Financial Data and Key Metrics Changes - Consolidated revenue increased by $938,000 or 1.1% year-over-year, with a 2.5% increase when excluding sales from Noah Home, Inc [20] - Consolidated gross margin improved by 310 basis points to 55.6%, despite additional inventory valuation charges in the prior quarter [20] - Operating income was $2,500,000 or 3% of sales, a significant improvement from a loss of $8,500,000 in the prior year [21] - Diluted earnings per share were $0.22 compared to a loss of $0.82 in the previous year [21] Business Line Data and Key Metrics Changes - Net sales in the wholesale operations increased by $1,600,000 or 3%, driven by a 12.6% increase in shipments to Bassett retail stores, while shipments to the open market decreased by 2.6% [21] - Retail store net sales increased by $3,800,000 or 7.5%, although written sales declined by 0.8% [23] - Retail backlog was $34,100,000, down from $37,100,000 at the end of November 2024 [24] Market Data and Key Metrics Changes - Orders to the corporate and licensed store network grew by 9.6%, while wholesale business from the open market declined by 6.6% [11] - Written sales at bassetfurniture.com increased by 31% in the second quarter compared to the previous year, following a 36% increase in Q1 [15] Company Strategy and Development Direction - The company is focused on executing a five-point restructuring strategy aimed at growth and profitability, including product innovation and cost reduction [5][6] - Plans to open two new retail stores in Cincinnati and Orlando, with construction expected to start in the fall [18] - The company aims to enhance its presence in the interior design community and is committed to integrating further into this channel [73] Management's Comments on Operating Environment and Future Outlook - The management highlighted the challenging housing market and consumer confidence issues affecting the home furnishings industry [6][8] - Despite the tough environment, the company remains optimistic about the impact of its restructuring efforts and new product lines on future performance [73] - Management is closely monitoring tariff impacts and is working to mitigate their effects on pricing and supply chain [10][72] Other Important Information - The company generated $7,000,000 in operating cash flow during the quarter and ended with $59,800,000 in cash and short-term investments, with no outstanding debt [24][25] - The board of directors will consider a regular quarterly cash dividend of $0.20 per share [19] Q&A Session Summary Question: Update on design studios and future plans - The company currently has 54 design studios and expects to maintain a pace of opening six to eight studios per quarter [27][30] Question: Metrics on design studios' performance - The company is monitoring the performance of design studios but has not shared specific metrics externally [31] Question: Impact of tariffs on design trade versus retail - Tariffs have had less impact on the design trade compared to retail, which is more cost-conscious [36] Question: Shipment timing and expectations for the third quarter - A significant customer affected Lane Venture shipments, but improvements are expected in the third quarter [42][46] Question: Future margin impacts from discounting - The company is working to clean inventory, which may slightly affect margins but is seen as a prudent exercise [56][59] Question: Plans for store expansion - The company aims for a conservative growth strategy, targeting two to three net new stores per year [62][67]

Part I - Financial Information [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company reported a significant financial turnaround, achieving net income for the quarter and six months ended May 31, 2025, and dramatically improving operating cash flow compared to prior-year losses [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Consolidated Statement of Operations Highlights (in thousands, except per share data) | Financial Metric | Quarter Ended May 31, 2025 | Quarter Ended June 1, 2024 | Six Months Ended May 31, 2025 | Six Months Ended June 1, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $84,348 | $83,410 | $166,510 | $169,964 | | **Gross profit** | $46,909 | $43,760 | $93,739 | $91,627 | | **Income (loss) from operations** | $2,497 | $(8,462) | $4,952 | $(10,819) | | **Net income (loss)** | $1,918 | $(7,201) | $3,772 | $(8,394) | | **Diluted earnings (loss) per share** | $0.22 | $(0.82) | $0.43 | $(0.96) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Account | May 31, 2025 (Unaudited) | November 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $39,433 | $39,551 | | Inventories | $59,362 | $54,965 | | Total current assets | $144,193 | $141,539 | | Total assets | $331,333 | $341,170 | | Total current liabilities | $74,524 | $73,403 | | Total liabilities | $164,557 | $173,843 | | Total stockholders' equity | $166,776 | $167,327 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended May 31, 2025 | Six Months Ended June 1, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $6,903 | $(1,919) | | Net cash used in investing activities | $(2,349) | $(4,066) | | Net cash used in financing activities | $(4,672) | $(3,777) | | **Change in cash and cash equivalents** | **$(118)** | **$(9,761)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes outline the company's two reportable segments, the closure of the Noa Home business, revenue recognition policies, and details of its **$25 million credit facility** with **$16.8 million available** - The company's fiscal year 2024 contained 53 weeks, with the extra week in the first quarter, resulting in 27 weeks of operations for the six-month period ended June 1, 2024, versus 26 weeks for the period ended May 31, 2025[19](index=19&type=chunk) - The company maintains a **$25 million credit facility**, secured by accounts receivable and inventory, with **$8.2 million outstanding** under standby letters of credit and **$16.8 million available** as of May 31, 2025[40](index=40&type=chunk) - The company operates two reportable segments, Wholesale and Retail, with 'Corporate and other' including shared costs and the now-closed Noa Home business[59](index=59&type=chunk)[61](index=61&type=chunk) - In Q2 2025, the company received **$698,000** from a business interruption insurance claim related to a 2024 cybersecurity incident, recorded as a gain reducing SG&A expenses[48](index=48&type=chunk) [Management's Discussion and Analysis (MD&A)](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes improved performance to cost reductions and the absence of prior-year impairment charges, with the Retail segment returning to profitability and the Wholesale segment improving operating income, supported by strong liquidity [Company Overview](index=25&type=section&id=Overview) - Bassett operates through a network of **87 Company-owned and licensee-owned Bassett Home Furnishings (BHF) stores**, accounting for approximately **60% of wholesale sales**[79](index=79&type=chunk) - The company is focusing on its digital presence, noting a **greater than 35% increase in e-commerce sales** for the first six months of fiscal 2025 compared to the prior year[81](index=81&type=chunk) - The Noa Home e-commerce business, acquired in 2022, was closed and liquidated in fiscal 2024 after continued operating losses[82](index=82&type=chunk) - Approximately **80% of wholesale revenues** are derived from products manufactured in the United States[84](index=84&type=chunk) [Consolidated Results of Operations](index=26&type=section&id=Consolidated%20Results%20of%20Operations) - Q2 2025 consolidated sales increased **1.1% YoY**, while H1 2025 sales decreased **2.0% YoY**, though normalizing for the extra week in H1 2024 shows a **1.7% increase**[86](index=86&type=chunk)[89](index=89&type=chunk) - Gross margin for Q2 2025 increased by **310 basis points**, and SG&A as a percentage of sales decreased by **330 basis points**, primarily due to cost reductions and the absence of prior-year inventory valuation and asset impairment charges[87](index=87&type=chunk)[88](index=88&type=chunk) Consolidated Results Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Change (%) | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $84,348 | $83,410 | 1.1% | $166,510 | $169,964 | -2.0% | | Gross profit | $46,909 | $43,760 | 7.2% | $93,739 | $91,627 | 2.3% | | SG&A expenses | $44,412 | $46,707 | -4.9% | $88,787 | $96,931 | -8.4% | | Income (loss) from operations | $2,497 | $(8,462) | N/M | $4,952 | $(10,819) | N/M | [Segment Analysis](index=27&type=section&id=Segment%20Analysis) The Wholesale segment significantly increased operating income, while the Retail segment achieved profitability through higher sales and cost reductions, with the 'Corporate and Other' segment reflecting the Noa Home business closure Operating Income (Loss) by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Wholesale | $8,290 | $5,687 | $16,975 | $12,446 | | Retail - Company-owned stores | $482 | $(2,222) | $434 | $(3,834) | | Net expenses - Corporate and other | $(6,521) | $(6,942) | $(12,747) | $(14,537) | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash provided by operating activities was **$6.9 million** for H1 2025, a significant improvement from **$1.9 million cash used** in H1 2024, primarily due to improved operating income[122](index=122&type=chunk) - The company has a strong liquidity position with **$59.8 million in cash, cash equivalents, and short-term investments** as of May 31, 2025[123](index=123&type=chunk) - During H1 2025, the company paid **$3.5 million in dividends** and repurchased **$1.2 million of its common stock**, with **$19.2 million remaining available** under the stock repurchase plan[123](index=123&type=chunk) - The company has a **$25 million credit facility** with **$16.8 million available** as of May 31, 2025[126](index=126&type=chunk) [Market Risk Disclosures](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include raw material and fuel cost fluctuations, alongside exposure to the commercial real estate market through owned properties and leased right-of-use assets totaling over **$100 million** - The company is exposed to market risk from the cost of raw materials like wood, fabric, and petroleum-based foam products[133](index=133&type=chunk) - The company has potential exposure to the commercial real estate market through its owned retail properties (net book value of **$23.8 million**) and leased locations (right-of-use assets of **$84.8 million**)[135](index=135&type=chunk) - The company is contingently liable for **$4.6 million** in licensee lease obligation guarantees[135](index=135&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were deemed effective as of May 31, 2025, with no material changes to internal controls over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period[136](index=136&type=chunk) Part II - Other Information [Share Repurchases and Other Information](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company reported no material legal proceedings and continued its stock repurchase program during the quarter, with **$19.2 million** remaining authorized for future repurchases - The company has no material legal proceedings to report[138](index=138&type=chunk) Stock Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | March 2 - April 5, 2025 | 23,155 | $15.79 | | April 6 - May 3, 2025 | 4,000 | $15.44 | | May 4 - May 31, 2025 | 582 | $16.28 | - As of May 31, 2025, **$19.2 million remained available** for share repurchases under the company's plan[138](index=138&type=chunk)

Company Performance - Bassett Furniture (BSET) reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, and compared to a loss of $0.19 per share a year ago, representing an earnings surprise of +46.67% [1] - The company posted revenues of $84.35 million for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 3.88%, and compared to year-ago revenues of $83.41 million [2] - Over the last four quarters, Bassett has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Outlook - Bassett shares have increased approximately 17.3% since the beginning of the year, outperforming the S&P 500's gain of 5.9% [3] - The current consensus EPS estimate for the coming quarter is $0.20 on $83.6 million in revenues, and for the current fiscal year, it is $0.88 on $334.66 million in revenues [7] - The estimate revisions trend for Bassett was favorable ahead of the earnings release, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Furniture industry, to which Bassett belongs, is currently in the top 37% of over 250 Zacks industries, suggesting a favorable outlook as the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] - Another company in the same industry, Legget & Platt (LEG), is expected to report quarterly earnings of $0.29 per share, with revenues anticipated to be $1.06 billion, down 5.8% from the year-ago quarter [9]

Core Insights - Bassett Furniture Industries, Inc. reported a consolidated revenue increase of 1.1% year-over-year for Q2 2025, reaching $84.3 million, with a notable operating income of $2.5 million compared to a loss of $8.5 million in Q2 2024 [1][5]. Financial Performance - Consolidated sales for Q2 2025 were $84.3 million, up from $83.4 million in Q2 2024, reflecting a 1.1% increase [1]. - Excluding the impact of Noa Home Inc., which closed in late 2024, consolidated revenues increased by 2.5% [5]. - Operating income was $2.5 million, representing 3.0% of sales, a significant recovery from the previous year's loss of $(8.5) million [5][8]. - Gross margin improved to 55.6%, a 310 basis point increase from the prior year, primarily due to the absence of inventory valuation charges that affected the previous year's results [5][8]. - Selling, general, and administrative expenses decreased to 52.7% of sales, down 330 basis points from the prior year, attributed to restructuring and cost containment efforts [5][8]. Segment Performance - Wholesale sales increased to $54.2 million, a 3.1% rise from $52.6 million in the previous year [1][15]. - Retail sales also saw an increase, reaching $54.2 million, up 7.5% from $50.5 million in Q2 2024 [1][15]. - The Corporate & Other segment reported a loss of $(6.5) million, reflecting the closure of Noa Home Inc. [1][15]. Management Commentary - The CEO highlighted improvements in revenue and operating income despite challenges such as a weak housing market and trade tariff uncertainties [3]. - The company emphasized its focus on operational efficiency, product launches, and enhanced e-commerce capabilities as key factors in navigating the current market conditions [3]. Cash Flow and Earnings - The company generated $7.0 million in operating cash flow during the quarter [5]. - Diluted earnings per share were reported at $0.22, a recovery from a loss of $(0.82) in the prior year [5][9]. Balance Sheet Overview - Total assets as of May 31, 2025, were $331.3 million, a decrease from $341.2 million at the end of the previous fiscal year [11][12]. - Current assets increased to $144.2 million, up from $141.5 million [11]. - Total liabilities were reported at $164.6 million, with current liabilities at $74.5 million [12]. Future Outlook - The company is positioned to leverage its strong U.S. manufacturing base to serve both wholesale and retail markets effectively in the second half of fiscal 2025 [3].

Group 1 - Bassett Furniture (BSET) is currently outperforming its Consumer Discretionary peers with a year-to-date return of 13.1%, compared to the sector average of 12.1% [4] - The Zacks Rank for Bassett Furniture is 1 (Strong Buy), indicating a positive outlook based on earnings estimate revisions and improving earnings sentiment [3] - Over the past three months, the Zacks Consensus Estimate for BSET's full-year earnings has increased by 25.7%, reflecting a positive trend in analyst sentiment [4] Group 2 - Bassett Furniture belongs to the Furniture industry, which has 8 individual stocks and is currently ranked 67 in the Zacks Industry Rank; this industry has seen a decline of about 15.8% year-to-date [6] - In contrast, Roblox (RBLX), another Consumer Discretionary stock, has returned 77% since the beginning of the year and has a Zacks Rank of 2 (Buy) [5] - The Gaming industry, which includes Roblox, has 39 stocks and is ranked 87, with an average increase of 16.3% year-to-date [6]

Group 1 - Bassett Furniture Industries Incorporated (NASDAQ: BSET) is positioned as a micro-cap proxy in the approximately $250 billion US home furnishing market [1] - The company has demonstrated resilience in a challenging environment compared to its peers [1]

Core Insights - The article highlights the investment strategies and achievements of Paul Franke, a seasoned investor with 38 years of trading experience, emphasizing his contrarian stock selection style and algorithmic analysis for identifying investment opportunities [1]. Group 1: Investment Strategy - Paul Franke has developed a system called "Victory Formation," which focuses on supply/demand imbalances indicated by specific stock price and volume movements [1]. - The strategy recommends investors maintain a diversified portfolio of at least 50 well-positioned stocks and suggests using 10% or 20% stop-loss levels on individual investments to enhance performance [1]. - The "Bottom Fishing Club" articles target deep-value stocks or those showing significant positive technical momentum reversals [1]. Group 2: Performance and Recognition - Franke was consistently ranked among the top investment advisors nationally during the 1990s and achieved the 1 position in the Motley Fool® CAPS stock picking contest in 2008 and 2009, out of over 60,000 portfolios [1]. - As of September 2024, he is ranked in the Top 3% of bloggers by TipRanks® for 12-month stock picking performance based on suggestions made over the last decade [1]. Group 3: Market Analysis - The "Volume Breakout Report" articles focus on identifying positive trend changes supported by strong price and volume trading actions, indicating potential investment opportunities [1].

Industry Overview - The Zacks Furniture industry includes manufacturers, designers, and marketers of residential and commercial furnishing solutions, with involvement in various sectors such as construction, healthcare, and retail [2] - The industry is currently facing challenges due to economic uncertainty, declining consumer confidence, and reduced home-related spending influenced by high mortgage rates [1][3] Economic Challenges - U.S. consumer confidence dropped to 92.9 in March 2025, the lowest level in over a decade, reflecting concerns over tariffs and inflation [3] - High mortgage rates, around 6.64% as of early April 2025, are straining housing affordability and reducing expenditures on home furnishings [4] - The reduced activity in the housing market is directly impacting furniture sales growth, as fewer new homeowners are furnishing their spaces [5] Competitive Landscape - The industry is highly competitive, with companies investing in digital presence and shipping capabilities to capture market share [6] - Rising expenses related to labor, marketing, and occupancy are putting pressure on profit margins [6] - Companies are focusing on product innovation and digital marketing to enhance customer experience and drive growth [7][8] Strategic Initiatives - Companies like Flexsteel Industries and Bassett Furniture are strategically investing in technological advancements, product innovation, and cost efficiency to navigate current challenges [1] - Acquisitions are being pursued to broaden product portfolios and expand geographic footprints, particularly in resilient sectors like healthcare [9] Industry Performance - The Zacks Furniture industry ranks 186, placing it in the bottom 24% of over 250 Zacks industries, indicating bleak near-term prospects [10][11] - The industry's earnings estimates for 2025 have decreased from $1.73 to $1.52 per share, reflecting a lower earnings outlook [12] Recent Returns - Over the past year, the industry has declined by 33.2%, underperforming the broader Zacks Consumer Discretionary sector, which saw a 0.1% dip, and the S&P 500, which rose by 9.5% [14] Valuation Metrics - The industry is currently trading at a forward P/E of 9.97X, significantly lower than the S&P 500's 20.73X and the sector's 17.71X [17] Company Highlights - **Flexsteel Industries**: Focused on product development and innovation, with operating margins improving to 10.7% for the fiscal second quarter of 2025. Despite industry challenges, earnings estimates for fiscal 2025 increased to $3.53, indicating a 67.3% year-over-year growth [19][20] - **Bassett Furniture**: Concentrating on cost reductions and product innovation, with a Zacks Consensus Estimate for 2025 EPS at 70 cents, recovering from a loss of 48 cents per share in the previous year [23][24]

Financial Data and Key Metrics Changes - Consolidated sales decreased by 5.1% for the first quarter, primarily due to a comparison of 13 weeks this year to 14 weeks in the previous fiscal year [11][26] - On a normalized basis, sales revenue for the first quarter increased by 2.2% [12][27] - Consolidated gross margins increased by 170 basis points, primarily due to better margins in the wholesale segment [27] - Consolidated operating income was $2.5 million compared to a loss of $2.4 million in the previous year [28] Business Line Data and Key Metrics Changes - Wholesale orders decreased by 8.4% for the quarter, or 1.4% normalized for the extra week [13] - Orders from the store network increased by 4.2% on a normalized basis [13] - Retail gross margins fell modestly, but cost reductions contributed to improved results [15] - E-commerce sales increased by 36% due to investments in BassettFurniture.com [16] Market Data and Key Metrics Changes - The sales environment was more challenging in February, with the President's Day promotional event not as successful as last year [12][13] - Orders from the traditional wholesale business decreased by 10% on a normalized basis, with February being the slowest month of the quarter [14] Company Strategy and Development Direction - The strategic plan for 2025 aims to weather slow housing sales and maintain a disciplined focus on growth [10] - The company is incorporating more technology into the customer experience and fine-tuning marketing efforts [10] - Investments in omnichannel strategies are expected to drive growth in traffic and conversions [17] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence has been declining, impacting business trends [11][40] - The company is preparing to address the implications of new tariffs on materials and products [23][24] - Management expressed confidence in the steps taken to run efficiently through the current economic challenges [11][36] Other Important Information - The board of directors approved a regular quarterly dividend of 20 cents per share [25] - The company plans to invest between $8 million and $12 million in capital expenditures for store remodels and technology [35] Q&A Session Summary Question: Changes in business trends due to consumer confidence drop - Management observed a spike in sales post-election but noted a return to last year's pace as the year progressed [40] Question: Health of inventory and impact of tariffs - Increased inventory was driven by new collections rather than a conscious effort to stockpile against tariffs [43][44] Question: Sustainability of gross margins - Management indicated that current gross margins are among the highest achieved but do not expect them to increase further in the short term [55] Question: Plans for addressing tariffs - The company is considering various strategies, including potential price increases, but has not finalized a plan [57] Question: New store openings and design studios - Management sees significant growth potential in the design studio program and is working on new store leases [60][66]

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the quarterly period ended March 1, 2025 FORM 10-Q OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________________ to _______________________ Commission File No.000-00209 BASSETT FURNITURE INDUSTRIES, INCORPORATED (Exact name of Registrant as specified in ...