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Unidentified Company Representative

Thanks Rob in my commentary. The comparisons I will discuss will be the fourth quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023. Unless otherwise noted for the fourth quarter, total consolidated revenue declined $10.4 million or 11%. Primarily due to a 14% decrease in wholesale sales and an 8.4% decrease in retail sales through our company owned stores solidated gross margins increased 230 basis points due primarily to better margins in the wholesale segment from improved margins in our club level product coupled with better margins in our domestic upholstery manufacturing operation.
Although we're pleased with our very strong consolidated gross margins during the quarter, we do expect a slight moderation during 2025 due to the expectation that we will be more aggressive with pricing on the retail side. As Rob mentioned earlier, we reported consolidated operating income of $900,000 compared to a loss of $4.5 million for the fourth quarter of 2023.
However, if you normalize the operating income for both 2024 and 2023 for the special charges, operating income would have been $2.3 million or 2.7% of sales as compared to $900,000 or 0.9% of sales for 2023.
Now, I've provided information regarding our wholesale operations, net sales decreased $8.3 million or 14% from the prior year period due primarily to a 13% decrease in shipments in both the store network in the open market, partially offset by a 22% increase in shipments for Lane venture gross margin for the three months ended November 30th 2024 increased 290 basis points over the prior year.
Primarily due to the expected improvement in the club level business and the improved mix of customers for the lane venture operation.
Although SG and a expenses decreased year over year, SG and a expense as a percent of sales increased slightly due to deleverage of fixed costs from lower sales volumes partially offset by cost reductions from implementing our restructuring plan.
Wholesale backlog at the quarter end was $21.8 million as compared to $18.5 million at the end of both the third quarter of 2024 and the end of fiscal 2023.
Now moving on to our resale retail store operations, net sales decreased $4.8 million or 8% from the prior year period. As Rob said written sales, the value of sales orders taken but not delivered declined 0.6% compared to the prior year period. Gross margin for the quarter was essentially flat as improved inline margins were offset by lower margins on clearance goods.
As Rob mentioned, we've been aggressively working through unproductive inventory which was part of our restructuring plan.
Although SGNA expenses decreased year over year again, SGNA expense as a percentage of sales increased slightly due to deleverage of fixed costs from lower sales volumes partially offset by cost reductions from implementing our restructuring plan.
Retail backlog at the end of the fourth quarter was $37.1 million compared to $33.3 million at the end of the third quarter and $30.9 million at the end of fiscal 2023 as Rob mentioned, Noah Home has been closed and it was closed by the end of the fourth quarter, but we recorded a $2.6 million tax benefit for a capital loss associated with the cumulative investment in Noah Home.
As capital losses can only be deducted to the extent of capital gains. We will be able to file an amended return for 2022 and use that loss against the large gain that we recorded in 2022 on the sale of zenith logistics and recapture. Part of the cash paid for that year.
Let's cover the balance sheet and capital allocation. We generated $6.4 million of operating cash flow in the fourth quarter. We ended the quarter with $59.9 million in cash and short term investments with no outstanding debt.
As Rob discussed, we've made significant progress on the restructuring plan over the back half of the year. Although savings to date have been slightly above $1 million expected savings in 2025 compared to 2024 should be between seven and $8 million.
As mentioned in last quarter's report, we reduced our capital outlay in the fourth quarter and closed the fiscal 2024 with capital spend to $5.2 million.
The majority of the spending was on retail store openings and remodels fiscal 2025 we have projected a range of capital investment between $8 million and $12 million.
This will be dedicated primarily to existing store remodels and the potential store openings that Rob previously mentioned, as well as investments in technology.
We continue to pay our quarterly dividend and repurchase shares. Opportunistically, we spent $4.9 million dividends and $1.4 million share buybacks during 2024. Our goal is to provide good returns to Bassett shareholders. Our financial condition remains solid and provides us with a platform to service all of our obligations.
Now, we'll open up the line for questions. Gigi, please provide instructions to do so.

Question and Answer Session

Operator

(Operator Instructions)
Our first question comes from the line of Anthony Lebiedzinski from Sidoti & Company.

Anthony Lebiedzinski

Good morning, everyone and thanks for taking the questions, you know. So first, great to see Vassard returning to profitability and maintaining a strong balance sheet. I know you touched on the written sales. So good to see that also, relatively improving.
Just curious as to what you guys have seen, I guess since the election, I guess we've heard from some other companies seeing relatively trends. Also wondering if you could comment on what you've seen thus far. The first two months of the, your new fiscal year as far as just overall, whether it's written sales or just overall, trends in the business that you're seeing, that would be great to get an update on that.

Robert Spilman

Okay, Anthony, good morning. This is Rob. So as we pointed out, it seemed like we got a, a, a brief period of euphoria around Black Friday, as we mentioned. And that was, of course, right after the election since that time, we would say we've kind of settled back down to where we were to a certain extent we owned, owned.
And now I qualify that by saying that last year in our fiscal calendar was six, it was a six week December and this year was a five week. So we had one less we to deal with, but, we were up mid single digits in December and we, we're, that's kind of the trend that we're seeing. I'm talking about at retail and So when I say where we were slightly better, but we're not seeing a sense of euphoria out there at the moment, but, but, but a little better.

Anthony Lebiedzinski

Little better. Sounds good. Certainly. So you highlighted Basset Design Studios. Can you give us an update as to like how many of those you have in place now? And what is your expectation if you have if you have one for as far as number of those design studios that you plan to have by the end of fiscal '25.

Robert Spilman

Well, we now we are around 43 or four of those things. It changes from day to day, of course, as we get the report in from the field, H1, I don't want to say how many we're going to have a year end, but, you think about it nine months, we've been opening about five per month.
And I'm not sure we're going to be able to continue that pace, but we are getting a lot of interest in this program and we expect it to grow significantly in terms of the amount of dealers that we have in 2025.

Anthony Lebiedzinski

Got you. Okay. And then, you, you've talked about, the true custom upholstery program you guys have had, it sounds like you guys have been certainly recognized for those efforts based on your comment about the furniture for today.
Now, is this something you plan to highlight more in terms of your marketing messaging, whether it's like you said, I think direct Mail you'll do more of or anything else that you think that you plan to do to, to highlight that.

Robert Spilman

I would say in conjunction with the custom studio, Anthony, we were definitely, we've done some trade advertising, which we haven't done in a long time. And I think, there's a community of dealers out there and a lot of them think we are a store company and that we don't maybe not interested in their business, let's say, and you know, we're only in about half the States with stores.
And so we think there's a lot of opportunity to communicate just how strong this custom upholstery is, which has been a Hallmark of our retail concept for a number of years. So yes, we will be continuing to highlight our competencies on true custom in the stores as always, but we're also going to be a little more aggressive out there in the field and our dedicated distribution opportunities.

Anthony Lebiedzinski

Got you. And then my last question before I pass it on to others. So obviously, the gross margin was impressive in Q4. I know you mentioned that you expect that to moderate a bit because of pricing. That being said, when housing does recover at some point, how should we think about potential gross margins in the future?

Robert Spilman

Well, we're, we're answering the question from almost an all time high. I think so. I think I don't see them climbing significantly beyond where we are. Even if housing comes back, we want, we still want to offer value and we think we can leverage that, that volume to lower the SG&A and have better operating margins. That's, that's really the plan. We are very focused now given the environment for two years on offering a good value to our customers. We think we have, but we really want to start communicating that. So I think the gross margin is, is kind of going to stay in this neighborhood if I had to guess.

Anthony Lebiedzinski

That makes a lot of sense. Well, thank you very much and best of luck.
Thanks for having me.

Operator

(Operator Instructions)
Brian Gordon from Water Tower research.

Brian Gordon

Hey guys, it's Mike Morin from Water Tower. How are you?

Robert Spilman

Hey, Mike. Hey, we're.

Unidentified Company Representative

Doing great. Thank you.

Brian Gordon

Hey, just a little more color on the margin commentary. You talked about a step back, I guess as we go forward this year, can you just give us a hint on what that degree might look like?

Unidentified Company Representative

Ask that one more time. What Mike?

Brian Gordon

Yeah, margins obviously were very impressive, but you talked about maybe taking a step back.

Unidentified Company Representative

Right. Right. I mean.

Brian Gordon

It kind of get a sense of what that might look like.

Unidentified Company Representative

Yeah, I, I'd say again, as we alluded to, we think we're going to get a little bit more aggressive in, well, two things get, get more aggressive on, pricing related to retail or in our retail stores as well as making sure that we're moving through clearance goods as quickly as we need to be moving them through.
As Rob has said to us many times, inventory does not get, get more valuable as it sits in warehouses. So we just want to make sure that we're moving that through. Now, that's not going to be those together are not going to be that much pressure on the margins.
But we do, we are proud of the fact that we did have what we consider to be a record margin, but just not comfortable to say that that's going to be sustainable and particularly with those added pressures on the margin.
But again, it's not going to be a, we don't see it as a drastic shift of any kind.

Robert Spilman

I would add Mike that it's similar to Anthony's question. We don't see this trend continuing to rise necessarily and that that's by design. And although I think as Mike said, we're going to moderate it, I think slightly, it's not, we're not talking about a huge decline in margin, but we don't see it this trend, we've been on continuing this year, but we don't, we don't want it to drop much either. So it's, we're just setting expectations really. That's right.

Brian Gordon

No, understood. Thank you. And then I guess just on the natural disasters between the hurricanes and the wildfires, any impact in the business.

Robert Spilman

You know, the North Carolina Hurrian back in September was cause and effect. I mean, we had, we had to close our operations down for a couple of days, a few days there in the hickory area. Also, we have a very strong independent dealer base in that area in North Carolina. That's a very strong and it affected other areas too. South Carolina, et cetera.
So a lot of our dealers were, were affected by that and that and that hurt our incoming business as far as the California fire tragedy. We did have one store out there that had to shut down for a few days, but I wouldn't say that it caused a whole lot of upheaval to our operations.

Operator

Thank you. At this time, I would now like to turn the conference back over to Rob Spellman, Chairman and CEO for closing remarks.

Robert Spilman

Thank you, Gigi and thank everyone for your interest in ba and for your questions. We know that our decisions to right size. Our cost structure put us on the road to improve profitability. We delivered that in the fourth quarter. We're optimistic that our growth, driving initiatives will deliver for customers and shareholders this year, we're excited about our new collections, strengthening our dedicated distribution programs and reaching more consumers through our e-commerce site and price value messaging.
Thank you very much and have a great day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.