The fourth quarter was tough for our industry and Bassett was no exception,” said Robert H. Spilman, Jr., President and Chief Executive Officer.
Robert H. Spilman, Jr., President and CEO, Bassett

Bassett Furniture sales for the fourth quarter of 2006 were $76.5 million, down 13% from fourth quarter 2005 levels. “The fourth quarter was tough for our industry and Bassett was no exception,” said Robert H. Spilman, Jr., President and Chief Executive Officer. “Although retail conditions continue to be challenging, we are committed to investing in the future of the Bassett store program and the Bassett brand. We will, however, continue to examine our cost structure in light of the cost of our new initiatives and the current retail environment.”

On a wholesale basis, net sales were $65.9 million for the fourth quarter of 2006, 14% below the $77.1 million sales level attained in the fourth quarter of 2005. For the year, wholesale sales were $284.8 million, 5% below sales levels attained in 2005. For 2006, 72% of wholesale shipments were to BFDs compared to 67% in 2005. Approximately 44% of wholesale shipments were imported products as compared to 35% in the fourth quarter of 2005. Overall, the segment’s gross margins increased one percentage point in 2006 compared to 2005 and year-over-year operating earnings increased $2.5 million. This improvement was primarily driven by an improved mix of imported products and the performance of the upholstery division. Upholstery shipments and operating earnings continued to improve due to the retail acceptance of our custom programs and the new imported leather products introduced over the past several years.

The Bassett Furniture Direct retail store program had 134 stores (107 licensed and 27 corporately owned) in operation at the end of the fourth quarter. The Company opened one store and two licensed stores were closed during the fourth quarter. Overall retail conditions and the Company’s initiative to develop a new store prototype have temporarily slowed store count growth. The Company expects licensees to open four to six stores in fiscal 2007.

Retail sales for the fourth quarter of 2006 were $21.5 million, 10% below fourth quarter of 2005 levels. For the year, sales were $84.4 million, up $13.9 million from 2005. The increase in sales for 2006 is due to the stores the Company acquired during 2005.

Bassett’s 27 corporate stores continued to experience relatively soft conditions at retail and incurred an operating loss of $3.4 million for the fourth quarter of 2006, compared to loss of $1.6 million in the fourth quarter of 2005. Net sales and margins were lower than planned primarily due to the overall soft retail conditions, selling of selected products at clearance prices in order to prepare for the arrival of new products and featured catalog products, and promotions geared to respond to the overall soft market conditions. As previously discussed, changes being made to drive more traffic, improve staffing, and streamline operations are taking longer than anticipated to implement. The Company has made additional changes in both the leadership and pricing structure of the Company-owned stores which it believes will lead to better performance in 2007.