Closing this plant has been the most difficult decision we have ever had to make. We regret the effect that this will have on the many fine employees who work at our largest hometown plant.
Robert H. Spilman Jr., President and CEO, Bassett Furniture Industries

Bassett Furniture Industries will close its largest manufacturing facility located in its namesake town of Bassett, Virginia. The 323,000 square foot facility will begin shutdown within 90 days. The closure will affect approximately 280 employees or 15 percent of the Company’s workforce. Bassett plans to source the majority of the products currently produced at this facility from overseas suppliers, to continue to produce certain custom bedroom products domestically and to discontinue providing certain slower selling items. Over the past decade, Bassett, like most domestic wood furniture companies, has shifted production overseas to reduce costs.

“Closing this plant has been the most difficult decision we have ever had to make,” said Robert H. Spilman Jr., president and chief executive officer. “We regret the effect that this will have on the many fine employees who work at our largest hometown plant. We recognize that they have worked hard to meet the Company’s goals and this decision is in no way a reflection upon them. They have been extremely dedicated and loyal employees for many years and we will provide them with assistance to make the transition as smooth as possible under the circumstances. While we regret the decision, we also believe this is a needed step in our transformation from being primarily a domestic furniture manufacturing company to a retailer, manufacturer and marketer of branded home furnishings. It will allow us to more fully focus on our retail and product development strategies currently aimed at driving increased sales throughout our store network with greater value for our customers in today’s very competitive marketplace. We believe the end result will be a leaner, more profitable company that provides better returns for our shareholders.”

Bassett will continue to operate two domestic manufacturing facilities which allow it to provide custom furniture solutions in both upholstery and wood within 30 days.

Bassett also announced that its first quarter, 2007 earnings will be negatively impacted by lower sales levels and reduced margins, compared to the year ago period. First quarter sales for the three month period ended February 24, 2007, are expected to be approximately 16-18% below the same period last year and approximately 5-6% below the fourth quarter of 2006. This shortfall is primarily due to continued soft furniture retail conditions which have impacted both retail sales and wholesale shipments. The decline against the same period last year was also partially due to a decline in year over year wholesale shipments to the Army/Air Force Exchange and to the sale of the Company’s Weiman operation at the end of April 2006.

“Like many other retailers, we have seen a continued softening in consumer traffic amidst the backdrop of a nationwide housing slump, higher interest rates and higher gasoline prices all serving to limit the discretionary spending of many consumers,” said Mr. Spilman. “During this period of retail sluggishness, we will continue to challenge all of our fixed operating costs to ensure that our cost structure is appropriate for our current business levels. We believe the Company is focused on the right things to weather this period and to emerge stronger when overall conditions improve.”