BASSETT FURNITURE INDUSTRIES INC
For the period ended Jun 1, 2024. Filed Jul 11, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 1, 2024 · Filed Jul 11, 2024
BSET$21.76-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-02; filed 2024-04-03.
0001437749-24-010760
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-01; filed 2024-07-11.
0001437749-24-022523
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 79 previous paragraphs and 100 current paragraphs.
43 unchanged; 23 reworded; 30 added; 13 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 31 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
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Current report
During the fourth quarter of fiscal 2022 we acquired Noa Home, a mid-priced e-commerce furniture retailer headquartered in Montreal, Canada. Noa Home has operations in Canada, Singapore, the United States and the United Kingdom. After nearly two years of operating losses, we concluded during the second quarter of 2024 that Noa Home was not likely to achieve profitability at any time in the foreseeable future and have decided to cease operations by selling the inventory in an orderly fashion over the next several months. In the second quarter of 2024 we have recognized non-cash charges totaling $2,401 related to the impairment of certain long-lived assets of Noa Home and the establishment of a reserve against Noa Home’s remaining inventory.
Current report
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Current report
Consolidated results of operations for the three and six months ended June 1, 2024 and May 27, 2023 are as follows:
Current report
Gross margins for the three months ended June 1, 2024 decreased 10 basis points from the prior year period primarily due to increased inventory valuation charges of $1,729 in the wholesale segment, $472 in the retail segment and $500 in the Noa Home operation. Excluding these charges, our consolidated gross margin would have been 55.7%.
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Analysis of Year-to-Date Results:
Current report
Gross margins for the six months ended June 1, 2024 increased 110 basis points over the prior year period. Included in the current year gross margin are increased inventory valuation charges of $1,729 in the wholesale segment, $472 in the retail segment and $500 in the Noa Home operation. Excluding these charges, our consolidated gross margin would have been 55.5%. Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the six months ended June 1, 2024 increased 620 basis points from 2023 primarily due to the deleverage of fixed costs caused by lower sales volumes.
Current report
Reconciliation of Gross Profit as Reported to Adjusted Gross Profit:
Current report
In addition to the two reportable segments described above, we include our remaining business activities and assets in a reconciling category known as Corporate and other. This category includes the shared costs of corporate functions such as treasury and finance, information technology, accounting, human resources, legal and others, including certain product development and marketing functions benefitting both wholesale and retail operations. In addition to property and equipment and various other assets associated with the shared corporate functions, the identifiable assets of Corporate and other include substantially all of our cash and our investments in CDs. We consider our corporate functions to be other business activities and have aggregated them with any of our operating segments that do not meet the requirements to be reportable segments. As of and for the periods ended June 1, 2024 and May 27, 2023, the only such operating segment included in Corporate and other is Noa Home, which was acquired on September 2, 2022. All sales reported in our Corporate and other category are attributable to Noa Home, which generates substantially all of its sales outside of the United States. During the second quarter we concluded that Noa Home was not likely to achieve profitability in the foreseeable future and have decided to cease operations by selling the inventory in an orderly fashion over the next several months.
Current report
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Analysis of Year-to-Date Results–* Wholesale*
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Net sales for the three months ended June 1, 2024 decreased $10,310 or 17% from the prior year period. Written sales (the value of sales orders taken but not delivered) declined 2.5% from the second quarter of 2023. Gross margin for the three months ended June 1, 2024 were flat with the prior period as higher margins on in-line goods were offset by lower margins on clearance goods and $472 of additional inventory valuation charges due to our strategy to be more aggressive in selling clearance goods to better control inventory levels. SG&A expenses as a percentage of sales for the three months ended June 1, 2024 increased 570 basis points primarily due to decreased leverage of fixed costs from lower sales volumes.
Current report
Analysis of Year-to-Date Results - Retail
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*27 weeks for fiscal 2024 as compared with 16 weeks for fiscal 2023.
Current report
Analysis of Year-to-Date Results–* Corporate and Other*
Current report
Other Gains and Losses
Current report
Fiscal 2024
Current report
During the three and six months ended June 1, 2024, we recognized non-cash charges for asset impairments totaling $5,515 which consisted of the following:
Current report
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Fiscal 2023
Current report
During the three and six months ended May 27, 2023, we recognized a non-cash gain of $1,013 resulting from the write-down of our contingent consideration obligation to the former owners of Noa Home. Subsequent to the acquisition of Noa Home on September 2, 2022, the parties concluded that the revenue and EBITDA targets originally set forth in the purchase agreement by which the Noa Home co-founders were to earn the contingent consideration were likely not to be met within the originally anticipated time frame and therefore agreed to replace the contingent consideration payable that was recognized at the acquisition date with two fixed payments of C$200 each. The first payment was made in June of 2023 and the second payment will be made in December of 2024.
Current report
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Current report
Since our used commitment was less than $8,250 at June 1, 2024, we were not required to test the Consolidated Fixed Charge Coverage Ratio or the Consolidated Lease Adjusted Leverage to EBITDAR Ratio. Had we been required to test those ratios, we would not have been able to achieve the required levels for either ratio. Consequently, our availability under the Credit Facility is currently limited to an additional $2,237.
Removed paragraphs (13)
Previous report
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Previous report
During the fourth quarter of fiscal 2022 we acquired Noa Home, a mid-priced e-commerce furniture retailer headquartered in Montreal, Canada. Noa Home has operations in Canada, Singapore and the United Kingdom. With a lean staffing model, the Noa Home team has built an operational blueprint that has the potential for significant growth. We believe the acquisition will provide Bassett with a greater online presence and will allow us to attract more digitally native consumers. We are currently in the process of expanding Noa Home’s product assortment and categories offered on the Canadian website. In August of 2023, we introduced the Noa Home brand in the United States.
Previous report
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Previous report
Consolidated results of continuing operations for the three months ended March 2, 2024 and February 25, 2023 are as follows:
Previous report
Gross margins for the three months ended March 2, 2024 increased 220 basis points over the prior year period.
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Due to our results of operations in 2023, we were not in compliance with certain of these covenants at the end of our 2023 fiscal year. Consequently, our bank agreed to reduce the consolidated fixed charge coverage ratio to 1.0 times and increase the consolidated lease-adjusted leverage ratio to 3.75 times, as defined, for the year ended November 25, 2023 and the quarter ended March 2, 2024. We were in compliance with the amended covenants at November 25, 2023 and at March 2, 2024. The respective ratios will revert back to the previous values for the quarter ending June 1, 2024. We are in negotiations with our bank and plan to have an amended, restated or new agreement with a similar line of credit in place by the end of the second quarter of 2024.
Reworded paragraphs (23)
Previous wording
Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The current fiscal year ending November 30, 2024 is a 53-week year, with the additional week being included in our first fiscal quarter. Accordingly, the information presented below includes 14 weeks of operations for the quarter ended March 2, 2024 as compared to 13 weeks included in the quarter ended February 25, 2023.
Current wording
Our fiscal year, which ends on the last Saturday of November, periodically results in a 53-week year instead of the normal 52 weeks. The current fiscal year ending November 30, 2024 is a 53-week year, with the additional week being included in our first fiscal quarter. Accordingly, the information presented below includes 27 weeks of operations for the six months ended June 1, 2024 as compared to 26 weeks included in the quarter ended May 27, 2023.
Previous wording
Results of Continuing Operations–** Periods ended March 2, 2024 compared with the periods ended February 25, 2023:**
Current wording
Results of Operations–** Periods ended June 1, 2024 compared with the periods ended May 27, 2023:**
Previous wording
Total sales revenue for the three months ended March 2, 2024 decreased $21,144 or 20% from the prior year period due to a 22% decline in wholesale sales along with a 17% decrease in retail sales through the Company-owned stores and a 37% decline in sales at Noa Home.
Current wording
Total sales revenue for the three months ended June 1, 2024 decreased $17,109 or 17% from the prior year period due primarily to a 15% decline in wholesale sales and a 17% decrease in retail sales through the Company-owned stores.
Previous wording
Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the three months ended March 2, 2024 increased 740 basis points from 2023 primarily due to the deleverage of fixed costs caused by lower sales volumes.
Current wording
Selling, general and administrative (“SG&A”) expenses as a percentage of sales for the three months ended June 1, 2024 increased 490 basis points from 2023 primarily due to the deleverage of fixed costs caused by lower sales volumes.
Previous wording
We have strategically aligned our business into three reportable segments as defined in ASC 280,Segment Reporting, and as described below:
Current wording
We have strategically aligned our business into two reportable segments as defined in ASC 280,Segment Reporting, and as described below:
Previous wording
Reconciliation of Segment Results to Consolidated Results of Operations
Current wording
Reconciliation of Segment Results to Consolidated Income (Loss) Before Income Taxes
Previous wording
To supplement the financial measures prepared in accordance with GAAP, we present gross profit by segment inclusive of the effects of intercompany sales by our wholesale segment to our retail segment. Because these intercompany transactions are not eliminated from our segment presentations and because we do not present gross profit as a measure of segment profitability in the accompanying condensed consolidated financial statements, the presentation of gross profit by segment is considered to be a non-GAAP financial measure. In addition, certain special gains or charges are included in consolidated income from operations are not included in the measures of segment profitability. The reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP is presented below along with the effects of various other intercompany eliminations on our consolidated results of operations.
Current wording
To supplement the financial measures prepared in accordance with GAAP, we present gross profit by segment inclusive of the effects of intercompany sales by our wholesale segment to our retail segment. Because these intercompany transactions are not eliminated from our segment presentations and because we do not present gross profit as a measure of segment profitability in the accompanying condensed consolidated financial statements, the presentation of gross profit by segment is considered to be a non-GAAP financial measure. In addition, certain special gains or charges as well as non-operating income and expenses are included in consolidated income (loss) before income taxes are not included in the measures of segment profitability. The reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP is presented below along with the effects of various other intercompany eliminations on our consolidated results of operations.
Previous wording
Results for the wholesale segment for the three months ended March 2, 2024 and February 25, 2023 are as follows:
Current wording
Results for the wholesale segment for the three and six months ended June 1, 2024 and May 27, 2023 are as follows:
Previous wording
Net sales for the three months ended March 2, 2024 decreased $15,184 or 22% from the prior year period due primarily to a 20% decrease in shipments to the open market, a 21% decrease in shipments to our retail store network and a 26% decrease in Lane Venture shipments. Gross margins for the three months ended March 2, 2024 increased 200 basis points over the prior year primarily due to the expected improvement in the Bassett Leather business. As the Bassett Leather product line is internationally sourced with extended lead times, we received significant amounts of inventory during the second and third quarters of 2022 just as product demand was weakening due to the market downturn in home furnishings. Also, the ocean freight costs associated with the majority of the product received was at significantly higher costs than are currently being realized on current product receipts. We expect further margin improvement in the second quarter of 2024 with a return to normal margins in the third quarter of 2024. Margins in our Bassett Casegoods business also improved as expected primarily due to shipping more product that contained lower in-bound freight costs. In addition, margins in our Bassett Custom Wood business increased due to lower material costs, partially offset by deleverage of fixed manufacturing costs from lower sales volumes. SG&A expenses as a percentage of sales increased 250 basis points primarily due to reduced leverage of fixed costs from decreased sales.
Current wording
Net sales for the three months ended June 1, 2024 decreased $9,165 or 15% from the prior year period due primarily to a 19% decrease in shipments to the open market, a 16% decrease in shipments to our retail store network partially offset by a 2% increase in Lane Venture shipments. Gross margins for the three months ended June 1, 2024 increased 110 basis points over the prior year primarily due to the expected improvement in the Bassett Leather business. As the Bassett Leather product line is internationally sourced with extended lead times, we received significant amounts of inventory during the second and third quarters of 2022 just as product demand was weakening due to the market downturn in home furnishings. Also, the ocean freight costs associated with the majority of the product received was at significantly higher costs than are currently being realized on current product receipts. This improvement was partially offset by decreased margins in our Bassett Custom Wood business due to increased inventory valuation charges as a result of a plant consolidation and the reduction in the number of active suites in the product line and deleverage of fixed manufacturing costs due to lower sales volumes. We also recorded increased inventory valuation charges in our Bassett Casegoods business as we plan to be more aggressive in selling certain slow-moving products. Total additional inventory valuation charges for the wholesale segment were $1,729. SG&A expenses as a percentage of sales increased 170 basis points primarily due to reduced leverage of fixed costs from decreased sales.
Previous wording
Wholesale backlog at March 2, 2024 was $19,491 as compared to $18,478 at November 25, 2023 and $24,895 at February 25, 2023.
Current wording
Wholesale backlog at June 1, 2024 was $19,373 as compared to $18,478 at November 25, 2023 and $19,693 at May 27, 2023.
Previous wording
Net sales for the three months ended March 2, 2024 decreased $11,208 or 17% from the prior year period. Written sales (the value of sales orders taken but not delivered) declined 3.5% from the first quarter of 2023. Gross margin for the three months ended March 2, 2024 improved 110 basis points over the prior period primarily due to higher margins on in-line and clearance goods from improved pricing disciplines. SG&A expenses as a percentage of sales for the three months ended March 2, 2024 increased 640 basis points primarily due to decreased leverage of fixed costs from lower sales volumes.
Current wording
Net sales for the six months ended June 1, 2024 decreased $21,518 or 17% from the prior year period. Written sales (the value of sales orders taken but not delivered) declined 3.0% from the first half of 2023. Gross margin for the six months ended June 1, 2024 improved 50 basis points over the prior period primarily due to higher margins on in-line goods partially offset by lower margins on clearance goods and $472 of additional inventory valuation charges due to our strategy to be more aggressive in selling clearance goods to better control inventory levels. SG&A expenses as a percentage of sales for the six months ended June 1, 2024 increased 600 basis points primarily due to decreased leverage of fixed costs from lower sales volumes.
Previous wording
Retail backlog at March 2, 2024 was $31,307 compared to $30,902 at November 25, 2023 and $41,763 at February 25, 2023.
Current wording
Retail backlog at June 1, 2024 was $31,545 compared to $30,902 at November 25, 2023 and $32,894 at May 27, 2023.
Previous wording
Revenues, costs and expenses of corporate and other for the three months ended March 2, 2023 and February 25, 2023 are as follows:
Current wording
In addition to the two reportable segments discussed above, we include our remaining business activities and assets in a reconciling category known as Corporate and other, which includes the shared costs of various corporate functions along with any operating segments that do not meet the requirements to be reportable segments. Therefore, Noa Home is included within the Corporate and other reconciling category and accounts for all of the sales and gross profit within this reconciling category. Revenues, costs and expenses of Corporate and other for the periods ended June 1, 2024 and May 27, 2023 are as follows:
Previous wording
The decreases in sales and gross profit from the prior year period were primarily due to a shift in the second quarter of 2023 where Noa Home reduced advertising spend to improve advertising efficiency which resulted in lower overall sales but with greater leverage on advertising spend coupled with Noa Home’s exit of the Australia market during the first quarter of 2024. The $641 decrease in SG&A expenses was primarily due to decreased advertising and marketing spending by Noa Home partially offset by a slight increase in overall corporate overhead spending.
Current wording
The decreases in sales and gross profit from the prior year period were primarily due to a shift in the second quarter of 2023 where Noa Home reduced advertising spending to improve advertising efficiency which resulted in lower overall sales but with greater leverage on advertising spending coupled with Noa Home’s exit of the Australia market during the first quarter of 2024. Included in the gross profit is an inventory valuation charge of $500 due to our decision to cease operations by selling the remaining inventory in an orderly fashion over the next several months. The $1,909 decrease in SG&A expenses was primarily due to decreased advertising and warehouse spending by Noa Home coupled with lower corporate overhead spending from better expense management.
Previous wording
Interest income for the three months ended March 2, 2024 was $756 compared to $152 for the three months ended February 25, 2023. The net change from the prior year period was primarily due to higher interest income on our cash equivalents and investments in certificates of deposit.
Current wording
Interest income for the three and six months ended June 1, 2024 was $627 and $1,383, respectively, compared to $569 and $721 for the three and six months, respectively, ended May 27, 2023. The net change from the prior year period was primarily due to higher interest income on our cash equivalents and investments in certificates of deposit.
Previous wording
Other loss, net, for the three months ended March 2, 2024 was $104 compared to $567 for the three months ended February 25, 2023. The net change from the prior year periods was primarily due to lower costs associated with Company-owned life insurance.
Current wording
Other loss, net, for the three and six months ended June 1, 2024 was $276 and $380, respectively, compared to $505 and $1,072 for the three and six months, respectively, ended May 27, 2023. The net change from the prior year periods was primarily due to lower costs associated with Company-owned life insurance.
Previous wording
We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income and use that effective tax rate to record our year-to-date income tax provision. Any change in annual projections of pretax income could have a significant impact on our effective tax rate for the respective quarter.
Current wording
We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income or loss and use that effective tax rate to record our year-to-date income tax provision. Any change in annual projections of pretax income or loss could have a significant impact on our effective tax rate for the respective quarter.
Previous wording
Our effective tax rate was 30.0% and 36.8% for the three months ended March 2, 2024 and February 25, 2023, respectively. The effective rates differed from the federal statutory rate of 21% primarily due to increases in the valuation allowance placed on deferred tax assets associated with Noa Home and the effects of state income taxes and various permanent differences.
Current wording
Our effective tax rate was 11.2% and 14.5% for the three and six months ended June 1, 2024, respectively. The effective rates for the three and six months ended June 1, 2024 differ from the federal statutory rate of 21% primarily due to increases in the valuation allowance placed on deferred tax assets associated with Noa Home Inc. (“Noa Home”), the effects of state income taxes and various permanent differences.
Previous wording
Cash used in operations for the first quarter of fiscal 2024 was $7,736 compared to cash provided by operations of $563 for the first quarter of fiscal 2023, representing a decrease of $8,302 in cash flows from operations. This decrease was primarily the result of changes in working capital due to the timing impact of expenditures as a result of an additional week in the first quarter of 2024 coupled with lower net income.
Current wording
Cash used in operations for the first half of fiscal 2024 was $1,919 compared to cash provided by operations of $6,413 for the first half of fiscal 2023, representing a decrease of $8,332 in cash flows from operations. This decrease was primarily the result of changes in working capital due to the timing impact of expenditures as a result of an additional week in the first quarter of 2024 coupled with lower net income. For the quarter ended June 1, 2024, cash provided by operating activities was $5,820 which was comparable to the quarter ended May 27, 2023.
Previous wording
Our overall cash position declined $11,798 during the first quarter of 2024 compared to a decrease of $6,733 for the first quarter of 2023. During the first quarter of fiscal 2024, we spent $2,076 on purchases of property and equipment primarily consisting of the upfit of the new Tampa, Florida and Houston, Texas stores that opened in the first quarter of 2024, final payments on the Austin, Texas store remodel and expenditures related to various information technology and manufacturing plant projects. We also paid $1,573 in dividends during the first quarter of 2024. We made no purchases under our stock repurchase program during the first quarter of 2024 compared to $1,421 repurchased in the prior year period. We expect capital expenditures for the full year to range from $12 million to $14 million. As of March 2, 2024, $21,823 remains available for future purchases under our stock repurchase plan. With cash and cash equivalents and short-term investments totaling $58,384 on hand at March 2, 2024, expected future operating cash flows and the availability under our credit line noted below, we believe we have sufficient liquidity to fund operations for the foreseeable future.
Current wording
Our overall cash position declined $9,761 during the first half of 2024. However, we generated net cash of $2,037 for the quarter ended June 1, 2024. During the first half of fiscal 2024, we spent $3,683 on purchases of property and equipment primarily consisting of the upfit of the new Tampa, Florida and Houston, Texas stores that opened in the first quarter of 2024, final payments on the Austin, Texas store remodel and expenditures related to various information technology and manufacturing plant projects. We also paid $3,153 in dividends during the first half of 2024. During the second quarter of 2024 we resumed purchasing shares under our stock repurchase program and repurchased $489 during the first six months of 2024 compared to $3,450 repurchased in the prior year period. We expect capital expenditures for the full year to range from $8 million to $10 million. As of June 1, 2024, $21,333 remains available for future purchases under our stock repurchase plan. With cash and cash equivalents and short-term investments totaling $60,460 on hand at June 1, 2024, expected future operating cash flows and the availability under our credit line noted below, we believe we have sufficient liquidity to fund operations for the foreseeable future.
Previous wording
Our bank credit facility provides for a line of credit of up to $25,000. At March 2, 2024, we had $3,731 outstanding under standby letters of credit against our line, leaving availability under our credit line of $21,269. The line bears interest at the One-Month Term Secured Overnight Financing Rate (“One-Month Term SOFR”) plus 1.5% and is unsecured. Our bank charges a fee of 0.25% on the daily unused balance of the line, payable quarterly. Under the terms of the facility, we must maintain the following financial covenants, measured quarterly on a rolling twelve-month basis:
Current wording
On May 15, 2024, we entered into the Credit Facility with our bank. This credit facility provides for a line of credit of up to $25,000. At June 1, 2024, we had $6,013 outstanding under standby letters of credit against our line. The line bears interest at the One-Month Term Secured Overnight Financing Rate (“One-Month Term SOFR”) plus 1.75% and is secured by our accounts receivable and inventory. Our bank charges a fee of 0.25% on the daily unused balance of the line, payable quarterly. Under the terms of the Credit Facility, Consolidated Minimum Tangible Net Worth shall at no time be less than $120,000. In addition, we must maintain the following financial covenants, measured quarterly on a rolling twelve-month basis and commencing as of the end of the first fiscal quarter after the first date that the used commitment (the sum of any outstanding advances plus standby letters of credit) equals or exceeds $8,250:
Previous wording
We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of one of our licensee-owned stores, and we lease land and buildings used in our wholesale manufacturing operations. We also lease local delivery trucks used in our retail segment. The present value of our obligations for leases with terms in excess of one year at March 2, 2024 is $113,143 and is included in our accompanying condensed consolidated balance sheet at March 2, 2024. We were contingently liable under a licensee lease obligation guarantee in the amount of $1,750 at March 2, 2024. The remaining term under this lease guarantee extends for four and a half years. See Note 9 to our condensed consolidated financial statements for additional details regarding our lease guarantees.
Current wording
We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of one of our licensee-owned stores, and we lease land and buildings used in our wholesale manufacturing operations. We also lease local delivery trucks used in our retail segment. The present value of our obligations for leases with terms in excess of one year at June 1, 2024 is $109,167 and is included in our accompanying condensed consolidated balance sheet at June 1, 2024. We were contingently liable under licensee lease obligation guarantees in the amount of $5,322 at June 1, 2024. The remaining terms under these lease guarantees extend for six years. See Note 10 to our condensed consolidated financial statements for additional details regarding our lease guarantees.
Previous wording
We have a substantial investment in real estate acquired for use as retail locations and occupied by Company-owned retail stores. Such real estate is included in property and equipment, net, in the accompanying condensed consolidated balance sheets and consists of eight properties with an aggregate square footage of 203,465 and a net book value of $24,193 at March 2, 2024.
Current wording
We have a substantial investment in real estate acquired for use as retail locations and occupied by Company-owned retail stores. Such real estate is included in property and equipment, net, in the accompanying condensed consolidated balance sheets and consists of eight properties with an aggregate square footage of 203,465 and a net book value of $24,442 at June 1, 2024.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Total sales revenue for the six months ended June 1, 2024 decreased $38,253 or 18% from the prior year period primarily due to a 19% decline in wholesale sales and a 17% decrease in retail sales through the Company-owned stores.
Current report — wording carried from elsewhere
Net sales for the three months ended June 1, 2024 decreased $24,348 or 19% from the prior year period due primarily to a 19% decrease in shipments to the open market, a 19% decrease in shipments to our retail store network and an 11% decrease in Lane Venture shipments. Gross margins for the three months ended June 1, 2024 increased 150 basis points over the prior year primarily due to the expected improvement in the Bassett Leather business. As the Bassett Leather product line is internationally sourced with extended lead times, we received significant amounts of inventory during the second and third quarters of 2022 just as product demand was weakening due to the market downturn in home furnishings. Also, the ocean freight costs associated with the majority of the product received was at significantly higher costs than are currently being realized on current product receipts. This increase was partially offset by significantly higher costs than are currently being realized on current product receipts. Margins in our Bassett Casegoods business also improved as expected primarily due to shipping more product that contained lower in-bound freight costs partially offset by increased inventory valuation charges as we plan to be more aggressive in selling certain slow-moving products. These improvements were partially offset by decreased margins in our Bassett Custom Wood business due to increased inventory valuation charges as a result of a plant consolidation and the reduction in the number of active suites in the product line and deleverage of fixed manufacturing costs due to lower sales volumes. Total additional inventory valuation charges for the wholesale segment were $1,729. SG&A expenses as a percentage of sales increased 210 basis points primarily due to reduced leverage of fixed costs from decreased sales.
Current report — wording carried from elsewhere
The decreases in sales and gross profit from the prior year period were primarily due to a shift during the second quarter of 2023 where Noa Home reduced advertising spending to improve advertising efficiency which resulted in lower overall sales but with greater leverage on advertising spending coupled with Noa Home’s exit of the Australia market during the first quarter of 2024. Included in the gross profit is an inventory valuation charge of $500 due to our decision to cease operations by selling the remaining inventory in an orderly fashion over the next several months. The $1,267 decrease in SG&A expenses was primarily due to decreased corporate overhead spending from better expense management coupled with lower advertising and warehouse expenses for Noa Home.
Current report — wording carried from elsewhere
Our effective tax rate was 18.4% and 27.1% for the three and six months ended May 27, 2023, respectively. The effective rates for the three and six months ended May 27, 2023 differ from the federal statutory rate of 21% primarily due to the non-taxable gain on revaluation of contingent consideration associated with the acquisition of Noa Home (see Note 9), increases in the valuation allowance placed on deferred tax assets associated with Noa Home and the effects of state income taxes and various permanent differences.