BSET - Earnings call transcript Q3 2024 | Bassett Furniture Industries, Incorporated

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to Bassett Furniture Industries Q3 2024 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Daniel, CFO. Please go ahead.

John Daniel

the for Gigi, you, introduction. Thank Furniture's Welcome quarter for third call August to XX, Bassett ending XXXX. the earnings

Joining me up closed, today issued is will today's our Chairman and quarter, our Q&A release on website. we after session. remarks available about our the CEO, yesterday the a it's market call and open our After for news Rob Spilman. We

call call. We will of site this within investor post the on transcript XX our of the hours

under that's addition, filings we XX-Q the Investor on tab. on SEC In website Relations this morning, the available our and filed

During and today's The estimate to differ guarantee forecast pursuant These call, actual uncertainties statements. company of considered any safe such does to nor certain view. statements accuracy we made cannot Litigation to provision harbor the make XXXX. inherently that the may Private be the or materially results and present of undertake are forward-looking forward-looking from Securities management's involve update any risks it statements obligation cause of Reform Act

including For filings with see the related November our Other XXXX. important corporate Form available the XX, are fiscal SEC year website. more describing for business on report cautionary to the risks XX-K information on annual ended company's please our notes,

about Now over Rob I'll our to turn third for the Rob? comments quarter. call

Robert Spilman

continued thank pressure Mike. Good of market morning, weak sales for Thank quarter. integration you, for during third everyone, you to call. the us housing U.S. The and our today's joining our with industry

inventory the remain started since ago, rate to Fed's have short housing X rates ease the term. impediments overall availability basis mortgage and XX weeks Although cut in affordability point

to third effects want dock bearing on mention devastating and quarter that Bassett Hurricane occurred affected have Hurricane in Coast Helene and fourth shift it our and Helene. Many potentially by X customers Our employees the quarters events plans East deeply of the have several happens. I were strike. quarter, will a a that industry as is transformational for the next ready to to benefit also the subsequent

them. longer-term to track. Hurricane Carolina, the with center logistics to related shipments strike X dock which I-XX possible on as are shipments the systems our impact larger to due Coast just Catawba for thoughts to to County, And our X on it The and October. has week and first distribution recovered East X distribution during weeks. main damage We've on put in outages Helene the our back get Our down to impacted are quickly while days, as X and our business infrastructure, power damage route impact the west. is shut of North the was back was days the

costs. the Day consumers compared last fixed associated subsequent Now on move our the greater the pressure to Like and our as event, higher of on third Heading let's segments difficult both year. fourth event wholesale on business our Memorial of quarter, of retail in produced July in-between due last was results. increases down to and the level quarter, our retail were into sidelines. especially revenue to weeks the stayed with quarter our discussion But both

weekly on XXX of our leaner up million margins income more inventory. lower margin to than to improvement largely delivery though by meant down $XX July XX%, Retail home Inventories manufacturing improved facilities points our margins followed always year's run gross gross improved year-over-year on sequential that were we basis down attack X.X% inventory. weakest Wholesale club is down reporting quarter shut lower by This higher of a and by year, in over the we XX.X% XX suffered sequentially, gross reinforcing annual level can was quarter's belief third slightly from and that basis operational The margins. our better fourth volume, points period. attributable that for despite basis. driven with were combination cyber margin slightly workdays. Consolidated XX% the by shutdown, the last clearance

X%, written focused in also top third was into down fall going heading of and studio strong dealers important open true X last to retail ticket of to upholstery slightly of have the new forward. Labor both strong the program Bassett quarter, program. average year. We an up Our Since sales efforts. The reception sell-through quarter down option while Day. a added of enhancements $X,XXX, feature on retail be total produced in from retail end line custom should our introduction our was were sales remain were Initial leather X%. the the and market design makeovers XX% very custom we sales

the made fall a of five-point custom furniture at have our upcoming market. centerpiece showroom studio We the

the to believe we we enhanced operational positioning we of positioned and with financial better as have to X and to branded that plan a performance. strategic customization in was quarter we Point quarter, result. several on through not five-point plan something long-term restructuring organic advertising, up done support also drive plan expand made distribution Bassett our growth We outreach the dedicated a initiated locations, our executing trade for set and capabilities during good omnichannel are progress years. Last this improved to Bassett plan, retail footprints. We

major comprehensive address culminating case product the offerings. We line are portion launch a fall goods, and collections and are point In collections we price opportunities. entertainment X beginning remaking bedroom, XXXX. The in and X dining styling product will and spring imported occasional upcoming to significant this new in the the of quarters of

expanding domestic the dining successful this we On front, our fall. origins are program

especially sales In the next expansion Our recliner solid seasons. BenchMade of upholstery, the will line. program Wood in assortment makeover also domestic a our category, warrant undergo strong motion in our over XX

recognizing the the the outreach design community underway of channel have growing well, to as We interior targeted a throughout importance this industry.

at will are designers consecutive designed their encouraged We Point For more InterHall year, at contacted a showroom recognition trade. firms the the and of market for and spring X and strength the second in market by than the High at designer we fall operate weeks. XXX design our

invest of continued transformation digital our in We a sales even this and challenging revenue. to these E-commerce cross-functional times. retail multiyear small have are still year portion

and the our of we're to about growth capabilities, double-digit omnichannel e-commerce potential quarter. optimistic see are We this excited

With brand wood our expect from was satellite small these makeover X we U.S. primary in-home our stronger to to proficiency. Point rationalize by Bassett presentations sites plan into complement a and X of manufacturing supported investments, design locations X operation.

are some productive drop consolidation lines. with with expected was was overhead This rationalization, X As operating improved and there impacted absorption X seeing any margins. location. the transition, now during on inventory in which disruption we and is complete Point optimize to August

plant part path on are this domestic We continuing strategy. as wood of the consolidation

wholesale this center, of Oklahoma footprint. and our products million center into X affected in process East strengthen consolidated to line our of the In consolidation, the West clearance overall one. home Texas our of wood was to reduction wholesale which that addition is improve of distribution major also move plant in and second Virginia our third quarter, we margin This charge completion a quarter. and In today's plan we resulted in retail, facilities moved retail quarter. have businesses. after the structure quarter into Texas and stores. Point reported cost wholesale, completed this out delivery a are will in X of warehouse to we new operations slow-moving expected, X In consolidating the Coast to As facilities closure of North overall designed productivity realize both we until and aforementioned the $X.X during the warehouses our of continue

to to thoroughly retail We pair and of structure continue identify further review operating SG&A expenses. opportunities the both wholesale to

Greensboro, beginning North a the we fleet side, capital certain within program are store the Carolina stores being retial the On recently to the first. completed refurbish with

last Canada, wind and mid-price this furniture inventory and work current United and progress we Singapore, close planned. the U.S. remaining with down by plan fiscal Our No the end Kingdom. home. retailer This Noa in restructuring e-commerce the in still year. operations was headquartered Canada operations point is the will in of to as The

capital plans the primarily Our year for fiscal spending are complete.

shareholders to will dividend drive Board shares to the quarterly and Directors dividends, regular week. We approved including our this that purchase of through continue returns opportunistically

Getting resources it's us that operating imperative improve can for We continue a continue profitability. to demand. along to of balance mentioned services the our expense I are with new and and launching That sheet, revenue. better align to these the place, position Bassett's expected ourselves structure strong consumer that pieces means turnaround in projected for of earlier, so to products with have eventual we use evaluate the efficient we but

over it to Mike turn for I'll Now details financials. our on more Mike?

John Daniel

of the our quarter before occurred commentary, comparisons be third my of to July. third unless cyber into fiscal compared will want noted. context in But to that In XXXX, provide fiscal the Rob. I Thanks, results, more the I XXXX discuss I get otherwise will on incident the quarter

began unauthorized issue million We $X process the weeks. personal activated running. receive occurrences compromised. believe incident estimated detected our insurance As in shutting quarter, and the steps and assess shutdown The for our fourth we fully issue in any with our began the operating filings, consumer were We in delays a we and backups in July to contain filing expect normal and consultants SEC our immediately plan IT team recover not within of an up operating some of external team those plants took systems do proceeds down reported resulted and factor. The portion million provider systems. the third all essentially claim Bassett's was to quickly working activity in data We the and of quarter. to full retail on by orders. $X response loss cybersecurity we're a X to system by which systems. from interrupted resulted had monitor threat as X This with and our By -- for on unknown able week, an between that to manufacturing all information wholesale the XX,

partially third wholesale XXX our and basis XX% to declined during in due a XX% to incident. $XXX,XXX decrease This the from decrease retail both labor through cybersecurity unproductive retail shutdown revenues sales points by incurred million the stores. Consolidated to segments. quarter, gross wholesale costs for XX% margins increased in margins primarily was offset So temporary the a $XX.X resulting company-owned of or due XX.X% in and consolidated the improved sales

million was Rob $X.X contract loss million and cyber we from loss earlier. mentioned and annual incident progress consolidated on between target estimated our compared $X.X labor $X.X unproductive $XXX,XXX logistical services in plan, included the on costs, operating XXXX. discussed in the And these prior additional million would valuation third a to nonrecurring quarter loss Excluding to margin reported the charges. We of as loss XX.X% gross $X.X which compared million have XXXX. the factors year, been of of of a for cost our inventory the $X.X the restructuring the operating impacting with fiscal Based consolidated projected XX.X% million, realize on are loss Rob to of a the savings that starting

Now decrease points previously from that Rob cybersecurity the in from fixed the labor XX, sales due market, margins operations. in over I'll store provide lower $X.X was wholesale due the shutdown in XX% sales $XXX,XXX basis regarding year, or shipments. costs to a increased volumes or shipments by costs Net expected decreased X.X% primarily our level unproductive offset prior months the during in the of open the for venture XX of improvement incurred year the and and a from to to business XX% business period million margins deleverage information Bassett incident. lane custom temporary decrease partially prior decrease ended XX% to due network Gross of XXXX, X% highlighted. This in club X upholstery shipments our the improvement retail the lower sales primarily August to a leather

of quarter. points of SG&A percentage due as was While $XXX,XXX, to a lower million XXX quarter end as SG&A compared on million to Wholesale $XX.X second leverage sales the fixed expenses at end basis sales volumes. of reduced at decreased expenses $XX.X costs increased backlog the

delivered line delivery the margins for the moving to X.X% X.X% decreased margin higher taken improved points Net retail to income. $X store XXX million of but over on year sales from periods. due in basis compared Gross clearance operations. declined in year Written the higher not period. prior or value and goods Now sales, and orders prior both year prior the period quarter to the sales

end percentage from fixed leverage of service sales the While to costs. In fixed center handling points, customer SG&A have taking expenses is store for quarter issues payments on positions central a decreased second costs efficiency increase for backlog located at decreased expenses increased primarily million, our level, by call of at and relationship third now to XXX $X.X engagement million, the staff building from and store Retail our engagement. each enhances as This of quarter. again, sales up product goal handle volumes lower kept end claims. responsibility of and small a due transition store. advertising customer scheduling at partially basis quarter level, million the eliminated We delivery $XX.X which deliveries, the now offset to XX our was the individual to center centrally we reduced SG&A $XX.X at at our the redirected functions call at local the

quarter to quarter capital with We turn sheet flow and We and our the $XXX,XXX. the balance let's in short-term to deficit Finally, $XX.X allocation. million operating investments. ended for the cash limited cash

manufacturing the cash we during and week pay million insurance related loss Xth the to our addition when our our of annual premiums workers $X In incident, life third July historically and renewal estimated shut as of insurance, vacation pay to down. have significant company-owned quarter portion increased million fund to plants we the give cyber property $X annual for the on outflows a the casualty are

mentioned of on we that million $X spending in the of year, store capital retail spend back quarter, our limited the majority to with the an $X plans Last million remodels. half investments over to our additional business of

quarter. had the expect be As XXXX we to during $XX the fiscal to the to the business now quarter, QX, total we the of million of for $X million for end annual instead million weak $X.X continued the or to pace range to at $X spend million between $X.X fourth million, of planned

current the while our storm executing a Our us the financial with weather and provides to plans for economic condition future. platform remains solid

return. to previously Rob challenge shareholders activities quarter, complete revenue. continuing imperative It's said, the that expenses As our our restructuring so planned during structure us to we while that we the reasonable cost will align Bassett improve provides fourth for profitability our a can to so operating

for do Gigi, Now we please will line so. to open the questions. instructions up provide

Operator

Instructions]. [Operator

Our of from Lebiedzinski comes first line question the from Sidoti. Anthony

Anthony Lebiedzinski

I it's So the the despite balance certainly, first, company mean, just environment, a quick strong a comment maintaining see from to difficult me. sheet. nice

was So first the the QX -- fourth you as my cyber attack I as guess issue. far obviously, July, so you had shutdown during had question, of normals

for XX really or of XX you XX So were only out weeks. the operational

like actually weekly looks the an it improved quarter. on second So the revenue basis from fiscal adjusted

Your customer up were well. also sequentially as deposits

near-term multiple to results mentioned issue. also address if think kind outlook. can So and you've we far wondering what as you and that as the how hurricane should as question, just you of know could Day. in about as but I the I strike so just But far context seen all as Labor far you comment the your the part know it's that. hopefully, a port

Robert Spilman

half say There's is only we I to the in Rob. July this Anthony, was a month. morning. a there. because week lot tough unpack would operated a so have Good and or really

July Our Day, my is the of I as in Memorial fourth was so -- said in good, was remarks, soft. very between and

But leading into in during time describe And better past it's year. say we're this way -- environment. you the still years, has -- stronger half better this And September historically, for of is and the for the it August, year. better I'd getting general Labor X definitely in still just back the would that months I was no at exception in have of slightly us That's tough overlay Day. a it. things if with the We stores start This period.

Anthony Lebiedzinski

Understood.

Okay.

do think ticket What's was average you how up. driving And that? sustainable is? Your that

Robert Spilman

ticket been. $X,XXX Our will quarter, mark. will it's down right about be is it up. around We're average It X be where that

of lumpy -- depending that's it's the projects have. so we size the design of that on And kind

as But we're would that, of ticket all above. a the not like course, So I traffic interested store would average we're we as that, to all in have time. in transactions are everybody interested and the also bigger say and of

high our stay that years. So I $X,XXX range. it's this average has last ticket think it range in right couple I in of to for basically been the $X,XXX -- And at expect

Anthony Lebiedzinski

margin of gross the of workers last your nice terms the so in a with year. $XXX,XXX, improvement you even had that then And Okay. paying improvement, headwind from

to So to with that environment? restructuring would not a kind recovers business business margin given of love I in could I'm gross we and hear that. your thoughts I'm better efforts, making just the curious, you're see on the improvement the when what --

Robert Spilman

We -- and model in we early hurt the margins. are not [indiscernible] with our in factories X We improve absorption. thing to put this improve we I did addition, a tough margin. challenges, think really which could quarter, this There course, had new July -- upon further gross We do. right of August. together is embark that did to a

on. cyber we did only going that the had have event, not So we

that And this. got was the of often years, -- of as lumpy so [indiscernible]. we've first the of month the Unfortunately, some plants as do over couple but those is. to weeks of it better August of consolidation had And

So the it's think do move over we hard frankly, quantify could it. -- see to future. the And gross in side margins this me on -- I wholesale progress for still where expect we in some some exactly can be, but

Now the is at to want and flip is side very this we competitive offer market of value, a the that moment.

the we I price good sure, to feel on goods value. overall, settlement as want ability side, improve But we gross it. -- So pretty trajectory least about of price have definitely our some the retail, our for to the opening recognizable point and margin further at and

Anthony Lebiedzinski

Studio And the fiscal as many That what how sounds as good. is now? the of And your in is end concept, stores expectation far that my for Bassett the last Design right question, year?

Robert Spilman

September. of Well, not got set in month field. in of we -- we have all up the we've because X yet of They're out XX now the these them

we the all earlier signed these so We yet. got and the we've seeing this and year, of -- to High have But have market had the fixtures XX and upcoming you and want the our showing in -- down the of and deal. showroom forward the haven't made there look that reconfigured to goods said focal you. major make and just point to Point, shipped we to a we at all effort the So we it

still So XX we bigger of we earlier. I potential long-term that get this. the could think talked about is The question

goods. this, the there and that not markets didn't demographics bit, goods some with you sell we are necessarily encouraged little this that very markets with support don't the on. to we're better a have Now to are thing certain do the surprised just and of that sell we but really slightly reception we entry-level where frankly, count We getting

So think we over the this our of case a call in stores. used dedicated of then and it, day distribution goods footprint, time, we is our and back between next full the blooded iteration course, design which our around gallery center, and everything then Bassett with the to what is

is line get into great a to program and the Bassett day. this for our dealers that piece do it's a So the proven way we of every and extensively

So it the very potential around so excited enthusiasm about and the far.

Operator

next Brian question from comes from Our Water the Tower Gordon of line Research.

Brian Gordon

a want bit question. earlier on to dig in an little I

were planned production that, know think XX% I July that would shutdowns. you part got like at of something orders were X.X%. like that by to something like the event, retail And of production I days your remarks mentioned in days right that said something that missed. down if of had XX% was you assume the I come Xth itself. this given But I cyber

John Daniel

Right.

Brian Gordon

from closer say would to to X% out back fair If might it wholesale. shipments cyber, been down that have we that something be

John Daniel

time about that that up, mind shutdown wholesale on orders side during in taking Keep we're question. that catch the we still and... Thanking do

Robert Spilman

Tell about holiday. the

John Daniel

orders the taking And Yes. during Yes. we cyber event... Yes. were

Robert Spilman

[indiscernible] interim.

John Daniel

an just interim. We got

I that math I'm that. not me more Give bit follow X%. on a -- little and your So sure context on

Brian Gordon

back the trying Yes. so just of I I mean, some to envelope. do was

a and have So XX days week production I X was I mean we of assuming. weeks

So if you're versus XX XX%? like something to gets days to down XX that

John Daniel

same July Yes. And -- mind, week X. closed because in also keep down for we were year of down by last we were we're that amount

Brian Gordon

X the for Right. specifically talking about the days But cyber. I'm

John Daniel

Okay.

when the we So, that well, essentially onion and it were in not majority the on where were the you come that shipments. we think -- we missed real right issue I would order in But orders, we is the on not retail because kind help of able shipments taking were catch up it certainly our peel the the we on although doing did several back of and paper. side, open theoretically had customers to

but the running. think -- think systems So essentially period really we you you and retail around our and really because didn't it up have where that when lost, I during time on side were people what about was you in, the leaving turning sales coming

shipments So the our that the thing quarter. our really for and affected main sales that's

Robert Spilman

of comment in don't time lines it from we've companies, bit mean lifetime when kind thing. this. -- add I'll in where and Brian. And also shut we fourth to of system, around freight off. the is do most week other in is, doing And lot are that, And so little know, for North a a back get week July Carolina have But turning and the you of a really to here words, we coming takes different loads distribution again captive wheels of the depleted. we have one our as furniture that the -- come for case, I other that down I here -- a same but in traditional my

loads to again. the up build You have

And day, week over after we like again it shut a just Mike so when all you you then have said, that down for immediately -- exacerbated just factor then that. a and

and pipeline getting getting the filling back there our these So definitely trucks into the We in the catch up. efficiency and did out loads July built affected them August. and and

the gross part of but factories, a it what up us we would Some say. -- would inefficient Anthony's in there. affected question I it's that it played slightly that's is and is just really margins, too, definitely But I -- back didn't an of stuff the say that all and good to called this on affect was us,

Brian Gordon

look close take a the a like like That the is, put definitely I'm orders to at agree event the being back that be if we of and then helps were reason does you like it might something we we the Would bottom out why be inefficiencies that? kind a and that. that perspective? mean, may something understand of we when seem cyber seeing demand a retail bottom with impact asking to I in the from

Robert Spilman

year and Well, ourselves the of pretty -- one we year, and went asking into is the course, is a much this year we great Well, bumping this the but business again think I ask trend. we of that, had and post-COVID kind this we retail at and along it the of all back the all same time to this some consecutive ourselves come question I and last industry. year. [indiscernible], bottom, in is X whole a down in time observation point." calendar, And guess, business, We've were this -- we're came thing around "hey, months going saying, last of the

-- September So I the take if of of several feel that really the we with of the surprised honest the part quarter thing. that kind us, third But just it last we're I into does that, of bottom of and weeks this -- in back we've that the heck out then think last you. be reached reported the to

but then stay is, seeing, week, Now, weeks. long because good have do bottom? couple a a on case, in very tough question the our And how though even we're we'll get of you we'll the not

happen. doing we're seeing to in power not make of everything momentum we're that to And try want So to our the we course, that see.

the you So up until can't reach bottom. you if come -- but

do perspective, that like there. I from feel we're So,

John Daniel

this out you assumption effects of along was it And written the the could cyber to you of look add, bottom. we and down bumping cyber, sort let written -- if the that me on retail think the the last Brian, that come quarter I as Retail down are X.X%. at quarter, you point X.X% on

Brian Gordon

there's of have that Yes, to to know And openings designed said thoughts the the many encouraging. be, put the were bit a so on in kind you to be year I by could works? kind end you -- of next that's fiscal how on year. the that be about year, actually thinking for kind kind of big last at you number no something would mean how shifting traveling of question studios of XX in of we you growth follow-on some end Do all year, the 'XX. been like the but might very any for little look as in potentially I store that then those the to many How July stores the I might look works? new sites. know call be that planned of

Robert Spilman

Well, moment, we've working still economics market got We're looking honestly, that. at would at. I say we're the of that the one on

decision And so -- new -- that one conclusion that's store. is of market, the in moment, but should at kind new the have next on few one all planned we we And recent weeks.

in again, to base, some and encouraging, And basis good also alluded but I doing happening nevertheless, so, seeing, we're honestly, on to -- there. are refurb fleet what increase that current the we're e-commerce really is our looking on that. things inward small

program. to and months say. In so It's we're new. that in, terms I custom see growth think going to of the it's difficult X it's in studio, really steady But

that, already sign XX see. encouraging that that's year. think don't review, But again, the I Monday we provide to our another will Honestly, for every report us. know. are in I that on that ones And and will We market Now, next doing growth have do well. opened

we're the next are those things year. kind counting of So for on

Brian Gordon

to And visit. Point come really new product we the see at when excited High Great.

Robert Spilman

without what's recognition hadn't he'd of And We miss him. and call organization is know second thank to a the listen, the -- your This encouraging looking our I but the be And miss he was great job. one. Budd. I were have you which we're we in can't him you, and on in done ahead. going past. do with proud and doing Brian, we us a conference calls, of

Operator

Spilman like to Rob over turn would back for closing to remarks. I now conference the

Robert Spilman

want Okay. did receive. for Bassett questions your Thank Gigi. the just we in for And to I and you, thank everyone interest today

growing the and collections here. I High as revenue align is further something head Bassett with Custom As losing into on connecting about underway every well you plan around upcoming it's community advancing is much. design structure the day talked restructuring cost and very Point Thank new we we our Studio, to designed said, all omnichannel and look forward interior XXXX. current to our into the We and presence our the market focusing our we're with

Operator

This call. for Thank you today's conference concludes participating.

You may disconnect. now

Bassett Furniture Industries (BSET) 10 Oct 242024 Q3 Earnings call transcript