Monday, June 28, 2004

Shares of Bassett Furniture Industries Inc. reached their highest price in more than a month after the company announced a big jump in earnings and improved sales of its children’s products.

The Bassett, Va., maker of wood furniture said its net income rose to $1.89 million (16 cents per share) in the second quarter of this year, up from $1.19 million (10 cents) in the comparable quarter of 2003.

Shares rose 87 cents yesterday to close at $19.40, their highest price since May 27. Shares have climbed $1.62 since earnings were announced Thursday.

The company said it is seeing increased business from its Furniture Direct retail stores. Shipments to the stores were 11 percent higher than at this point last year and make up 57 percent of the company’s total wholesale shipments, compared with 52 percent in the first half of 2003. Bassett will expand its number of stores this year to 118 from 104.

Bassett reported overall sales of $80.35 million for the second quarter, up from $76.86 million in the like period of 2003.

Bassett also said it has seen an increase in demand for its furniture for children. The company does not break down sales figures by product, but the children’s furniture industry has grown to a more than $9.4 billion industry, according to Kids Today, a magazine that covers the children’s furniture industry.

The magazine said sales of children’s furniture rose 32 percent between 1998 and 2002, the last year statistics were published.

In addition, record-low mortgage interest rates have allowed people to refinance homes and free up cash for updating their interiors, and much of that money has been spent on furniture for children’s rooms, several furniture companies have reported.

Bassett appears to have recovered from a slump in the furniture-manufacturing industry that forced it to close several plants in 2002 and lay off more than 1,000 workers. Bassett was hurt further by a major drop in sales to JC Penney stores last year. The department store was once responsible for as much as 15 percent of Bassett’s sales, but now accounts for less than 3 percent.

The company said it was pleased with a preliminary ruling on June 19 from the Commerce Department that placed duties of 8 percent to 11 percent on imports of Chinese wood bedroom furniture. The ruling was designed to prevent Chinese furniture makers from selling goods at ultralow prices in a practice called “dumping,” which has led to the suppression of prices for all furniture makers.

“We were fairly satisfied with the ruling … and do not believe [it] will have a significant impact on our overall results,” Robert H. Spilman Jr., Bassett’s president and chief executive officer.

Bassett said it would like to improve its operating margins, particularly in its wood-manufacturing division, which the company said has been slow to improve its sales over the past year.

Bassett shareholders as of Aug. 17 will receive a dividend of 20 cents per share on Sept. 1.

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