by Latest quarterly report illustrates the strength and positioning of company’s retail segment now and in the months ahead
BASSETT, Va. — In its latest results for its fiscal third quarter ended Aug. 27, Bassett Furniture shed light on the success of its retail store network across the country.
According to the company, the corporate retail group had its best-ever third quarter with $70.9 million in revenues, a 21% increase from the prior year period. Its year-to-date sales in the retail segment were $210.6 million, a 16.1% increase over the same period last year.
The segment also contributed $4.5 million during the quarter and an overall $15.8 million in operating profits year to date, which the company said exceeds any bottom line performance to date. In addition, the company said, the 51.8% margins for the segment were close to its targeted income range.
Such numbers indeed make the company’s retail segment worth watching.
Yet a closer look at the earnings statement reveals there were challenges too.
For example, while net sales increased overall, written sales, which the company defines as the value of sales orders taken but not delivered, fell 9.4% from the third fiscal quarter of 2021.
Meanwhile gross margins fell 70 basis points compared to the same period last year. The company said this was due to increased clearance activity from four store closures during the quarter.
For the full nine-month period, written sales fell 8.4%, although gross margins rose 90 basis points compared to the same period last year. The company attributed this to improved pricing strategies and lower levels of promotional activity, which was partially offset by increased clearance activity from a total of five store closings year to date.
“As we continually monitor the performance of our Company-owned retail store locations, we may occasionally determine that it is necessary to close underperforming stores in certain markets,” the company said in the quarterly report. “During the first quarter of fiscal 2022 we closed one retail store in Ontario, California, and we closed our store in Wichita, Kansas, during the third quarter of fiscal 2022.” The company added that during the quarter it also closed its store in Farmingdale, New York and consolidated its operations with our existing store in nearby Westbury, New York. “All of the above-mentioned closures occurred at or near the lease expirations.”
During the third fiscal quarter, the company also said it sold one of its company-owned store locations in Houston for $8.2 million, net of closing costs. It expects to vacate the location early in the fourth quarter and open a new store in the Inwood Village shopping center around the same time.
Other developments on the retail side of its business include the following:
+ Due to construction-related supply chain issues, a new replacement store in Dallas that was supposed to open in August, will now open in early November.
+ In the same market, it is remodeling two other Metroplex stores — Southlake and Frisco. In the year ahead, it also has a remodel planned for its Austin store along with two new stores in Tampa and Houston.
+ It is also considering another Florida store, which along with other stores in the state will be supported by a new Regional Fulfillment Center in Orlando that aims to provide two-week home delivery. It has opened a similar facility in the Baltimore area to service its stores in the mid-Atlantic.
In conclusion, by the end of its fiscal year, it expects to have 59 corporate-owned Bassett stores compared to 61 at the end of the third quarter. This number will change with the addition of the aforementioned projects planned for 2023.
Obviously the economy will determine how well these and an additional 35 licensed BHF stores perform between now and what could be a turbulent year ahead. But for now, the company appears to moving forward with a successful part of its business that has yielded gains for both its bottom line — and shareholders — based on the solid results during the quarter. As mentioned earlier in this column, the company’s retail strategy will be worth watching moving forward.
