Bassett Furniture Industries Inc. announced today the financial results for its first fiscal quarter ended March 1, 2003.

Sales for the first quarter of 2003 were $73.3 million, down 13.6% from first quarter 2002 levels. The decrease was due to industry wide soft retail conditions as well as the previously disclosed significant sales decrease with JCPenney. Also, the first quarter of 2002 included an additional week of shipments compared to fiscal 2003 (2002 was a 53 week fiscal year).

Gross margin improvement for the quarter was driven by the inclusion of corporate store gross profit, cost reductions initiated earlier this year, and better margin performance in both the Upholstery and Import Divisions. The Company achieved the margin improvement despite significantly lower manufacturing shipments in the first quarter of 2003. The increase in selling, general and administrative expense, both in terms of dollars and as a percentage of sales, is primarily reflective of the inclusion of corporate store results for the first quarter of 2003.

The Company reported a loss for the quarter of $1.3 million or $(.11) per share after taking a previously announced $3.2 million charge related to closing the Company’s Dublin, Ga., wood manufacturing facility. Excluding the charge, net income was $1 million or $.08 per share compared to $2.9 million or $.25 per share in the first quarter of 2002.

Robert H. Spilman Jr.
President and chief executive officer
“Business conditions continue to be challenging. The cost reduction actions we have taken have helped to offset lower sales levels and will position us for greater profitability in the future. We continue to be focused on our stores – both adding additional stores and improving our overall program. I am particularly excited about the new product introductions for the coming months, especially ‘American Hewn’ which will debut at next month’s furniture market.”

The Bassett Furniture Direct (BFD) retail store program continues to grow with 88 stores currently in operation. Licensees opened four stores in the first quarter and the Company expects licensees to open six stores in the second quarter and a total of 20 new stores in fiscal 2003. Sales to BFD stores were 45% of total Company sales in 2002 and are planned to be approximately 55% of total Bassett sales in 2003. Sales to BFD stores were 50% of sales for the first quarter of 2003.

The Company borrowed $4 million during the first quarter of 2003 to support increased inventory levels needed by the Company’s growing Import Division in addition to funding an increase in accounts receivable. The increase in accounts receivable is reflective of the general economic downturn. The Company’s debt to capital ratio was 3% at March 1, 2003.

The Company received proceeds of $17 million from its Bassett Industries Alternative Asset Fund Investment during the quarter and reinvested $12 million of these funds with another money manager. The remaining $5 million was used to fund capital spending, BFD growth, and working capital.