place, we will continue to think and act in the best long-term interests of our shareholders. We will continue to thoughtfully invest in store prototype conversions and remodels and work diligently with our licensed network to improve their operating results. With the improvements in our retail program and our strong balance sheet, we are well positioned to not only survive these turbulent times, but also to gain market share as some of our competitors exit the industry.”

The results for the 40 weeks ended August 30, 2008 included four unusual pretax items consisting of $1.4 million of legal and other expenses for the proxy contest with Costa Brava Partnership III L.P., a $1.3 million gain associated with the sale of the Company’s airplane, a $0.6 million loss on the exit of a corporate retail store lease recorded in the third quarter and a $0.6 million impairment charge associated with the writeoff of leasehold improvements for a closed store, of which $0.2 million was recorded in the third quarter. The loss for the 39 weeks ended August 25, 2007 included unusual pretax charges of $3.6 million for the writedown of the plant and equipment for the closing of the Bassett plant, $1.9 million associated with lease exit costs for certain closed stores, $1.0 million associated with the writeoff of tenant improvements from the downsizing of the Company’s showroom space and $0.9 million associated with severance from the closure of the Bassett plant. Please refer to the attached schedule which summarizes these unusual items.

Excluding these unusual items, the net loss for the quarter and 40 weeks ended August 30, 2008 would have been $(2.1) million and $(1.7) million, respectively, and the net loss for the 39 weeks ended August 25, 2007 would have been $(1.4) million. Please refer to the attached schedule which reconciles net income (loss) as reported to net income (loss) as adjusted.

Wholesale Segment

Net sales for the wholesale segment were $59.5 million for the third quarter of 2008 as compared to $58.5 million for the third quarter of 2007, an increase of 2%. The 2008 and 2007 reported sales were increased by reported revenue of $4.0 million and $1.0 million, respectively, due to a change in the Company’s business practices as described above. Excluding the effects of the business change, sales would have been $55.5 million for the quarter ended August 30, 2008 as compared to $57.5 million for the quarter ended August 25, 2007, a 3% decrease. Approximately 53% of wholesale shipments during the third quarter of 2008 were imported products compared to 51% for the third quarter of 2007. Gross margins for the wholesale segment were 29.7% for the third quarter of 2008 as compared to 24.4% for the third quarter of 2007. Excluding the effects of the invoicing change described above, gross margins for the third quarter of 2008 and 2007 would have been 24.7% and 23.1%, respectively, a 1.6 percentage point increase. This increase is primarily due to an improved product mix associated with increased imported products which carry a higher margin and the absence of certain wind down costs incurred in 2007 related to the closing of the Bassett plant. The Company recorded $4.1 million of bad debt expense, which was $3.2 million more than in 2007. Certain of the Company’s licensee-owned stores continue to be impacted by the deteriorating retail environment and strained credit markets coupled with lower consumer confidence. The increased bad debt expense was partially offset by reduced spending in other SG&A areas.

Net sales for the wholesale segment were $190.8 million for the 40 weeks ended August 30, 2008 as compared to $184.2 million for the 39 weeks ended August 25, 2007, an increase of 4%. The 2008 and 2007 reported sales were increased by reported revenue of $12.7 million and $1.0 million, respectively, due to a change in the Company’s business practices as described above. Gross margins for the wholesale segment were 29.7% for the 40 weeks ended August 30, 2008 as compared to 22.9% for the 39 weeks ended August 25, 2007. Excluding the effects of the business change described above, gross margins for the nine months of 2008 and 2007 would have been 24.8% and 22.5%, respectively, a 2.3 percentage point increase. This increase is primarily due to the improved product mix as described above. The Company recorded $6.1 million of bad debt expense for fiscal 2008, which was $3.9 million more than in 2007.

Retail Segment

The third quarter featured an unusual amount of activity in Bassett’s 29 corporate stores, as one store was permanently closed, two stores were temporarily closed for conversion to the new store prototype, and three stores were remodeled. Nevertheless, retail sales increased to $24.0 million in the third quarter of 2008 as compared to $22.2 million in the third quarter of 2007. These sales increases have primarily resulted from the additional Company-owned stores acquired during 2007 and an increase in comparable store sales. The comparable store sales increases were primarily driven by progress in the Dallas market, the benefits of store consolidation in upstate New York, and increased sales in its Pineville, N.C., store due to its conversion to the new store prototype. Gross margins for the quarter decreased 2.3 percentage points due primarily to lower margins in the Houston and Atlanta markets, resulting from the temporary closure of two stores for conversion to the new store prototype concept as these stores ran inventory liquidation events. Even with the lower gross margins and an overall difficult retail environment, the retail segment slightly reduced its operating loss over the prior year period. For its 24 comparable corporate stores, the Company reduced its operating losses by approximately 20% in the third quarter of 2008 as compared to the third quarter of 2007. The Company believes that the combination of new product introductions, store prototype retrofits, better hiring and training of design consultants and continued improved marketing efforts will lead to further improvement in retail operating results.

Net sales for the 40 weeks ended August 30, 2008 were $74.5 million as compared to $65.3 million for the 39 weeks ended August 25, 2007. These sales increases have primarily resulted from the additional Company-owned stores acquired during 2007 and increases in comparable store sales. Gross margins for the 2008 period increased 1.5 percentage points due to improved pricing and promotional strategies. The Company’s retail segment reduced its total operating losses by $0.8 million, a 10% decrease. For its 22 comparable corporate stores, the Company reduced its operating losses by approximately 35% in the 40 weeks ended August 30, 2008 as compared to the 39 weeks ended August 25, 2007.

Other, net

Other, net for the quarter and 40 week period ended August 30, 2008 was $(0.7) million and $(0.5) million as compared to $0.8 million and $4.5 million for the quarter and 39 week period ended August 25, 2007, respectively. These decreases were primarily related to the performance of the Company’s Alternative Asset Fund, as the Company recognized market losses of $(0.6) million and $(1.0) million for the quarter and nine months ended August 30, 2008 as compared to market gains of $0.1 million and $2.9 million for the quarter and nine months ended August 25, 2007. As of August 30, 2008, the fair value of the Company’s investment in the Alternative Asset Fund was $29.0 million, which is included in investments in the consolidated balance sheet.

Balance Sheet and Cash Flow

The Company used $12.7 million of cash in operating activities during the 40 weeks ended August 30, 2008 primarily due to the continued difficult environment at retail as well as payments to fund the inventory build at the end of 2007 for the January 2008 new product rollout. Representing one of the most extensive redesigns and rollouts in the Company’s recent history, the new product has been well-received at retail and has helped fuel sales. Due to the lead time to source the majority of the new product, inventory and accounts payable balances were unusually high at the end of fiscal 2007. Management expects inventory levels to slightly increase over the remainder of the year as the Company prepares for additional product introductions in January 2009. These introductions will not be as extensive as the 2008 rollout. The Company’s accounts payable balance was reduced by $7.8 million during the 40 week period and has returned to a more normalized level. The Company also funded $16.1 million in dividends, including an $8.7 million special dividend in August as discussed below, and repurchased $3.6 million of common stock under the previously announced $20 million share repurchase plan. These cash requirements were primarily funded through $27.6 million of net investment sales and $2.0 million in additional borrowings on the revolving credit facility.

Net accounts receivable increased $2.4 million during the 40 week period ended August 30, 2008, due primarily to the slower pace of collections from certain store licensees related primarily to the overall retail environment. The Company continually assesses its levels of bad debt reserves and recorded $6.1 million in provision for losses on accounts receivable in 2008 with $4.1 million of that recorded in the third quarter. A continuing difficult and weak retail environment could result in further bad debt expenses, reduced revenue and other store real estate charges.

Special Dividend and Status of Investment Redemptions

During the quarter ended August 30, 2008, the Company announced that its Board of Directors had approved the first installment of $0.75 per share to be paid as part of the $1.25 special dividend announced in April. Accordingly, $8.7 million was paid out in August. To fund this special dividend, the Company received $12.6 million during the quarter from the full liquidation of a position in the Alternative Asset Fund and $3.6 million from the partial liquidation of a position, with excess funds primarily being used for additional repurchases of common stock under the Company’s share repurchase plan and to reduce outstanding debt.

Just how far does Quality Furniture of North Carolina go with its commitment to personalized service?

Co-owners Jerry Snipes and Kim Weber said their store continually works to exceed customers’ expectations by not only offering the best in brand-name furniture at low prices, but also placing a very personal touch on their business by providing services they say you may not find at other stores. Quality Furniture’s varied personalized services range from free local deliveries and pick-up of old furniture to taking measurements at a customer’s home and bringing catalogs to seniors and others who are interested in purchasing new furniture but may not be able to get out to the store.

“We treat customers like they’re family,” Weber said of Quality Furniture’s simple, yet compelling business philosophy.

The 429 Route 31 South store, which opened in January, features several famous brand names, including England, a division of La-Z-Boy, Riverside, Lancer and Mobel Inc. The store, open seven days a week, carries all types of furniture, including sofas, dining room sets, casual dining, bedroom, kitchen and mattresses. Furniture can be purchased directly from the store’s showroom or by catalog. The store includes a display of fabrics showing what various sofa sets look like in numerous colors and designs.

Snipes and Weber, who co-own another furniture store located at 480 Route 206 in Newton, said their stores provide a comfortable atmosphere for all visitors. “There’s no high pressure,” Weber noted. “When someone walks in, we let them browse at their own pace. We will spend as much time working with the customers as they want us to.”

When it comes to price and product type and style, Snipes said what you’re told is exactly what you’ll get. “We shoot it to you straight,” he said.

Snipes regularly drives to North Carolina, often referred to as the furniture capitol of the world, where he personally picks up top-line furniture for his New Jersey stores. As a result, he said the best furniture is selected, while overhead costs are kept to a minimum. “Product for product, others can’t compete with our prices,” he said.

Quality Furniture offers an additional 10 percent discount to law enforcement officers and an additional 10 percent discount to seniors each Wednesday.

Snipes, who has been in the furniture business for more than 25 years, previously owned the former Quality Furniture Store on Route 46 in White Township. Snipes said his business’s reputation for top quality service has resulted in many customers from the former White Township store now purchasing furniture from the Washington Township and Newton locations.

For more information, call the Washington Township store at (908) 223-7494 or the Newton store at (973) 383-5118.

Source

The slump in the housing industry is knocking the stuffing out of furniture sales, merchants and analysts say.

A recent casualty is Domain, an upscale regional chain that is liquidating all 27 stores, including its showroom at the Promenade at Sagemore in Marlton.

“In the past year or so we’ve lost Levitz, Storehouse and Bombay Co.,” said Jerry Epperson, furniture industry analyst at Mann Armistead & Epperson in Richmond, Va. “It’s a very challenging time for the business.”

In a recent poll of dealers by Furniture World, a New Rochelle, N.Y.-based trade publication, 70 percent of retailers said orders were down. Read more »

Art Furniture, which has operated for nearly 14 years at Arizona Avenue and Elliot Road in Chandler, is going out of business, a casualty of the housing slump.

A liquidation sale is under way.

At one time, owner Yalchin Balci was grossing nearly $1.5 million a year. But business began to fall in 2006. The death knell for the company came in November, traditionally the busiest month for furniture retailers, when business was off 70 percent.

The decision to close the business has been painful. Read more »

For small, independent store owners, figuring out how to compete with mega-chains has always been a challenge.

Now more furniture and home-furnishing stores are taking a bigger-is-better mentality and opening showrooms of their own to compete directly with their largest rivals.

Rather than asking customers to look through catalogs to find the sofas, chairs, dining room sets or other furniture they want, many independents are giving shoppers an experience much like the one they get in larger stores. And with the explosion of e-commerce, brick-and-mortar merchants often can offer more selection, helping them compete with online clearinghouses.

Still, it’s not a decision to be taken lightly, said Jim Brandt, who recently opened a Drexel Heritage showroom for his Raleigh Design Center.

“There’s a major cost layout. It blows my mind how much money I’ve had to pay out already,” said Brandt, who estimates that he has spent $50,000 just on the inventory to fill the showroom. Read more »

What happened the last time you walked into a store intending to buy furniture? Did you make a purchase? Or did you leave discouraged?

A recent survey of 2,500 households for the trade journal Furniture/Today estimated that $47.5 billion was lost last year because consumers didn’t find what they wanted when they shopped for new furniture. The biggest percentages of nonpurchases were for futons (50 percent), motion sofas (43 percent), curio cabinets (42 percent) and dining room sets (40 percent.)

Think price is the obstacle? Not always. Industry pros say the furniture-shopping experience is far more complex, a combination of emotional and merchandising experiences. Read more »

William Bew White III has a lofty goal for the family business he founded in 1978: He wants to make Montevallo-based Summer Classics “the Ralph Lauren of outdoor furniture.”

White seems to be on his way. The company’s outdoor furniture line — which includes table and chair sets that cost $4,000 or more — is sold in 48 states and several foreign countries. Through retailers such as Williams-Sonoma and Restoration Hardware, sales are projected to reach $60 million this year and $76 million in 2008, up from $20 million just four years ago.

At that pace, White says the $100 million sales mark will soon be eclipsed.

“This is an incredible business that started from nothing,” he said. “We’ve grown it with people that believe in the business model and take ownership as if it were their own business.”

More growth is planned. White intends to open a large showroom in a high-profile spot along Interstate 459 in the Birmingham area, adding to the 11 the company already operates in places such as Huntsville, Gulf Shores, Nashville, Tenn., Charlotte, N.C., and San Antonio. Read more »

Furniture makers are jumping on the ‘green’ bandwagon

Furniture makers are jumping on the “green” bandwagon with new lines of eco-friendly home furnishings this summer and fall.

Pieces made from natural, renewable resources were the hottest trend at this spring’s High Point Market in North Carolina, according to the American Home Furnishings Alliance.

Among the offerings were funky recycled furniture from Groovystuff (indoor and outdoor items crafted from salvaged farm plows, rice barrels and antique wagon wheels); dye-light “Natural Grounds” wool rugs from Company C; and The Natural Light lighting collections, made of sustainable materials and packed in recyclable materials instead of packing “peanuts.” Read more »

In a move to establish a significant presence of sustainability, Channel Logic and Sustainable Furniture Council join with World Market Center to create the inaugural Living Green Pavilion. As part of the Design and Living section at the Sands Convention Center, Living Green will showcase stylish and functional home furnishing designs available from several manufacturers. Channel Logic Inc, has positioned themselves as the leading sustainable products resource and representation firm, and is working hard to establish a viable presence in the marketplace for eco-conscious purchasers.

Channel Logic, Inc. is a sustainable furniture manufacturer representation firm, founded in March, 2007, by Tim Loveday and Mark Gruman. With the sustainability movement rapidly gaining momentum, Loveday and Gruman recognized an opportunity to advance the presence of sustainability within the furniture industry. Read more »