Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 6, 1992 TAG: 9202060152
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: BASSETT LENGTH: Medium
BASSETT FURNITURE STAYS STEADY
Bassett Furniture Industries came through a tough year with only a slight decrease in operating earnings. But the slump is not over, Chairman Robert Spilman told the company's stockholders Wednesday.Spilman said furniture shipments in December and January were ahead of year-earlier paces, and they promise to be up this month. "It's not getting any worse," he said at the company's annual meeting.
For the year ending Nov. 30, Bassett reported an 8.5 percent drop in sales from $435.6 million to $401.6 million. Operating earnings, after accounting changes required by stock-market fluctuations, came to $18.4 million or $2.57 a share, down 6.6 percent from $19.7 million or $2.67 a share.
Bassett, Spilman said, has done well in a weak economy, "but it's not over." The company's outlook, according to its annual report, is that "current economic conditions will not improve any time in the immediate future and that this severe environment will continue to have an adverse effect on the company's financial operating results."
The big problem, Spilman said its "finding dealers we can sell to." Some of the company's major customers, such department store chains as Federated Department Stores Inc., Allied Stores Corp. and R.H. Macy & Co. Inc., are in bankruptcy and they've left a void, Spilman said. Such bankruptcies left Bassett with credit losses of more than $2.2 million last year.
Montgomery Ward & Co. Inc., after 15 years out of the case-goods market, recently gave Bassett an order for $5 million, he said. "But they notified us last week that they were getting out of the market, and there goes five to 10 million dollars worth of business," Spilman said.
Positive signs for the furniture industry include a rise in housing starts and low mortgage interest rates, he reported.
Spilman said Bassett has spent more than $19 million on machinery and buildings in the last two years, preparing the company "to be one of the major survivors when this business cycle is over."
Management decided "the timing was perfect" to fine-tune these plants for full operations when the recession is over, he said.
Spilman said Bassett will aggressively pursue acquisition of other furniture companies this year. "There are dead bodies out there [in the recession], not just small companies . . . but we want to be sure there's a natural fit," he said.
The company's fastest-growing segment is its new motion division, two plants in Mississippi where reclining chairs and sofas are manufactured, Glenn Hunsucker, president and chief operating officer, said.
Newman Bush, vice president in charge of that segment, said Bassett ranked 10th in reclining chair sales last year. He predicted 1992 sales of reclining furniture will grow from $27 million last year to $45 million-$50 million in 1992.
As Bassett grows, Spilman said, it's ironic that the expansion is not in Henry County where the company "has its roots and where we have prospered."
After reporting that a Mississippi town bought land for Bassett to locate a recliner factory, he said, "I wish the local governments [in Henry County] had an opportunity to see the support others give. . . . The thing to do [here] is to bring in new business and not do anything with the old."
Spilman said Bassett would like to expand in the area where it has operated since 1902.
In a restructuring move, the company closed a case goods plant in Bassett and took a $14.3 million charge in 1990.
In a costly step last year, he said, the company got out of the hotel-motel contract furniture business. The lodging industry has been in a slump, partly caused by overbuilding.
Stockholders re-elected 14 directors. The seat held by A.L. Philpott, the House of Delegates speaker who died last year, was not filled.
Directors, meeting afterward, declared the regular quarterly dividend of 25 cents a share, payable March 2 to shareholders on Feb. 19.
The board re-elected officers and promoted J.C. Philpott to executive vice president-manufacturing, wood products, and Bush to senior vice president, upholstery and divisions.