by 2025 will be a year in which the company must balance ongoing efficiencies with further investments in the business to remain profitable
BASSETT, Va. — In its recently released Q4 earnings, Bassett Furniture announced its first quarter of profitability — with net income of $3.2 million — since its fiscal second quarter ended in late May 2023, thus reversing five consecutive quarterly losses.
Indeed, the overall losses in 2024 contributed to a yearly loss totaling $9.7 million. Still, the Q4 gain shows that tough decisions made in 2024 are beginning to pay off and likely will continue to do so in the year ahead.
That also obviously depends on the overall economy and a turnaround in the housing market that hopefully contributes to continued increases in retail sales. But so will the company’s continued efforts at managing its costs, which are pitted against the need to invest in the business from a sales, marketing and product development standpoint.
Company Chairman and CEO Rob Spilman Jr. alluded to this during the company’s Jan. 30 conference call with analysts.
“While the major components of our restructuring plan were complete at the end of November, we will continue to evaluate opportunities for increasing efficiency, leveraging our cost structure and influencing our mindset to run a leaner business on an ongoing basis,” he said during the call, adding that “we focus a significant amount of time on analyzing how we can run our business smarter while we navigate the ongoing challenging housing environment.”
His further comments also offered additional insights into how the company plans to manage the business amid potentially still-sluggish existing home sales expected for much of this year.
“In 2024, existing home sales were at the level they were in 1995, 30 years ago,” he said. “Our entire industry is in search of the elusive bottoming out of demand to enable better planning of our business. Industry forecasts point to only a slight uptick in existing home sales for 2025, so we are prepared with our strategic plan to weather another year of tepid demand.”
For Bassett, there are bright spots and areas of opportunity.
For example, Spilman noted, the company was pleased with its performance during the two-week Black Friday retail sales promotion. Written sales, he said, were up 25.1% over the prior year, which he said generated strong customer deposits and a better backlog to start the new year.
Another bright spot was outdoor furniture orders. While they only represent about 7.6% of the wholesale segment, outdoor also is seeing double-digit growth, with an uptick of 33% in orders during the quarter.
Overall wholesale inventory meanwhile, he said, is down by $6.5 million. He attributed this to consolidation in its Club Level and domestic wood plant operations, which shifted much of the production in Bassett, Virginia, into its Martinsville, Virginia, plant. As a result, he said, the remaining domestic wood plant operated at a higher level of profitability, “and we believe that further efficiency improvements we are putting in place will yield better results in the future.”
The company also reduced losses associated with the Noa Home e-commerce segment with the closure of the division in 2024. Furthermore, it consolidated its warehouse network, shifting from 27 retail home delivery facilities to 22 by the end of 2024.
Spilman said that the company plans further warehouse consolidation this year, “with no disruption to our customer commitments, while maintaining our four-to-six-week delivery cycles.”
With such cost-cutting measures in place or in progress, he added, the company continues to invest in other areas of the business, such as product development, with three new major whole-home case goods collections hitting retail this year. That includes its Danish modern Copenhagen collection already in its retail stores and two others, Andorra and Newberry, debuting this spring.
And despite the closure of it Noa e-commerce division, he added that the company is investing in bassettfurniture.com. While “still a small percentage of our overall sales, e-commerce revenue is growing, and we’ve had seven consecutive months of sales increases through the end of 2024,” he said, noting that investments in the presentation and overall user experience are driving traffic and higher e-commerce order values, which he said are up 27% annually compared to last year. He added that in-store designers are “telling us that consumers are entering the store with specific items in mind based on their interaction with the brand on our website.”
Other initiatives he noted during the call included:
+ The strengthening of its marketing program to better communicate its price-value equation plus the reintroduction of direct mail as part of its marketing efforts in Q4. As it has already delivered “positive returns,” he said, the company plans to use direct mail more frequently this year to drive retail traffic particularly with major events and major collections.
+ A focus on its Bassett Custom Studio, which Spilman said requires the retailer to dedicate 1,000 square feet to its True Custom upholstery program, with no requirements of backup inventory. “Nine months into this program, we’re excited about the progress. With the many frame, fabric and design options that True Custom offers in a relatively small space, the dealer can generate a high rate of sales per square foot with no inventory requirement beyond the floor samples.” With several dealers already expanding their square footage to the program, he said this “inexpensive commitment to the Bassett brand has great potential, and we plan to continue to increase the number of studios this year.”
+ In addition, the company continues to remodel some stores and is negotiating leases for two others expected to open in late 2025 or early 2026.
He noted that while the 2024 restructuring indeed was challenging, Bassett has become a leaner operation with 11% fewer associates than a year ago.
“With a leaner operating model and new features to our growth plan, we believe Bassett is well positioned for the future,” he said.
