Bassett Furniture reports sales decline, significant employee attrition

BASSETT, Va. – Bassett Furniture reported $107.7 million in consolidated first quarter sales, an 8.7% decline from the same time last year. That’s also down nearly $14 million from last quarter.

Wholesale sales were $69.9 million, a 16.3% dip from last year. Retail sales were better but not enough to offset, with an increase of $900,000 to $65 million.

Company CEO Robert H. Spilman said the backlog Bassett built up over the pandemic has been fulfilled, and the company is now producing at a rate commensurate with its written business.

“As the industry and Bassett wrestle with macroeconomic inconsistencies, we are focused on efficiently targeting our consumers, new product innovation, providing the best buying experience and service possible, and working to sharpen our value proposition on the heels of the unprecedented cost pressures that we faced over the past 30 months,” he said.

Spilman says the company has made headcount adjustments this year.

“For the past two months, we have been working reduced production schedules in our facilities. As a consequence, we have adjusted manufacturing employment levels by 11% this year, primarily through attrition,” he said. “Total wholesale inventories were reduced by 15% for the period. As previously reported, we continue to right size our Club Level imported motion inventories and are suffering margin degradation in so doing as the inventory is valued with the exorbitant ocean freight costs incurred last year, and we are discounting the product to move the goods. The corresponding effect resulted in a 250 basis point blow to overall operating margins for the quarter versus last year. The bottom-line effects of the price reduction lessened somewhat as the period unfolded but will represent a hindrance to operating results until sometime in the third quarter at current sales levels.

“Once we return to Club Level inventories that were shipped from Asia with current ocean freight rates, those margins will return to historical levels, which is already the case for certain styles.”

Still, Spilman was positive, citing the end of supply issues seen during the pandemic.

“The turmoil caused by pandemic supply chain upheaval is now behind us,” he said. “Part of the disruption included skyrocketing raw material prices and the aforementioned freight costs. As the environment has normalized, certain manufacturing cost inputs have been reduced. Armed with the results of a thorough line-wide cost analysis, we plan to sharpen price points on key items across the line to enhance sales and improve overhead absorption in our factories. We will implement the new pricing strategy in our stores and to our wholesale customers sometime in April, which we believe will not adversely affect wholesale margins based on our internal calculations.”

Spilman noted that while year-over-year retail delivered sales increased by 1.4% for the quarter, retail operating profit fell to $1.5 million. The company opened a new store in Dallas during the period and remodeled two other Dallas locations to test a new fixturing packaged designed to enhance accessory sales.

In addition, the company plans to begin work on its new large store (25,000 square feet) in Tampa, Fla., this month.

Spilman commented on its acquisition of e-commerce resource Noa Home.

Regarding the acquisition of e-commerce resource Noa Home, Spilman said it is operating at a loss and will likely do so until at least the latter part of the year. The company is honing Noa’s operating metrics and pricing strategies, as well as broadening its assortment.”

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