BASSETT, Va. - Bassett Furniture Industries, Inc. (NASDAQ:BSET), a prominent home furnishings manufacturer, has implemented workforce reductions as part of an ongoing restructuring plan aimed at reducing costs and aligning the company’s operations with current business levels. The company, headquartered in Bassett, Virginia, announced that the workforce cuts, which include layoffs and retirements, are expected to save approximately $2.5 million annually.
These reductions add to the company's overall reduction of 11% in headcount over the past year. Bassett also anticipates incurring a severance charge of about $500,000 in the current quarter due to these layoffs.
The workforce reduction is part of a broader five-point restructuring plan that Bassett announced on July 10, 2024. The plan includes initiatives such as consolidating U.S. wood manufacturing operations, optimizing inventory, and closing the Noa Home e-commerce business. The company projects that the complete restructuring will result in annual savings of $8.0 million to $9.0 million.
Rob Spilman, Chairman, and CEO of Bassett, expressed that while the decision to reduce the workforce was challenging, especially as it affected long-standing employees, it is a necessary step towards improving the company's financial health. He also noted that despite the lack of a significant increase in orders, the company has started to see improved results from the actions already taken.
Spilman highlighted the positive reception of new products at the Fall High Point Furniture Market and the company's anticipation of these products reaching retail floors in early 2025. He also mentioned the successful consolidation of Virginia-based wood production facilities and the growth in e-commerce sales over the past five months.
Bassett Furniture Industries has a network of 87 company- and licensee-owned stores and a traditional wholesale business with over 700 accounts. The company is known for its custom-built, on-trend furniture styles, free in-home design visits, and coordinated decorating accessories.
This announcement is based on a press release statement from the company and reflects the company's current strategy and financial outlook.
InvestingPro Insights
Bassett Furniture Industries' recent workforce reductions align with the financial challenges reflected in InvestingPro data. The company's revenue growth for the last twelve months as of Q3 2024 stands at -18.29%, underscoring the need for cost-cutting measures. This decline is further emphasized by an InvestingPro Tip indicating that analysts anticipate a sales decline in the current year.
Despite these challenges, Bassett maintains a strong commitment to shareholder returns. An InvestingPro Tip highlights that the company pays a significant dividend to shareholders, with a current dividend yield of 5.56%. This is particularly noteworthy given that Bassett has maintained dividend payments for 14 consecutive years, demonstrating resilience in the face of financial headwinds.
The restructuring plan's projected annual savings of $8.0 to $9.0 million could significantly impact the company's profitability. Currently, Bassett's operating income margin stands at -2.93%, indicating the urgency of these cost-saving initiatives.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Bassett Furniture Industries' financial health and future prospects.
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