Page 1

Bassett ® Bassett Announces Fiscal Third Quarter Results September 30 , 2021 BASSETT , Va . , Sept. 30 , 2021 ( GLOBE NEWSWIRE ) -- Bassett Furniture Industries , Inc. ( Nasdaq : BSET ) announced today its results of operations for its third quarter ended August 28 , 2021 . Fiscal 2021 Third Quarter Highlights ( Dollars in millions ) Sales 3rd Qtr Dollar % 3rd Qtr Operating Income ( Loss ) % of 2021 2020 Change Change 2021 Sales 3rd Qtr 2020 % of Sales Consolidated ( 1 ) $ 118.9 $ 91.6 $ 27.3 29.8 % $ 4.5 3.8 % $ 2.7 2.9 % Wholesale $ 73.1 $ 55.4 $ 17.7 32.1 % $ 4.5 6.2 % $ 3.3 6.0 % Retail Logistical Services $ 58.6 $ 48.1 $ 10.5 21.8 % 0.9 1.5 % $ ( 1.6 ) -3.3 % $ 21.2 $ 17.8 $ 3.4 19.1 % $ ( 0.5 ) -2.4 % $ 1.0 5.6 % ( 1 ) Our consolidated results include certain intercompany eliminations . See Table 4 , " Segment Information " below for an illustration of the effects of these intercompany eliminations on our consolidated sales and operating income ( loss ) . The disruptions that have permeated the furniture industry since the pandemic restart began fifteen months ago remain with us as we hit the homestretch for calendar 2021. " Business as usual ” this year means raw material shortages , escalating labor and commodity costs , severely compromised logistics capabilities , and an unyielding global virus stubbornly persisting at home and in the industry's manufacturing centers in Asia . The frustration of dealing with these dynamics is certainly wearing on the psyche of our associates and on virtually everyone else in the business . Posting consolidated revenue of $ 118.9 million for the quarter , an increase of 30 % compared to last year and 8.7 % more than 2019 did not come easily . Although there are many factors that currently encumber our financial performance , our team produced operating income of $ 4.5 million , 63 % more than the June - August period last year and 32 % more than in 2019. EPS advanced to $ 0.31 per share against the $ 0.22 recorded in 2020. We are persevering through these challenges and are squarely focused on working with our vendors to schedule adequate production to reduce our large wholesale backlog and offer higher levels of service in the near term . Quarterly wholesale revenue grew by 32 % compared to last year and by 17 % to 2019. The aforementioned daily upheaval of key elements of our supply chain means we left money on the table during the period , whether that came in the form of reduced production schedules or higher incurred costs . Total inventory now stands at $ 73.8 million , about $ 19 million more than at 2020 year end . Over $ 10 million of that increase came in the form of finished goods , which we are attempting to build to increase shipments . Still , our order backlog of $ 92.8 million , led by domestic upholstery and outdoor furniture sales , grew by 7.1 % in the period as incoming orders once again outpaced shipments . Moving into our fourth quarter , our backlog has continued to grow thanks to our strong three - week Labor Day retail sales event , which mirrored last year's results . 2021 and 2020 stand as the best ever years of that holiday's promotions . We have been able to ship above our weekly sales for the past two weeks and hope to continue that trend for the remainder of 2021 . We instituted our fourth general price increase of the year on September 13th . The pace of incoming increases from our suppliers has subsided somewhat from earlier in the year but remains significant . Unfortunately , we have not been able to enact price increases on our goods as fast as we have incurred them from our material providers . The most glaring example is the escalation in ocean freight that has quintupled in the past twelve months , which affects not only our imported products but many of the components that are used in our domestic production . During the quarter , the rising prices on container freight ramped up as the availability of space on the giant vessels that move goods from Asia to the U.S. declined . In effect , the shipping companies are conducting daily auctions for space on their vessels , causing container prices to fluctuate wildly from day to day . This was driven , of course , by the fact that the aggregate demand for goods to move into the U.S. has consistently outstripped the supply of cargo space available to move it for most of 2021. Recent demand of containers has been somewhat tempered by Vietnam's enactment of Martial Law , which has shut down all manufacturing activity in the country in an attempt to curb the Delta virus . Our information tells us that it will be late October before production fully returns , which will begin to affect our shipments in late Q4 and into fiscal 2022 . Our Zenith Logistics subsidiary suffered a $ 500k loss for the period compared to last year's $ 1.0 million profit . Zenith is a microcosm of the overall domestic logistics environment in the U.S. today . An acute shortage of warehousing labor , an issue that rarely confronted us prior to the pandemic , is now a very challenging issue . In an attempt to staff our facilities , we have aggressively raised wages to the extent that the labor line on the Zenith P & L rose 700 basis points for the quarter as a percentage of revenue , thus causing our loss . As with our competitors in the transportation space , the labor shortage has caused a massive backup of transportation equipment that has been sitting on yards waiting to be unloaded throughout the country . An additional response that we have made has been leasing several hundred trailers on the open market to keep goods moving , albeit at a higher expense than originally contemplated . The logjam of freight has also backed up our manufacturing schedules as we have simply run out of room in our facilities to store goods before shipment . To compensate , we aggressively raised prices for Zenith's services back in August , too late to arrest the trend for the quarter . The increases that cover these higher costs will begin to run through our financial statements over the next few months and we have made arrangements to acquire more warehousing space as well .