• Total Consolidated Revenue: Declined $10.4 million or 11% in Q4 2024 compared to Q4 2023.
• Wholesale Sales: Decreased 14% in Q4 2024.
• Retail Sales: Decreased 8.4% in Q4 2024 through company-owned stores.
• Consolidated Gross Margins: Increased 230 basis points in Q4 2024.
• Operating Income: $900,000 in Q4 2024 compared to a loss of $4.5 million in Q4 2023.
• Wholesale Backlog: $21.8 million at the end of Q4 2024.
• Retail Backlog: $37.1 million at the end of Q4 2024.
• Operating Cash Flow: Generated $6.4 million in Q4 2024.
• Cash and Short-term Investments: $59.9 million at the end of Q4 2024.
• Capital Expenditure: $5.2 million in fiscal 2024.
• Projected Capital Investment for 2025: Between $8 million and $12 million.
• Dividends and Share Buybacks: $4.9 million in dividends and $1.4 million in share buybacks during 2024.

• Warning! GuruFocus has detected 4 Warning Sign with BSET.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bassett Furniture Industries Inc (NASDAQ:BSET) introduced three new collections, including the successful Copenhagen collection, which are expected to transform retail merchandising.
• E-commerce revenue is growing, with seven consecutive months of sales increases and a 27% annual increase in order values.
• The company has strengthened its marketing program, with positive early responses to its price and value messaging.
• The Bassett Custom Studio program is showing promise, with several dealers expanding their dedicated space, indicating strong sales potential.
• Bassett Furniture Industries Inc (NASDAQ:BSET) was named Best Custom Upholstery Company in the industry, highlighting its strong reputation and quality.

Negative Points

• Total consolidated revenue declined by 11% in the fourth quarter, with wholesale sales down 14% and retail sales down 8.4%.
• The company experienced a challenging year in 2024, with significant restructuring and a reduction of 11% in its workforce.
• Margins are expected to moderate in 2025 due to more aggressive pricing strategies in retail.
• Natural disasters, such as hurricanes and wildfires, impacted operations and dealer business in affected areas.
• Despite cost reductions, SG&A expenses as a percentage of sales increased due to the deleverage of fixed costs from lower sales volumes.

Q & A Highlights

Q: Can you provide an update on the trends in written sales and overall business performance since the election and into the first two months of the new fiscal year? A: Robert Spilman, CEO, noted that there was a brief period of increased activity around Black Friday following the election. However, since then, sales have settled back to previous levels, with a slight improvement. December sales were up mid-single digits, indicating a modest positive trend.

Q: How many Bassett Design Studios are currently operational, and what are your expectations for the number by the end of fiscal 2025? A: Robert Spilman, CEO, stated that there are currently around 43 or 44 Bassett Design Studios. While he did not specify an exact target for the end of fiscal 2025, he mentioned that they have been opening about five studios per month and expect significant growth in dealer participation.

Q: Will you be highlighting the true custom upholstery program more in your marketing efforts? A: Robert Spilman, CEO, confirmed that they plan to emphasize their custom upholstery capabilities more in marketing, including trade advertising. They aim to communicate the strength of their custom offerings, which have been a hallmark of their retail concept, to a broader audience.

Q: Given the impressive gross margins in Q4, how should we think about potential gross margins in the future, especially when the housing market recovers? A: Robert Spilman, CEO, indicated that while current margins are near all-time highs, they do not expect significant increases even if the housing market recovers. The focus will be on offering value and leveraging volume to improve operating margins rather than further increasing gross margins.

Q: Have natural disasters like hurricanes and wildfires impacted your business operations? A: Robert Spilman, CEO, mentioned that the North Carolina hurricane in September caused temporary closures of operations and affected their dealer base in the area. However, the California wildfires had minimal impact, with only one store shutting down for a few days.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.