Bassett(US:BSET)2021-06-30 16:00Financial Performance - Total sales revenue for the quarter ended May 29, 2021, was $124.059 million, a significant increase from $63.801 million for the same period in 2020, representing a growth of 94.3%[9] - Net income for the quarter ended May 29, 2021, was $5.974 million, compared to a net loss of $20.352 million for the same quarter in 2020, marking a turnaround in performance[9] - Basic earnings per share for the quarter ended May 29, 2021, was $0.60, compared to a loss of $2.04 per share in the same quarter of the previous year[9] - Income from operations for the three months ended May 29, 2021, was $8,379, a significant recovery from a loss of $31,229 in the prior year[106] - Income from operations for the six months ended May 29, 2021, was $14,400, a significant recovery from a loss of $29,019 in the same period last year[106] - The total sales revenue for the six months ended May 29, 2021, was $237.732 million, compared to $175.921 million for the same period in 2020, reflecting a growth of 35.1%[9] Expenses and Costs - Selling, general, and administrative expenses increased to $50.001 million for the quarter ended May 29, 2021, from $37.730 million in the same quarter of 2020, reflecting a rise of 32.5%[9] - The cost of furniture and accessories sold for the quarter was $52.911 million, up from $29.452 million in the prior year, indicating an increase of 79.8%[9] - SG&A expenses as a percentage of sales decreased to 41.2% for the six months ended May 29, 2021, down from 51.2% in the previous year[107] - Cost of furniture and accessories sold as a percentage of total revenue improved to 42.6% for the six months ended May 29, 2021, compared to 42.5% in the prior year[107] Inventory and Assets - Total inventories as of May 29, 2021, amounted to $67,301, an increase of 22.5% from $54,886 on November 28, 2020[42] - The wholesale segment's reserve for excess quantities and obsolete inventory decreased to $3,155 from $3,421, while the retail segment's reserve increased to $1,119 from $1,101, resulting in a total reserve of $4,274[43] - The balances of assets recognized for shipping revenues earned but not billed were $962 as of May 29, 2021, compared to $783 on November 28, 2020[79] - The company has a substantial investment in retail real estate, with a net book value of $17,199 for properties totaling 201,096 square feet as of May 29, 2021[152] Dividends and Shareholder Returns - The company declared regular dividends of $0.125 per share for the quarter ended May 29, 2021, consistent with the previous year[9] - Stock compensation expense for the quarter ended May 29, 2021, was $48, compared to $124 for the same quarter in 2020, reflecting a decrease of 61.3%[62] - The company granted 7,105 restricted shares with an aggregate fair value of $175 to non-employee directors under the 2021 Stock Incentive Plan[59] Operational Challenges - The company continues to face uncertainties related to the ongoing impact of the COVID-19 pandemic, including potential labor shortages and supply chain disruptions[27] - Supply chain disruptions have caused significant delays in order fulfillment, resulting in abnormally high backlogs, with inflationary pressures leading to multiple wholesale price increases[102] - The company faced ongoing logistical challenges due to COVID-related labor shortages and supply chain disruptions, impacting order fulfillment and increasing backlogs[132] Sales Performance - Consolidated net sales of furniture and accessories for the three months ended May 29, 2021, were $109.997 million, compared to $53.000 million for the same period in 2020, representing a 107% increase[80] - Wholesale orders for the first half of fiscal 2021 increased by 90% compared to the same period in 2020 and represented a 36% increase compared to pre-pandemic levels in the first half of fiscal 2019[102] - The Bassett Custom Upholstery segment generated $61.338 million in total sales for the three months ended May 29, 2021, compared to $29.348 million for the same period in 2020, reflecting a 109% increase[80] - The Bassett Leather segment reported total sales of $18.236 million for the three months ended May 29, 2021, compared to $8.500 million for the same period in 2020, marking a 114% increase[80] - Retail sales for the quarter ended May 29, 2021, totaled $62,483, representing an increase of $29,312 or 88.4% compared to $33,171 for the same period in 2020[136] Financial Position and Liquidity - The company has $63,491 in cash and cash equivalents as of May 29, 2021, indicating sufficient liquidity to fund operations for the foreseeable future[148] - The bank credit facility provides a line of credit of up to $25,000, with $3,181 outstanding under standby letters of credit, leaving $21,819 available[149] - The effective tax rate for the quarter ended May 29, 2021, was 25.8%, differing from the federal statutory rate of 21% primarily due to state income taxes and other permanent differences[30] Future Outlook - The company continues to evaluate store performance, acknowledging a decline in retail traffic over the past three years and the need for potential store count adjustments[98] - The company plans to emphasize its "Made in America" story and utilize locally harvested materials, rebranding its premier Custom Upholstery line under the Bench Made program[99] - The company opened an additional upholstery manufacturing facility in Newton, NC, with a production area of 123,000 square feet, dedicated to the "Everyday Value" product line[103]