Bassett Furniture Industries, Incorporated · NASDAQ:BSET
Bassett Furniture Industries — Investor Presentation (March 2008)
30 slides from Bassett Furniture Industries's investor presentation, Mar 18, 2008
Slide 1: Bassett Investor Presentation March 2008
Bassett Investor Presentation March 2008 NASDAQ: BSET
Slide 2: Agenda
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
Slide 3: Business Overview
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 r
Slide 4: Furniture Industry Update
Furniture Industry Update From – 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 pres
Slide 5: China Furniture Exports & U.S. Furniture Employment
China Furniture Exports & U.S. Furniture Employment 1999 - - 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 Chinese exports data per the China National Furniture Association. U.S. employment data per the U.S. Bureau of Labor Statistics.
Slide 6: Home Furnishing Consolidation
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, - Levitz Furniture Inc. declared its third bankruptcy in ten years The furniture chain is undergoing outright liquid
Slide 7: Industry Undergoing Change
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
Slide 8: Retail Growth Strategy
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
Slide 9: Strengthen Retail Talent
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 reta
Slide 10: Updated Styling / Value Positioning
Dated Traditional Current Modern Contemporary $$$ $$ $ Updated Styling / Value Positioning
Slide 11: New Product Strategy
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
Slide 12: A New Store Prototype
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, Light
Slide 13: A New Store Prototype
A New Store Prototype Early results are very encouraging 5 new stores are now open Higher average volume Higher average transaction Higher conversion rate
Slide 14: Modernize Marketing Effort
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
Slide 15: Strengthen our Design Services
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
Slide 16: Strengthen our Design Services
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 Capa
Slide 17: Retail Strategy Summary
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
Slide 18: Growth Strategy - Rollout Plan (2008-2010)
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
Slide 19: Retail Store Network
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
Slide 20: Rollout & Repositioning Plan
Rollout & Repositioning Plan Targeted Today End of 2010 Corporate New prototype 15 to 20 Old prototype 16 to 18 (100% remodeled 31 to 38 Licensed New prototype 6 to 10 Old prototype 78 to 88 (50% remodeled) 84 to 98 115 to 136
Slide 21: Store Conversions & Remodels
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
Slide 22: Planned Capital Spending for New Prototype Stores
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 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 $
Slide 23: Targeted Store Economics
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 Wholesa
Slide 24: Actual & Targeted Store Performance
Actual & Targeted Store Performance Current Targeted Targeted Bassett Fleet New Bassett Stores Total Fleet - 2010 Avg. Sales per square foot Average Size 17,200 16,000 16,800 Avg. Sales per store $3.1 million $4.4 million $3.7 million
Slide 25: Balance Sheet
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 1
Slide 26: Balance Sheet
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
Slide 27: Balance Sheet
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
Slide 28: March 17, 2008 Release
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 Re
Slide 29: Summary
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 tran
Slide 30: Forward-looking statements
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 200
Bassett Furniture Industries — Investor Presentation (March 2008) on 6ix