On April 2, Bassett Furniture (NASDAQ:BSET) released first-quarter earnings for the period ended Feb. 24.

  • Continued soft furniture retail conditions dragged down sales 15%.
  • By the third quarter of fiscal 2007, the company plans to cease operations at its wood manufacturing facility in Bassett, Va.
  • Operating margin decreased by 10.9 percentage points because of adverse operating leverage.
  • On a positive note, improved inventory management decreased inventory carried by 17%.

(Figures in thousands, except per-share data.)

Income Statement Highlights

Q1 2007

Q1 2006

Change

Sales

$73,420

$86,489

(15.1%)

Net Profit

($4,188)

$2,180

N/A

EPS

($0.35)

$0.18

N/A

Get back to basics with the income statement.

Margin Checkup

Q1 2007

Q1 2006

Change*

Gross Margin

30.4%

31.6%

(1.2)

Operating Margin

(9.7%)

1.2%

(10.9)

Net Margin

(5.7%)

2.5%

(8.2)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

Change

Cash + ST Invest.

$8,456

$4,512

87.4%

Accounts Rec.

$42,601

$39,824

7.0%

Inventory

$45,111

$54,335

(17.0%)

Liabilities

Q1 2007

Q1 2006

Change

Accounts Payable

$16,440

$24,857

(33.9%)

Long-Term Debt

$19,360

$23,847

(18.8%)

The balance sheet reflects the company's health.

Cash Flow Highlights

Q1 2007

Q1 2006

Change

Cash From Ops.

($3,757)

($3,844)

N/A

Capital Expenditures

$218

$1,369

(84.1%)

Free Cash Flow

($3,975)

($5,213)

N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

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