Bassett Furniture Industries Inc. (BSET, Financial) filed Quarterly Report for the period ended 2010-05-29.
Bassett Furniture Industries Inc. has a market cap of $46.4 million; its shares were traded at around $4.05 with and P/S ratio of 0.2. BSET is in the portfolios of Jim Simons of Renaissance Technologies LLC.
The results for the quarter and six months ended May 30, 2009 included several restructuring and other non-cash items including asset impairment charges of $376 to write-off the remaining leasehold improvements for our Arlington, Texas and Alpharetta, Georgia stores, which ran inventory liquidation sales and closed during the third quarter of 2009. We also recorded a non-cash asset impairment charge of $258 to write-off the remaining leasehold improvements and a $285 lease exit charge associated with the closure of our retail office in Greensboro, North Carolina in May 2009. In addition, we recorded a $434 non-cash impairment charge to write-down the carrying value of our long-lived assets associated with a nonperforming retail location. Lastly, we recorded $320 in severance charges associated with the downsizing announced in March 2009.
In fiscal 2008, we requested our general partner in the Alternative Asset Fund, Private Advisors, L.L.C., to attempt to liquidate all of our investments in the fund. During fiscal 2009 and 2008, we received $19,258, and $23,250, respectively, for liquidations associated with various investments in the Alternative Asset Fund. As of November 28, 2009, the Alternative Asset Fund held only a $749 investment in Fortress, along with some remaining cash that was distributed in early 2010. Due to the level of the remaining assets in the Alternative Asset Fund, the Company and Private Advisors, L.L.C. dissolved the partnership effective December 31, 2009 and the Alternative Asset Funds remaining investment interest in Fortress was transferred to the Company.
Net sales for the wholesale segment were $42,822 for the second quarter of 2010 as compared to $45,013 for the second quarter of 2009, a decrease of 4.9%. While we have seen some slight improvement in demand through our retail distribution channels, wholesale shipments were adversely affected by delays in receiving imported product from certain of our overseas suppliers. Such delays resulted in a limited level of stock outages as we continue to manage inventory levels very closely. In an effort to mitigate the stock outages, we increased inventory levels by the end of the second quarter with respect to our imported goods. Approximately 49% of wholesale shipments during the second quarter of 2010 were imported products compared to approximately 51% for the second quarter of 2009. Gross margins for the wholesale segment were 32.4% for the second quarter of 2010 as compared to 28.5% for the second quarter of 2009. This increase is due to improved margins on the imported wood products as well as the closure of the fiberboard plant during the fourth quarter of 2009 which essentially operated at a breakeven gross profit during 2009. Wholesale SG&A, excluding bad debt and notes receivable valuation charges, decreased $606, or 5.1%, for the second quarter of 2010 as compared to 2009, due primarily to lower spending due to lower sales and continued cost cutting measures. We recorded $1,059 of bad debt and notes receivable valuation charges for the second quarter of 2010 as compared to $5,489 for the second quarter of 2009. This significant decrease in charges is primarily due to our efforts to work diligently with the licensees to control increases in accounts and notes receivable exposure. In addition, many of the distressed licensees for which significant bad debt and notes receivable valuation charges were required in 2009 have since been acquired by us and are now operated as company-owned stores.
Net sales for the wholesale segment were $83,128 for the first half of 2010 as compared to $92,960 for the first half of 2009, a decrease of 10.6%. Wholesale shipments decreased in part due to the softer retail environment in late fiscal 2009 that impacted our shipping rates early in the first quarter. In addition, shipments were adversely affected by delays in receiving imported product from our overseas suppliers. Such delays resulted in a limited level of stock outages as we continue to manage inventory levels very closely. In an effort to mitigate the stock outages, we increased inventory levels by the end of the second quarter with respect to our
imported goods. Approximately 52% of wholesale shipments during the first half of 2010 and 2009 were imported products. Gross margins for the wholesale segment were 32.2% for the first half of 2010 as compared to 28.0% for the first half of 2009. This increase is due to improved margins on the imported wood and upholstery products as well as the closure of the fiberboard plant during the fourth quarter of 2009 which essentially operated at a breakeven gross profit during 2009. Wholesale SG&A, excluding bad debt and notes receivable valuation charges, declined $2,512, or 10%, for the first half of 2010 as compared to 2009, due primarily to lower spending due to lower sales and continued cost cutting measures. We recorded $3,764 of bad debt and notes receivable valuation charges for the first half of 2010 as compared to $11,741 for the first half of 2009. This significant decrease in charges is primarily due to our efforts to work diligently with the licensees to control increases in accounts and notes receivable exposure. In addition, many of the distressed licensees for which significant bad debt and notes receivable valuation charges were required in 2009 have since been acquired by us and are now run as company-owned stores.
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Bassett Furniture Industries Inc. has a market cap of $46.4 million; its shares were traded at around $4.05 with and P/S ratio of 0.2. BSET is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Overall conditions for our industry and our Company have been difficult over the past several years although we have seen some slight improvement during the first six months of 2010. Nevertheless, we have continued to face significant economic pressures as new housing starts remain down and consumers continue to be faced with general economic uncertainty fueled by continuing high unemployment and renewed volatility in the financial markets. In addition, severe winter weather across much of the continental United States during the first quarter of 2010, particularly on the east coast, has further depressed retail sales activity for the quarter. All of these factors have significantly limited the resumption of growth for big ticket consumer purchases such as furniture. Consequently, this has put pressure on certain of our dealers ability to generate adequate profits to fully pay us for the furniture we have sold to them. As a result, we incurred significantly increased bad debt and notes receivable valuation charges during 2009 as well as during the first half of 2010. For the first half of 2010, we recorded $3,830 in bad debt and notes receivable valuation charges compared to $11,741 for the first half of 2009. Although management will continue to work closely with our licensees to ensure the success of both the licensee and Bassett, further store closures are possible during the remainder of 2010 and beyond that could result in lease exit charges or increases in our lease and loan guarantee reserves. We also may increase the number of Company-owned stores during the remainder of 2010, through acquisitions of certain licensee-owned stores. During the first six months of 2010, we acquired a total of eight licensee stores in Maryland, Missouri, Illinois, New York, Alabama, Mississippi, and California.The results for the quarter and six months ended May 30, 2009 included several restructuring and other non-cash items including asset impairment charges of $376 to write-off the remaining leasehold improvements for our Arlington, Texas and Alpharetta, Georgia stores, which ran inventory liquidation sales and closed during the third quarter of 2009. We also recorded a non-cash asset impairment charge of $258 to write-off the remaining leasehold improvements and a $285 lease exit charge associated with the closure of our retail office in Greensboro, North Carolina in May 2009. In addition, we recorded a $434 non-cash impairment charge to write-down the carrying value of our long-lived assets associated with a nonperforming retail location. Lastly, we recorded $320 in severance charges associated with the downsizing announced in March 2009.
In fiscal 2008, we requested our general partner in the Alternative Asset Fund, Private Advisors, L.L.C., to attempt to liquidate all of our investments in the fund. During fiscal 2009 and 2008, we received $19,258, and $23,250, respectively, for liquidations associated with various investments in the Alternative Asset Fund. As of November 28, 2009, the Alternative Asset Fund held only a $749 investment in Fortress, along with some remaining cash that was distributed in early 2010. Due to the level of the remaining assets in the Alternative Asset Fund, the Company and Private Advisors, L.L.C. dissolved the partnership effective December 31, 2009 and the Alternative Asset Funds remaining investment interest in Fortress was transferred to the Company.
Net sales for the wholesale segment were $42,822 for the second quarter of 2010 as compared to $45,013 for the second quarter of 2009, a decrease of 4.9%. While we have seen some slight improvement in demand through our retail distribution channels, wholesale shipments were adversely affected by delays in receiving imported product from certain of our overseas suppliers. Such delays resulted in a limited level of stock outages as we continue to manage inventory levels very closely. In an effort to mitigate the stock outages, we increased inventory levels by the end of the second quarter with respect to our imported goods. Approximately 49% of wholesale shipments during the second quarter of 2010 were imported products compared to approximately 51% for the second quarter of 2009. Gross margins for the wholesale segment were 32.4% for the second quarter of 2010 as compared to 28.5% for the second quarter of 2009. This increase is due to improved margins on the imported wood products as well as the closure of the fiberboard plant during the fourth quarter of 2009 which essentially operated at a breakeven gross profit during 2009. Wholesale SG&A, excluding bad debt and notes receivable valuation charges, decreased $606, or 5.1%, for the second quarter of 2010 as compared to 2009, due primarily to lower spending due to lower sales and continued cost cutting measures. We recorded $1,059 of bad debt and notes receivable valuation charges for the second quarter of 2010 as compared to $5,489 for the second quarter of 2009. This significant decrease in charges is primarily due to our efforts to work diligently with the licensees to control increases in accounts and notes receivable exposure. In addition, many of the distressed licensees for which significant bad debt and notes receivable valuation charges were required in 2009 have since been acquired by us and are now operated as company-owned stores.
Net sales for the wholesale segment were $83,128 for the first half of 2010 as compared to $92,960 for the first half of 2009, a decrease of 10.6%. Wholesale shipments decreased in part due to the softer retail environment in late fiscal 2009 that impacted our shipping rates early in the first quarter. In addition, shipments were adversely affected by delays in receiving imported product from our overseas suppliers. Such delays resulted in a limited level of stock outages as we continue to manage inventory levels very closely. In an effort to mitigate the stock outages, we increased inventory levels by the end of the second quarter with respect to our
imported goods. Approximately 52% of wholesale shipments during the first half of 2010 and 2009 were imported products. Gross margins for the wholesale segment were 32.2% for the first half of 2010 as compared to 28.0% for the first half of 2009. This increase is due to improved margins on the imported wood and upholstery products as well as the closure of the fiberboard plant during the fourth quarter of 2009 which essentially operated at a breakeven gross profit during 2009. Wholesale SG&A, excluding bad debt and notes receivable valuation charges, declined $2,512, or 10%, for the first half of 2010 as compared to 2009, due primarily to lower spending due to lower sales and continued cost cutting measures. We recorded $3,764 of bad debt and notes receivable valuation charges for the first half of 2010 as compared to $11,741 for the first half of 2009. This significant decrease in charges is primarily due to our efforts to work diligently with the licensees to control increases in accounts and notes receivable exposure. In addition, many of the distressed licensees for which significant bad debt and notes receivable valuation charges were required in 2009 have since been acquired by us and are now run as company-owned stores.
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