Bassett Hits a Sour Note
Bassett Furniture Industries, Incorporated experienced lackluster results for the first quarter of fiscal 2024, ending on Mar 2, 2024. The company fell short of both earnings and net sales estimates set by Zacks, facing a decline compared to the previous year.
The challenging sales landscape, particularly evident in the last two weeks of January 2024, played a significant role in the company’s disappointing performance. Sales contributions from the Wholesale and Retail segments, as well as Noa Home, suffered due to this downturn. Additionally, the company faced decreased leverage of fixed costs due to lower sales, coupled with rising startup and retail marketing expenses, which further ate into their profitability.
A Deeper Dive
Bassett reported an adjusted loss of 14 cents per share, a stark contrast to the Zacks Consensus Estimate of earnings of 1 cent per share. This marks a significant decline from the 16 cents per share earnings reported in the same period the prior year.
Net sales amounted to $86.6 million, missing the consensus estimate of $91.5 billion by 5.4% and reflecting a 19.6% drop from the same quarter in the previous year when sales were at $107.7 million.
Zooming in on Segments
Wholesale: The segment saw a 21.7% decline in net sales, dropping to $54.7 million from the previous year. This decrease was primarily driven by a 20% drop in shipments to the open market, a 21% decrease in shipments to the company’s retail store network, and a significant 26% decrease in Lane Venture shipments.
The first-quarter wholesale backlog for fiscal 2024 was $19.5 million, down 21.7% year over year but up 5.4% sequentially. The gross profit margin for this segment stood at 32.9%, showing a 200 basis points increase from the previous year.
Financial Snapshot
As of Mar 2, 2024, Bassett had $40.6 million in cash and equivalents, a decrease from the $52.4 million reported at the end of fiscal 2023. Short-term investments remained stable at $17.8 million from fiscal year 2023 to the end of the first quarter of fiscal 2024.
Long-term debt, which is a part of operating lease obligations, amounted to $95.3 million, down from $97.4 million at the end of fiscal 2023. Net cash used in operations for the latest quarter totaled $7.7 million, a considerable rise from the $0.6 million reported in the same period the previous year.
Looking Ahead
Currently holding a Zacks Rank #3 for Hold, Bassett faces challenges in the current market landscape. However, there are brighter spots in the Consumer Discretionary sector, with companies like Strategic Education, Inc., Adtalem Global Education Inc., and Ralph Lauren Corporation presenting opportunities for investors seeking potential growth.
Bassett shareholders may find solace in the knowledge that while the road ahead may be bumpy, there are always opportunities to navigate the twists and turns of the market.
