Bassett Furniture manufactures living, dining, bedroom, outdoor and upholstered furniture in Virginia and North Carolina.
BASSETT, Va. – Furniture manufacturer and retailer Bassett announced a restructuring plan last quarter, with the goal to right-size its cost structure and prepare for topline growth. The plan comes amid an industry downturn and a string of losses for Bassett, which just reported a loss in the third quarter this week.
The plan covers five main points, which CEO Rob Spilman detailed in a recent conference call.
Point 1: Drive organic growth
“We are remaking a significant portion of the product line in the upcoming quarters to address new styling and price point opportunities,” Spilman said. In case goods, the company will begin a launch of three major imported collections this fall, which include bedroom, dining, occasional and entertainment. It also will expand its U.S.-made Origins dining program.
“In upholstery, strong sales in our domestic motion assortment warrant expansion of the category, especially in our recliner line,” Spilman said, adding that a new leather option to the company’s true custom program produced strong sales.
“We have a targeted outreach to the interior design community underway as well, recognizing the growing importance of this channel throughout the industry. For the second consecutive year, we will operate a designer showroom at InterHall and High Point at the fall market in two weeks.”
Point 2: Consolidate U.S. wood manufacturing
In August, Bassett completed a plan to consolidate two U.S. wood manufacturing plants (in Bassett and Martinsville, Va.) into one primary location supported by a small satellite operation.
“As expected with any rationalization, there was some disruption in August during the transition, which impacted margins,” he said. “This consolidation is now complete, and we are seeing improved overhead absorption with operating one location.”
Point 3: Optimize inventory and drop unproductive lines
“We are continuing on this path as part of the domestic wood plant consolidation strategy,” Spilman said. “As expected, this reduction of clearance and slow-moving products affected margin in the third quarter, but it’s designed to strengthen the overall productivity of our line and of our stores.”
Point 4: Reduce costs in both wholesale and retail
“In retail, we are consolidating warehouse operations after the closure of three warehouses during the second quarter,” Spilman said. “This quarter, we moved facilities in East Texas and Oklahoma into our North Texas home delivery center and also consolidated two Virginia facilities into one. This process will continue until we realize the completion of our new footprint.
“In wholesale, in addition to the aforementioned wood plant consolidation, we have completed our plan to move out of a major West Coast wholesale distribution center, which resulted in a $1.2 million charge this quarter.
“On the capital side, we are beginning a program to refurbish certain stores within the retail fleet with the recently completed Greensboro, N.C., store being the first.”
Point 5: The closure of Noa Home
In the second quarter, Bassett opted to close Noa Home, the mid-priced Canadian e-commerce furniture retailer the company acquired in September 2022. Bassett had acquired with the hopes of increasing the company’s online presence.
“This work is still in progress as we planned, and Noa’s operations and remaining inventory will wind down by the end of this current fiscal year,” Spilman said.
E-commerce sales are improving though, increasing by double digits in the quarter from last year, according to Spilman, but remain a small portion of retail revenue.
“Getting these pieces in place, along with the launching of new products and services I mentioned earlier, are expected to better position ourselves for the eventual turnaround and consumer demand,” he concluded.
See Bassett’s third quarter earnings results here.
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