Bassett Furniture Industries (BSET) Q2 2024 earnings summary

Executive summary

• Revenue declined 17% year-over-year to $83.4 million, with retail under greater pressure due to higher fixed costs and a net loss of $7.2 million compared to net income of $2.1 million last year.

• Macroeconomic headwinds, including high home prices, mortgage rates, and inflation, continue to impact demand.

• A comprehensive restructuring plan was announced, targeting cost reduction, operational efficiency, and business growth.

• The Noa Home e-commerce business will be closed by year-end due to underperformance, resulting in $1.9 million in asset impairment charges.

• The company remains optimistic about a rebound in consumer demand and long-term shareholder returns.

Financial highlights

• Total revenues decreased $17.1 million, or 17%, year-over-year to $83.4 million; six-month net sales fell 18% to $170.0 million.

• Consolidated gross margin was 52.5%; adjusted gross margin, excluding inventory reserves, was 55.7% vs. 53.6% last year.

• Operating loss of $8.5 million, compared to $2.5 million operating profit in Q2 2023; net loss was $7.2 million, or $0.82 per share.

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

• SG&A expenses as a percentage of sales increased 490 bps for the quarter and 570 bps in retail due to lower sales leverage.

Outlook and guidance

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

• All restructuring actions, including warehouse exit and plant consolidation, targeted for completion by year-end.

• Margins may be slightly lower in the back half of 2024 due to clearance sales, but expected to normalize in 2025.

• No new store openings planned for 2024; three new markets under consideration for 2025.

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