UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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Bassett Furniture Industries, Incorporated
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BASSETT FURNITURE INDUSTRIES, INCORPORATED
Bassett, Virginia
Presentation to Certain Investors
Beginning March 17, 2008, Robert H Spilman, Jr., President and Chief Executive Officer, Barry C. Safrit, Senior Vice President and Chief Financial Officer, and Jason W. Camp, Senior Vice President, Retail, will be making presentations to certain Institutional Investors of Bassett Furniture Industries, Inc. regarding Bassett’s current retail growth strategy. A copy of the presentation is presented below.
Certain of the statements in the presentation that follows, particularly those preceded by, followed by or including the words “believes,” “expects,” “anticipates,” “ intends,” “should,” “estimates,” or similar expressions, or those relating to or anticipating financial results for periods beyond the fiscal year 2007, constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the protection of the safe harbor for forward looking statements contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results or future actions to differ materially from those indicated in the forward looking statements. Expectations included in the forward-looking statements are based on preliminary information as well as certain assumptions which management believes to be reasonable at this time. The following important factors affect Bassett and could cause actual results or future actions to differ materially from those indicated in the forward looking statements: delays or difficulties in converting some of its non-operating assets to cash, tax planning considerations, negotiations with third parties who have an interest in some of the non-operating assets in which the Company has an interest, economic, competitive, governmental and other factors identified in Bassett’s filings with the Securities and Exchange Commission, and the effects of national and global economic or other conditions and future events on the retail demand for home furnishings.
 1 Bassett Investor Presentation March 2008 NASDAQ: BSET |
 2 Agenda Business Overview & Industry Update Retail Growth Strategy Rollout & Repositioning Plan Balance Sheet Robert Spilman/President & CEO Jason Camp/SVP, Retail Barry Safrit/SVP & CFO |
 3 Business Overview 130 stores – 32 corporate & 98 licensed 75% of sales through store network 3 regional distribution centers Wholesale sales nearly 60% import, 40% domestic 2 domestic manufacturing facilities focused on executing our unique merchandising strategy 1,420 employees – 570 in corporate retail stores Becoming a hybrid between specialty & furniture store Offering alternative to more expensive competition Local design center Ethan Allen Thomasville |
 4 Furniture Industry Update From 1999 – 2007, China’s furniture exports have grown 640% from approximately $3bn to over $20bn Mass merchandisers (e.g., Wal-Mart, Target, Costco) have taken share and pressured margins of pure Home Furnishings retailers Slowdown within the housing industry has put added pressure on the home furnishings industry Source – U.S. Dept. of Labor |
 5 China Furniture Exports & U.S. Furniture Employment 1999 - 2007 - 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 '99 '00 '01 '02 '03 '04 '05 '06 '07 500 550 600 650 700 750 Chinese exports data per the China National Furniture Association. U.S. employment data per the U.S. Bureau of Labor Statistics.
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 6 Home Furnishing Consolidation Difficult industry conditions have led to consolidation 209 bankruptcies since 1999; 171 in the last five years (*) Numerous M&A transactions November 8, 2007 - Levitz Furniture Inc. declared its third bankruptcy in ten years The furniture chain is undergoing outright liquidation of its assets February 4, 2008 – Wickes Furniture, retail furniture chain with 40 stores across the country, filed for Chapter 11 bankruptcy (*) Source - CapitalIQ |
 7 Industry Undergoing Change Numerous domestic manufacturing closures; companies shift to outsourced production Renewed retail focus with dedication to improving/attaining profitability, store presentation and improved customer service New financial strategies Capital raise (e.g., STLY’s $25m private placements) Credit facilities refinanced (e.g., FNB and LZB) Dividend decreases (e.g., FBN 75% decrease and LZB 67% decrease) Share repurchase authorization and purchase (e.g., ETH, HOFT, LEG and STLY) |
 8 Retail Growth Strategy Building a Specialty Furniture Retail Brand Strengthen retail talent Execute new product strategy A new store prototype Modernize marketing effort Strengthen our Design Services Build national consistency in our network |
 9 Strengthen Retail Talent Retail Leadership Hired Jason Camp as SVP Retail Restoration Hardware Hired Barbara Kurgan as Creative Advisor Martha Stewart, Elle Decor Upgraded talent in key retail leadership roles. Retail Store Talent Investing heavily in recruitment and development of high quality retail talent Leveraging monthly sessions of Bassett University for both retail managers and design consultants |
 Dated Traditional Current Modern Contemporary $$$ $$ $ Updated Styling / Value Positioning |
 11 New Product Strategy Become a style leader within 4 lifestyles Strengthen offering in custom furniture Create a clear price / value point of differentiation from EA, Thomasville and Pottery Barn Strengthen design capabilities with a fully coordinated assortment Grow accessory / drapery business |
 12 A New Store Prototype Create 3 custom workshops Upholstery, Dining and Storage Showcase our 4 lifestyles More residential scale and design Create authority in Design Services Create a Home Entertainment destination Sectionals, Motion and Wall Units Build authority in Accessories Drapery, Rugs, Lighting and Mirrors |
 13 A New Store Prototype Early results are very encouraging 5 new stores are now open Higher average volume Higher average transaction Higher conversion rate |
 14 Modernize Marketing Effort Website A critical research tool for furniture shoppers Piloting web commerce this summer Catalog Will mail 9m across 8 drops this year Design Resource Guide Launch first bi-annual book this fall Television Gain national strength and consistency through TV |
 15 Strengthen our Design Services Thoughtful accents and accessories Wall art and mirrors Lighting & decorative accessories Fully coordinated textiles assortment Upholstery Fabrics Leather Assortment Rugs / Rug Squares Custom Drapery in 30 days Stocked top of bed Stocked pillows |
 16 Strengthen our Design Services Talented Design Consultants Aggressively recruiting and developing high quality Design Consultants Launching Bassett University Tools, Technology and Resources Presentation Rooms in new stores Prevue & Room Planner in stores/web Design Resource Guide Marketing the Capability Web, catalog, DRG, TV and Stores |
 17 Retail Strategy Summary Early results are encouraging New products are selling briskly New stores are delivering better performance Design Services are increasing Our national network is gaining consistency |
 18 Growth Strategy – Rollout Plan (2008 – 2010) Closing underperforming stores 20 to 25 stores over next three years Investing in new stores – 13 to 19 Store conversions and remodels |
 19 Retail Store Network (includes both Corporate and Licensee owned stores) Targeting improvement in average annual sales per store $3.1 million in 2007 to $3.7 million in 2010 New store top line target of $4.0 to $4.6 million per year |
 20 Rollout & Repositioning Plan Targeted Today End of 2010 Corporate New prototype 3 15 to 20 Old prototype 29 16 to 18 (100% remodeled 32 31 to 38 Licensed New prototype 2 6 to 10 Old prototype 96 78 to 88 (50% remodeled) 98 84 to 98 130 115 to 136 |
 21 Store Conversions & Remodels Conversion is a complete store redesign to incorporate all of the facets of the new store prototype. This represents a significant capital investment. Remodel is a redesign that is less in scope and incorporates only certain facets of the new store prototype. The capital investment is considerably less. Target Target 2008 2009 2010 Corporate Conversions 2 2 2 Corporate Remodels 3 4 4 Licensee Remodels 10 to 12 10 to 15 10 to 15 |
 22 Planned Capital Spending for New Prototype Stores *Based on certain percentage of leases versus owned real estate on new stores
New store real estate could be financed with mortgages Target Target 2008 2009 2010 Conversions/Remodels 2.6 $ $3 to $4 $3 to $4 New Stores 1.5 *7 to 11 *7 to 11 4.1 $ $10 to $15 $10 to $15 |
 23 Targeted Store Economics Assumes 16,000 square foot retail stores built for $100 per square foot Approximately $53 per square foot of tenant improvements and initial inventory costs of $0.5 million Total new store investment of $4.5 million Buy $4.5m, Lease $1.4m Retail segment growth drives Wholesale revenue and enables the Company to capitalize on the Bassett brand Wholesale Contribution - $400k on a $4.4 million store Retail Contribution - $200k to $500k for store depending on real estate Targeted Pretax Returns Buy 18 – 22%, Lease 35 to 40% Conversion 18 – 22% |
 24 Actual & Targeted Store Performance Current Targeted Targeted Bassett Fleet New Bassett Stores Total Fleet - 2010 Avg. Sales per square foot 180 275 220 Average Size 17,200 16,000 16,800 Avg. Sales per store $3.1 million $4.4 million $3.7 million |
 25 Balance Sheet Our balance sheet is bolstered by two significant investments/assets 1. Investment Portfolio Marketable Securities Alternative Asset Fund 2. International Home Furnishings Center Listed on the balance sheet as a liability due to dividends received being in excess of earnings recorded 11/24/2007 $25.1 $51.8 $76.9 |
 26 Balance Sheet This strong balance sheet HAS allowed us to: Pay out more than $48 million in dividends over the past five years Invest in store real estate Sign leases for store expansion $96 million commitment at 11/24/07 Guarantee leases for certain licensees $13 million at 11/24/07 |
 27 Balance Sheet We anticipate our strong balance sheet WILL allow us to: Continue paying an attractive dividend Weather current difficult industry conditions Execute our long-term retail growth strategies New stores Conversions and remodels |
 28 March 17, 2008 Release Reinforces our belief in long-term viability of the furniture business and continued expansion of the retail program Will liquidate significant portion of our investment portfolio over the next 2 to 3 years to: Invest in store program – real estate $10 – 12 million per year Return monies to shareholders Increased dividend $.225 for 6/1/08 Increased share repurchase authorization and expected activity |
 29 Summary Conditions are tough but we’re not standing still Retail strategies properly executed should allow us to take market share Growth plan as outlined will allow us to gain consistency and needed scale Recent board action signals board commitment to enhancing shareholder return through this transition and in the long-term |
 Certain of the statements in this release, particularly those preceded by,
followed by or including the words “believes,” “expects,” “anticipates,” “ intends,” “should,” “estimates,” or similar expressions, or those relating to or anticipating financial results for periods beyond the fiscal year 2007,
constitute “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended. For those statements, Bassett claims the
protection of the safe harbor for forward looking statements
contained in the Private Securities Litigation Reform Act of 1995. In many cases, Bassett cannot predict what factors would cause actual results or future actions to differ
materially from those indicated in the forward looking
statements. Expectations included in the forward-looking
statements are based on preliminary information as well as
certain assumptions which management believes to be reasonable at
this time. The following important factors affect Bassett and could cause actual results or future actions to differ materially from those indicated in the forward looking statements: delays or difficulties in converting some of
its non-operating assets to cash, tax planning
considerations, negotiations with third parties who have an
interest in some of the non-operating assets in which the
Company has an interest, economic, competitive, governmental and other factors identified in Bassett’s filings with the Securities and Exchange
Commission, and the effects of national and global economic or
other conditions and future events on the retail demand for home
furnishings. ### |