Bassett Furniture Industries, Incorporated

Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Daniel, CFO. Please go ahead.

Thank you, Gigi, for the introduction. Welcome to Bassett Furniture's earnings call for the fourth quarter ending November 30th, 2024. Joining me today is our chairman and CEO, Rob Spillman. We issued our news release yesterday after the market closed, and it's available on our website. After today's remarks about our quarter, we will open the call up for a Q&A session. We will post the transcript of the call on our investor site within 48 hours of this call. During today's call, certain statements we make may be considered forward-looking and inherently involve risks and uncertainties, that could cause actual results to differ materially from management's present view. These statements are made pursuant to the safe hardware provision of the Private Securities Litigation Reform Act of 1995. The company cannot agree or cannot guarantee the accuracy of any forecast or estimate, nor does it undertake any obligation to update such forward-looking statements. For more information, including important cautionary notes, Please see the company's annual report on Form 10-K for the fiscal year ending November 30, 2024, to be filed next week. Other filings with the SEC describing risks related to our business are available on our corporate website. Now I'll turn it over to Rob for comments about the fourth quarter. Rob.

Thank you, Mike. Good morning, everyone, and thank you for joining us today. Our industry has long been tied to housing and with persistent sluggish home sales, depleted levels of housing inventory, and higher mortgage interest rates, furniture sales lagged again in the fourth quarter. We took appropriate steps in 2024 to right-size our business through a comprehensive restructuring plan that we announced in July and we've been executing since then. We are pleased to have returned Bassett to profitability for this quarter. While the major components of our restructuring plan were complete at the end of November, we continue to evaluate opportunities for increasing efficiency, leveraging our cost structure, and influencing our mindset to run a leaner business on an ongoing basis. We focus a significant amount of time on analyzing how we can run our business smarter while we navigate the ongoing challenging housing environment. In 2024, existing home sales were at the level they were in 1995, 30 years ago. Our entire industry is in search of the elusive bottoming out of demand to enable better planning of our business. Industry forecasts point to only a slight uptick in existing home sales for 2025, so we prepared our strategic plan to weather another year of tepid demand. Let me now turn to more details on the results of the fourth quarter. While consolidated sales were down by 11% for the quarter, written retail sales decreased by only six-tenths of 1%. We were pleased with our performance over the two-week Black Friday promotion, where retail written sales were up 25.1% over last year's promotion, generating strong customer deposits and a better backlog to begin 2025. Wholesale orders were down by 3.1% for the quarter, while wholesale orders received from corporate stores increased by 1.8% for the period. The majority of this quarter's wholesale decline was attributed to the comparison to last year's aggressive inventory reduction program of club level. Total outdoor orders for this year's fourth quarter, although representing only 7.6% of the wholesale segment, nevertheless grew by an exciting 33%. As mentioned, the primary components of our restructuring plan have been implemented. We've proven we can run on leaner inventory, which was down more than $8 million on a consolidated basis at quarter end compared to last year. Wholesale inventory was down $6.5 million. The majority... was due to domestic wood plant consolidation and club level. Benefits of rightsizing our operating costs began to surface in the fourth quarter. The remaining domestic wood manufacturing facility operated at a higher level of profitability in the period, and we believe that further efficiency improvements we're putting in place will yield better results in the future. The losses from NOAA Home, our e-commerce business headquartered in Canada, were reduced in the quarter and are a thing of the past because the business is now closed as planned. Other gains in increased efficiency and improvements in our P&L have come from our warehouse consolidation. We've moved from 27 retail home delivery facilities to 22 at year's end, and have begun to see the associated financial benefits. We plan for further warehouse consolidation in 2025 with no disruption to our customer commitments while maintaining our four to six week delivery cycles. We've taken bold steps to drive newness and innovation into our business and our organization is energized about 2025. In addition to all the cost-cutting, we embarked on an extensive review of our product line last year and began significant makeovers of our assortment. We planned three major whole-home case goods collections to hit the retail market in 2025. The first, the Danish Modern Inspired Copenhagen Collection, has been in our retail stores for six weeks and is performing very well already. Two additional collections, Andorra and Newberry, will debut this spring. All three of these collections cover bedroom, dining, occasional, and entertainment options and will be transformational in terms of our retail visual merchandising. The investments that we've made at BassettFrencher.com to continue to change and benefit our business. Still a small percentage of our overall sales, but e-commerce revenue is growing. and we've had seven consecutive months of sales increases through the end of 2024. Our investments in the presentation and the user experience are driving traffic and higher e-commerce order values, which are up 27% annually compared to last year. And our in-store designers are telling us that consumers are entering the store with specific items in mind based on their interaction with the brand on our website. Fourth quarter, we've strengthened our marketing program and began communicating more about the price and value of our furniture. Early response indicates this messaging is resonating with customers and price value will be a focus for 2025. We reintroduced direct mail in our marketing mix in the fourth quarter, and it delivered positive returns. We plan to use direct mail more frequently in 2025 to drive retail traffic, particularly for major events and new product launches like Copenhagen, Andorra, and Newberry. Approximately 80 percent of our wholesale revenue on an annual basis comes from one of our dedicated distribution concepts. The latest is the Bassett Custom Studio, which requires the independent furniture retailer to dedicate a prescribed 1,000-square-foot footprint to our True Custom upholstery program with no requirements of backup inventory. Nine months into this program, we're excited about the progress. With the many frame, fabric, and design options that True Custom offers in a relatively small space, the dealer can generate a high rate of sales per square foot with no inventory investment beyond the floor samples. This program is working, and several dealers have already expanded the square footage dedicated to it. This inexpensive commitment to the Bassett brand has great potential, and we plan to continue to increase the number of studios this year. I also want to mention the pride that our team feels in being named Best Custom Upholstery Company in the industry as a result of Furniture Today's annual reader survey. This recognition underscores the accomplishments of so many Bassett teammates to earn the respect of those who really know the furniture business, and it reinforces the quality reputation that customers equate with our brand. I will not deny that 2024 in general and the implementation of the restructuring was challenging. We made difficult decisions, but as it changed our mindset to run as a smaller company. A year in, we had 11% fewer associates than a year ago. Our priority is to continually review our operations to ensure that we are driving efficiency, as well as delivering innovation and newness for customers. We are investing in remodeling some stores, and we are negotiating leases for two others. which are expected to open in late 2025 or early 2026. We don't have a crystal ball on projections for where the housing market or mortgage rates this year will be. As I said earlier, industry data points to similar trends to last year, but with a leaner operating model and new features to our growth plan, we believe Bassett is well positioned for the future. On January 16th, we announced that our board approved our regular quarterly dividend of 20 cents per share, and we remain committed to shareholder returns through dividends and opportunistic share repurchases. Now, I'll turn things back over to Mike for more details on our financials.